In order to build on a significant base of renewable energy projects, Congress should act promptly to renew the federal Production Tax Credit for at least one year. The PTC for renewable energy technologies expires on Dec. 31, 2008. According to energy investment authorities, the extension should take place at least eight months in advance of its expiration to avoid a slowdown in the market and to provide stability for industry to plan for 2009 and beyond without confronting an uncertain policy framework.
This PTC provides industry with incentives to help the United States diversify its energy portfolio by providing a 1.9 cent-per-kilowatt-hour tax credit for electricity generated from wind and other renewable energy technologies over the first 10 years of a project’s operation. The PTC was calculated to give renewable power production a tax incentive comparable to the ones oil, gas, coal and nuclear power enjoy. It levels the playing field.
45 percent in a single calendar year and infusing over $9 billion into the economy. New wind projects accounted for about 30 percent of the new power-producing capacity added last year and will power the equivalent of 1.5 million American households annually. This strengthens our energy supply with clean, renewable, homegrown electric power. Wind generation also needs no water for steam and cooling, an increasingly valuable benefit in arid areas and in times of drought.
Conversely, in years where the credit has lapsed or its extension delayed, new wind capacity has dropped precipitously.
To be certain, there are challenges both political and perceptual that must be addressed in discussions about the PTC. The first is to understand the PTC does not distort the market because all energy supplies receive government support. According to the General Accounting Office, subsidies granted by Congress to the oil and natural gas industries amounted to $150 billion between 1968 and 2000 (constant 2000 dollars). Extending the PTC, in actuality, enhances market function by eliminating the disadvantage renewable energy would otherwise face.
Renewable energy, especially wind power, developments pour millions of dollars into rural communities struggling to survive. These developments create jobs, help pay for schools and county roads, provide substantial new revenues to landowners who host the facilities, and bring new money to local businesses. Ask the folks in Wheatland County where the Judith Gap wind farm was built in 2005. They now hold a weekend Festival of the Wind, their chamber of commerce publishes a wind-energy calendar, and their county commissioners have had to confront how to spend added revenues rather than how to reduce services. There is a new sense of prosperity within the community.
As we consider extending the PTC, we need to change our mindset.
Discussions about energy too often focus on the supply side where the goal is meeting consumer demand. Consumers are hostages to the prices and flow of goods that providers choose to offer them using this mindset. Consumers should recognize conservation is their first fuel. By doing so, they control choices and “regulate” the market, conserving and modifying their demands to save money and energy. Further, when they do make purchases, consumers should be able to choose between energy from traditional and renewable sources.
Timely action by Congress will boost significant upward growth and investment for wind and other renewable forms of energy, spurring thousands of new jobs and millions of dollars in rural economic development, while also bringing cleaner air to all Americans.
Dave Wanzenried represents Senate District 49 in Missoula and is chairman of the Montana Environmental Quality Council.
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