U.S. Wind Industry Seeks Renewal of Tax Incentives–Is This the End of a (short-lived) Era?

Maybe. From my seat as a journalism and environmental science student at the University of Idaho, things are not looking too great for wind power. While the wind energy industry has seemingly flourished here in parts of the Pacific Northwest (as seen in Beyond the Light Switch’s wind segment), with wind turbines populating once vacant stretches of land, a recent article in The Denver Post revealed that developments like this might come to a crashing halt.

The increased production and assembly of wind turbines in the U.S. over the past 10 years are partially the result of production tax incentives (PTC), a program whose future may be in jeopardy.

Created under the Environmental Policy Act of 1992, PTC has promoted growth in renewable energy industries and supplied many Americans with jobs in sustainability-related areas. PTCs currently offer a 2.1 cents/ kilowatt-hour tax credit to qualified wind industries and other renewable energies like biomass, hydroelectric, and geothermal – with the U.S. currently sporting a total of 38 states with utility-scale wind turbines. The PTC program is currently up for renewal, but deliberations in Congress may tie it up for good. The Denver Post reported that the $1.4 billion program (extended over 10 years) has already failed three times in the Senate.

Here Allison Sherry of The Denver Post quotes U.S. Senator Michael Bennet of Colorado, "It's nuts…it's like Congress will get around to it when Congress is ready to work on it, but that's cold comfort for people getting laid off across the country and the state of Colorado." Sherry adds that cutting this program now would be way more damaging than it would have been 10 years ago because of the industry’s recent and rapid growth. But opponents of the program’s renewal are less sympathetic...

 A February article from The Wall Street Journal offered an example of such wind-opposing sentiment here, “The wind industry simply cannot continue to rely on the American taxpayer," said Rep. Mike Pompeo (R., Kan.), who is currently pushing a bill that would cut many energy-related credits from the tax code. "Each time it comes up to a year of expiration, they say, 'If we just get a few more years our technology will mature and we will become more competitive.' It's time for them to figure out how to do that."

Director of Stanford University Atmosphere and Energy Program Mark Z. Jacobsen’s response to this issue is related more to the health benefits of switching to renewable energy sources versus fossil fuels. A Beyond the Light Switch video interview posed the following question to Jacobson: “If energy from renewables is going to be more expensive, why should we consider our energy mix at all?” Jacobson answered, “This is a really twisted incentive system where we pay people to cause environmental damage, and so as a result they can freeload off the health of our citizens. And at the same time we complain about giving subsidies to renewable energy industries that are effectively eliminating those air pollution health problems and deaths.”

Jacobson is basically pointing out that the fossil fuel industry is just as draining on the American taxpayer due to healthcare costs incurred by illnesses directly tied to air pollution. “Right now it’s a freeloading market, where the fossil fuel industry is freeloading off of the health of society, and has been doing so for years,” he added.

But the potential demise of the PTC program isn’t the only thing threatening the U.S. wind industry. Mark Halper of the SmartPlanet blog recently addressed the looming reality of a Chinese monopoly on rare earth metals, a key component of wind turbine production and other renewable technologies like solar panels and hybrid vehicles. Halpert reports that China controls 95 percent of the world’s supply of rare earth metals and just acquired more after a deal with Colorado-based rare earth metals company Molycorp Inc.

Molycorp recently bought Toronto-based Neo Market Technologies, which sells a majority of the already mined rare earth metals to Japan and China. Here Halpert writes, “In fairness to Molycorp, companies in most industries routinely sell to China these days…And Molycorp hasn’t said it won’t sell to the U.S.”

It seems strange to think that all this progress and, by extension, the future viability of the U.S. wind industry in the U.S. is now at risk. If we can’t continue our pre-established efforts in sustainable, renewable energies, how do we expect to gain energy independence in the future? How do we expect to continue to create “green” jobs? More importantly – where are we going to source our energy, our electricity, if we can’t make this work? Yes, there are other options, but we've already invested in this one. What a waste to leave it unfulfilled.

Simply put, if Congress does make the decision to continue to invest in the future of renewables like wind energy here in the U.S., then maybe we wouldn’t have to worry about countries like China cornering the market on rare earth metals because we would have a larger presence in the market already. In the meantime, I’ll be waiting for the final decision – when Congress gets around to it.  

[Blog written by Laura Kross, Corps of Discovery intern currently enrolled in U of I's Principals of Sustainability.]

[Image courtesy of Kathy McCullough]