The PTC and the temporary Treasury cash payments in lieu of the PTC preserved thousands of American jobs during the economic meltdown. This issue is discussed in detail here. Briefly, the federal wind energy Production Tax Credit (PTC), the key incentive that has helped the companies that build wind farm plants to attract investment in their projects, lost its value during the meltdown, because many companies had no revenue and no tax liability against which to take the credit. Congress passed legislation authorizing the PTC to be taken instead in the form of a cash payment from the Treasury in the same amount. This emergency measure, which expired at the end of 2011 and is no longer law, kept the wind turbines industry from grinding to a halt during the meltdown and preserved the industry’s 85,000 jobs.
The wind turbines industry generates large numbers of construction jobs and also manufacturing jobs, not just the skilled jobs required to operate wind farm plants. In the course of creating the wind power industry, we’ve created a potent new source of American manufacturing jobs. As recently as 2005, only about 25 percent of the content of wind turbines installed in the U.S. was domestic. Today, that number is more than 60 percent, and there are more than 400 factories from coast to coast producing wind turbine components. A recent report from the nonpartisan Congressional Research Service (CRS) on the wind power industry underlines this, finding that 1) domestic content of turbines is indeed increasing rapidly and 2) turbine manufacturing creates good jobs in heavy industry. A wind farm also project typically creates dozens or even hundreds of construction jobs–jobs that can’t be outsourced and that pay salaries to workers right here in America. The same is true for a number of other related disciplines–jobs operating and maintaining turbines, driving the trucks that carry rotor blades and towers to the construction sites, performing the engineering work, and more.
The concept of tradable renewable energy credits is based on the tradable air pollution permits developed under the Clean Air Act by the George H. W. Bush Administration. Under the Clean Air Act, utilities were given permits to emit certain levels of pollutants, with the total number of permits being reduced each year. Utilities that retired polluting power plants and replaced them with clean energy sources like hydropower or wind turbines could take their permits and sell them to other utilities for cash, providing extra income and an extra incentive to reduce pollution. Renewable energy credits (RECs) work in the same way–a utility that is generating more renewable energy than it needs to comply with a state Renewable Energy Standard can sell RECs to a utility that is short of compliance. The Clean Air Act trading system was very successful, helping utilities reduce air pollution at a cost far lower than predicted. RECs work the same way, reducing the cost to utilities of complying with renewable energy standards.
Tom Gray, www.awea.org/blog/