Wind turbines: Inconsistent U.S. energy policy leads to competitive disadvantage

“The U.S. cannot compete on a level playing field with countries that have strong industrial policies when our own policies have been so inconsistent and erratic,” said U.S. Sen. Jeff Bingaman (D-N.M.), chair of the Senate Energy and Natural Resources Committee, Thursday at a hearing of the committee on "Tax Reform: Impact on U.S. Energy Policy."

The federal wind energy Production Tax Credit (PTC), the primary incentive that helps support growth of wind power in the U.S., stands as a poster child for that "inconsistent and erratic" policy, having been extended only in one- to three-year increments since Congress first allowed it to expire in 1999. Short-term extensions, as many wind industry executives have pointed out in recent years, do not provide the certainty that businesses need to make investments of hundreds of millions of dollars in new manufacturing plants.

Bingaman sounded a very similar theme in a speech at a recent Sandia National Laboratories wind turbine blade technology workshop. Speaking of the possibility that the PTC, which expires this year, might not be extended until after the November election, he commented, "That’s not a good way to make tax policy. It does not give developers and businesses the assurance they need to make plans and investments for the long term."

At the Senate hearing, his remarks came in the context of discussing the competitive outlook for U.S. renewable energy products, such as wind turbines and solar panels, with products manufactured by China. China has invested heavily in its renewable energy sector–an investment that has resulted in its world-leading clean energy market.

The PTC provides an income tax credit of 2.2 cents per kilowatt-hour for the first 10 years of electricity production from utility-scale turbines. It is set to expire on Dec. 31 unless Congress extends it first. A recent study by Navigant Consulting found that extending the Production Tax Credit will allow the industry to grow to 100,000 jobs in just four years, while an expiration would kill 37,000 jobs within a year.

A House bill seeking to extend the PTC has 101 cosponsors, including 23 Republicans, while a Senate bill to extend it was introduced March 15 by seven Senators, including three Republicans. PTC extension efforts have received the endorsement of a broad coalition of more than 370 members, including the National Association of Manufacturers, the American Farm Bureau Federation, the Edison Electric Institute, and the Western Governors’ Association. A PTC extension also has the support of the U.S. Chamber of Commerce, the National Governors Association, and the bipartisan Governors’ Wind Energy Coalition, which includes 23 Republican and Democratic Governors from across the U.S. A PTC extension has been endorsed by a number of newspapers across the country, including the Houston Chronicle, The New York Times, the Denver Post, the Daily Oklahoman, and the Toledo Blade.

Tom Gray,