The top Democrat and Republican on the Senate Finance Committee voiced confidence Wednesday that an array of expiring and already lapsed energy tax credits would be extended this year.
Senate Finance Committee Chairman Ron Wyden, D-Ore., praised his Republican counterpart, Sen. Orrin Hatch of Utah, for supporting at least a one-year extension for the incentives, which are given to wind, biomass, geothermal and other energy sources. Both hope for an eventual overhaul of the entire federal tax code that would potentially eliminate the dozens of specific energy provisions currently on the books.
The alignment of the committee leadership makes it likely that Congress will revive the production tax credit, which offers a 2.3-cent per kilowatt-hour credit mainly to wind power producers. Congressional sources told the Washington Examiner that the extenders package might slip into the continuing resolution to fund the government during the post-election lame-duck session.
The production tax credit has been a target of conservatives because they say it costs too much and that, for wind energy, it has served its purpose of jump-starting the industry. Across all the energy sources to which it applies, the subsidy costs $13.3 billion over a 10-year period, according to the Joint Committee on Taxation.
Don Nickles, a former Republican senator from Oklahoma who is now a lobbyist, said the credit shouldn’t be revived.
“Most of [the incentives] have had their day, they’ve had their time. Enough is enough,” Nickles said.
But Ethan Zindler, head of policy analysis with Bloomberg New Energy Finance, said that the incentive still drives wind industry investment. He noted that new generating capacity plummeted to 1 gigawatt last year when the credit lapsed, though he said installations are expected to rebound to 15 gigawatts this year and next.
Peter Kelley, a spokesman with the American Wind Energy Association, said eliminating the wind incentive would leave the industry with an uneven playing field when it comes to competing with other energy sources that receive tax subsidies.
“The reality is all types of energy production receive benefits and incentives through the tax code. The difference is that oil and gas producers have had permanent tax expenditures since the beginnings of the income tax, while incentives for renewable energy are of a much more recent vintage, are temporary, and have been closely examined and approved by policymakers on a bipartisan basis,” Kelley said.
