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Wind and bioenergy industries celebrate as US renewable energy tax credits saved

The renewable energy industry’s new year has kicked off to a good start after the United States’ Congress extended the wind energy Production Tax Credit (PTC) by one year as part of a package of measures to avert a “fiscal cliff” in the US budget.

Investment Tax Credits for community and offshore projects have also been extended, while the biodiesel tax incentive has been reinstated for 2012 and 2013. Democrats and Republicans struck a deal on the measures in order to avoid the so-called “cliff” which would have triggered a series of automatic tax hikes and spending cuts in the event of a failure by the two parties to agree a fiscal regime for 2013.

The deal struck for the American Taxpayer Relief Act of 2012 will cover all wind power projects that start construction in 2013, after a campaign by the wind industry to allow for the 18-24 months it takes to develop a new wind farm.

Leaders of the Senate Finance Committee included the provision in a "tax extenders" package they assembled in August, which made it into the overall fiscal cliff deal that was passed by the Senate, and then the House of Representatives.

The measures passed to the White House for final sign-off by the President yesterday. “President Obama consistently supported the wind energy tax credits throughout the process,” the American Wind Energy Association (AWEA) noted.

With Democrats holding the White House and the Senate, and Republicans holding the House of Representatives, agreement on a new fiscal regime has proved elusive,  throwing the industry into uncertainty and leaving it planning for the worst. As nearly 70% of turbines operating in the US are manufactured in the US, a significant reduction in installations in the event of the PTC not being extended would have hit manufacturers hard.

AWEA said America's wind energy workers have been living under threat of the PTC's expiration for over a year and layoffs had already begun, as companies idled factories because of a lack of orders for 2013. “Uncertain federal policies have caused a "boom-bust" cycle in US wind energy development for over a decade,” it noted, citing a study by Navigant Consulting which found that half of the American jobs in the wind industry and hundreds of factories in the supply chain would have been at stake had the PTC been allowed to expire.

The eleventh hour extension of the PTC will save up to 37,000 jobs and create far more over time, as well as reviving business at nearly 500 manufacturing facilities across the US, AWEA said. "On behalf of all the people working in wind energy manufacturing facilities, their families, and all the communities that benefit, we thank President Obama and all the members of the House and Senate who had the foresight to extend this successful policy, so wind projects can continue to be developed in 2013 and 2014," said Denise Bode, in one of her last official statements as CEO of AWEA – Bode announced her resignation from the position on December 14.

Meanwhile turbine manufacturers have welcomed the news. Vestas, which has made a series of layoffs over the past year, said it now plans to employ 16,000 people worldwide by the end of 2013. The PTC extension provides “certainty for the wind industry,” it said in a statement.

Reiterating its own commitment to the US market, the Danish firm said: “The short-term PTC extension is critical to ensure projects move forward and orders are placed that will support US manufacturing and the domestic supply chain.”

It added: “Even though the late timing of the extension will result in a significant reduction in 2013 installations relative to previous years due to the time it takes from when an order is placed to project completion, the US market will nonetheless be stronger as a result of the PTC extension.”

Bio-celebration

Meantime, the biodiesel industry is also celebrating after tax incentives, which had expired in 2011, were reinstated. Tax extensions for production of cellulosic ethanol from plant materials, and for electric vehicles, energy-efficient new homes and appliances are included in the bill, and for tax purposes algae will now be treated as a qualified feedstock for production of biofuel.

“The one year extension of the cellulosic producer tax credit and accelerated depreciation provides some measure of certainty to ensure that 2013 will be a year of growth and milestones for the advanced ethanol industry,” said Bob Dinneen, president and CEO of the Renewable Fuels Association.

“In addition, and equally significant, is the extension of the alternative fuel infrastructure tax credit which will accelerate E15’s entry into the marketplace this coming year.  The extension of these important provisions demonstrates the Obama Administration’s stalwart support of biofuels and Congress’s belief in the promise of energy independence and job creation through domestic renewable energy resources.” 

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Bioenergy  •  Policy, investment and markets  •  Wind power

 

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