Wind Energy Gets a Boost off Fiscal Cliff Deal
But the fickle nature of its funding in the United States remains problematic
A version of this article originally appeared in The Progressive
Last week, the President Obama and Congress reached an agreement and ratified a new fiscal deal. What are its implications for environmental politics?
Photo by Flickr user jimmedia
To see the downside, check out Andy Kroll at Mother Jones on the oil subsidies.
On the upside, wind industry received a boon as the Production Tax Credit (PTC), which subsidizes the construction of new wind energy, was extended for another year and the rules were changed. Now, construction does not need to be completed and producing electricity in order to receive money; instead, the credit funds construction.
While this announcement is a welcome relief, throwing a lifeline to the wind energy industry, the fickle nature of its funding in the United States remains problematic. Annual concerns about the extension of this tax credit have become as predictable a ritual as the Thanksgiving and New Year's holidays between which the countdown annually takes place.
Frustrated by the unstable PTC and seeing the job growth that the wind industry produces, a bipartisan group of 24 governors sent a letter to President Obama in July 2011, demanding the tax credit be extended by seven years in order to continue growth in the industry.
At the time, the American Wind Energy Association reported that wind energy was up 72 percent in the first half of 2011 over 2010, as a result of the PTC's extension but that "orders for 2013 and beyond are scant because of the lack of a predictable business environment, causing layoffs and even bankruptcies in American manufacturing plants." When the figures for 2012 are in, the wind energy industry expects it will have been another record year, surpassing both 2010 and 2011.
Tax credits are the least reliable way to fund renewable energy. Over the years, producers of renewable energy components, such as wind turbines, have pulled out of the U.S. and moved production hubs elsewhere, since many other countries offer more reliable sources of funding.
The International Energy Agency reported in July that global wind generation is set to grow by 40 percent by 2017. The US could cash in on the growth in this industry, creating jobs, reducing emissions and protecting the environment.
According to the US Department of Energy, wind energy could supply up to 20 percent of US electricity by 2030.
The Sierra Club, which has a Wind Works campaign, says more than 400 US companies build windmills or components related to them.
The American Wind Energy Association says that allowing the PTC to expire would have slashed 37,000 in manufacturing, installations and maintenance nationwide. The wind industry supports 7,000 jobs in Iowa, 5,000 in Colorado, 6,000 in Ohio and between 3,000 and 4,000 in Pennsylvania. During last fall's campaign trail, Obama targeted Romney's opposition to the extension in Iowa, Colorado, Ohio and Pennsylvania — all swing states.
So why isn't the US shifting from fossil fuels to renewable energy more quickly? That's where the oil, gas, and coal lobbies, which agitate for their own subsidies, come in.