Silver Chips Online

TechnoLogical: Extend alternative energy tax credits

By Urvi Banerjee, Staff Writer
December 31, 2012
TechnoLogical is a weekly blog focusing on new advances in science and technology and looking critically at how the technology we already use impacts our lives. Come back next Monday for the next edition of TechnoLogical.

The wind industry has experienced major growth in the last several years. According to the American Wind Energy Association (AWEA), wind generated over 35 percent of all new US power capacity in the last five years and in first quarter of 2012 alone, wind turbines had 52 percent more electricity generating capacity than in the same quarter of 2011. But by tomorrow, this progress might be for nothing.

Today, Dec. 31, marks the expiration date of the federal renewable energy production tax credit (PTC), the primary incentive for wind energy development. Part of the Energy Policy Act of 1992, the PTC provides a 2.2 cent per kilowatt-hour income tax credit for the first ten years of a turbine’s operation. Congress needs to vote to extend the PTC in order to ensure that such an economically and environmentally beneficial industry remains afloat in 2013.

By lowering the cost of operating new turbines, the PTC has led to a major boost in the wind industry and therefore economy. The Department of Energy (DOE) reported that wind power now accounts for over 10 percent of six states’ electricity supply and current wind power capacity is enough to power 13 million American homes at 50,000 megawatts. This growth has contributed to increased investment, with the DOE reporting $14 billion invested in wind energy projects in 2011 alone. Because American manufacturers provide 70 percent of wind energy equipment, the wind industry contributes to a healthier national economy as a whole.

Without the PTC, however, many power companies will not be able to afford continued operation of wind turbines. The DOE report estimated that around half of the Americans working in the wind industry will lose their jobs without a PTC extension because of shut down plants. Many layoffs have already occurred in the past year in anticipation of the PTC’s potential expiration. According to the Minnesota Public Radio, many analysts predicted earlier this year that losses would amount to 30 percent of total wind manufacturing jobs by this time.

When Congress let the promotion tax credit (PTC) expire in the past, the number of wind capacity installations dropped 73 to 93 percent in the following years. Courtesy of World Resources Institute
When Congress let the promotion tax credit (PTC) expire in the past, the number of wind capacity installations dropped 73 to 93 percent in the following years.
These numbers echo those of previous years before Congress let the PTC expire, a decision which ultimately had dire consequences. According to the AWEA, when this happened in 2000, 2002 and 2004, the following years saw drops in wind capacity installations by 93 percent, 73 percent and 77 percent, respectively. This major industry dependence on the PTC demonstrates just how important another extension is in order to keep wind energy growth from once again becoming stagnant.

Compared to other industries such as oil and natural gas, the government is subsidizing less money for the wind industry through the PTC and can thus afford an extension for a much more environmentally-friendly energy source. As clean energy becomes increasingly important with population growth and decreasing resources, it is critical that the government takes measures to boost the growth of these alternatives. Given that wind is currently the biggest clean energy source, extending the PTC will provide a large step in the right direction.


http://silverchips.mbhs.edu/story/11913