Bipartisanship is hard to come by in Washington these days. And clean energy has sadly become just another partisan issue over the last two years. So when Senator Scott Brown, a Republican, and Senator John Kerry, a Democrat,are in agreement on clean energy policy you know it’s a big deal.
Last week, Kerry and Brown joined ten colleagues in signing a letter to Congressional leadership in support of the extension of a key tax credit for wind energy set to expire at the end of 2012.
Here’s why this matters: though renewable energy is growing, it remains a tiny portion of our energy supply. In 2010, for instance, wind energy had a great year, accounting for 26% of all new generation capacity (think of this as the equivalent of new power plants built) and yet still finished the year accounting for less than 2% of our country’s electricity generation. And that’s far more than solar, the other major growth area for renewables.
To become sustainable, we need more renewable energy, and we need it relatively quickly.
The Production Tax Credit, or PTC, provides the producers of wind energy with a tax credit of just over two cents per kilowatt hour. With that tax credit, the American Wind Energy Association claims some wind projects have costs as low as five cents per kilowatt hour, which should give you a sense of how significant the PTC is to the price of wind energy.
If that tax credit expires, the industry claims its growth will slow. And uncertainty as to whether it will be extended is already causing problems for local wind companies, according to reporting in The Boston Globe.
The best argument against extending the credit is simply that the tax code is too riddled with loopholes, and that what we need is fundamental corporate tax reform that simultaneously lowers rates and eliminates various credits. That would be nice, although even if that were politically palatable it would still be important to find a way to incentivize clean energy.
But in the meantime, with comprehensive tax reform unlikely, it would be misguided to punish wind by letting the PTC expire.
It’s encouraging that both Senator Brown and Senator Kerry realize this. Hopefully they’ll win their colleagues over soon.