Renew wind energy tax credit

Renew wind energy tax credit

October 2nd, 2012 in Opinion Times

The U.S. wind power industry, never extraordinarily robust, faces additional roadblocks in its effort to remain financially viable and to continue its role in the necessary effort to secure reliable sources of renewable and clean energy to a nation in need of both. The consequences of an industry-wide collapse, especially in the long term, could be dire.

The industry faces difficulty on several fronts. Current economic conditions have cut demand for electricity, thus reducing interest in alternative sources of energy. Companies also have to compete with lower-priced equipment produced overseas -- mainly from Asia. Recent tariffs have helped alleviate that problem somewhat, but the issue persists. Those are not the only difficulties the wind power industry must battle.

The industry has been caught up in the current battle for the White House. At stake is the tax credit that helps the industry compete with other subsidized sources of energy. The credit valued at about $1 billion annually has been renewed over the years with widespread support from both parties. Most Republicans and Democrats generally agreed that continuing investment in a renewable source of energy would provide substantial national benefits in the future. Indeed, that balanced view made sense. No more.

Never mind that the subsidy helped the industry grow into a viable one over the years and that it has helped lower the cost of wind-produced electricity. It's true that the industry still can't compete with more traditional power producers, but the cost per kilowatt-hour is rapidly approaching a level at which its power will be attractively priced -- especially when the real price of fossil fuels includes paying for the significant environmental damages they create are taken into account.

The drop in per-kilowatt cost and the promise of additional declines bodes well for a future in which demand for electricity will surge, traditional sources of power will be stretched to the limit -- or broken -- and alternative sources of energy will be required to help meet needs.

That seems to have been forgotten in the current political climate. President Barack Obama is in favor of renewing the federal tax credit for wind energy companies that, unless renewed, will expire on Dec. 31. Mitt Romney, his Republican opponent, says he opposes the credit. Most GOP members of Congress have followed his lead, making it unlikely the credit will be renewed before the election. Indeed, it is possible, many observers say, that the credit will be allowed to expire regardless of the election outcome. That would be a mistake.

The U.S. wind power industry is already dying. Employment has dropped from about 85,000 Americans five years ago to about 75,000 today. Orders are drying up because of economic, competitive and political concerns. That means additional layoffs and plant closures loom. Renewal of the tax credit should help stall the layoffs and closures and allow the United States to continue to play a major role in a rapidly developing industry that holds promise for the future.

The tax credit is not a gift. It is an investment in an industry that understands the need to improve its products and to bring down costs. Wind energy companies continue to strive to do so, but will not be able to sustain the effort if a partisan Congress does not extend the tax credit.