Upcoming Death of Tax Credit Threatens Wind Industry

by Luke Jones  on Monday, Aug. 27, 2012 12:00 am  

There's a bad breeze blowing through Arkansas' wind power industry: The uncertainty of an important federal tax credit, which expires at the year's end, is driving companies into a corner and bleeding jobs.

"We're at a very perilous moment for U.S. wind energy," said Peter Kelley, spokesman for the American Wind Energy Association. "We've had growth by leaps and bounds in the past few years just because there's been a lot of demand for renewable energy, and there's a tax credit."

The tax credit is the magic bullet. It lets companies producing renewable energy pay a lower income tax rate by 2.2 cents per kilowatt-hour. Without it, AWEA reported, the industry could shed up to 93 percent of its workforce.

The credit was created in the 1990s and hasn't expired since 2005. Republican presidential candidate Mitt Romney has stated he would let the credit expire if he were elected, but state congressmen, including Republicans, have voiced support for the credit.

"I support a temporary extension of the wind production tax credit that is phased out over time, but I will continue to fight for fundamental reform of our tax system, because Americans need a simpler, fairer and flatter tax code that encourages job creation and allows us to compete around the world," U.S. Rep. Tim Griffin, R-Ark., said in an emailed statement.

"The layoffs there have been more about the failure to extend the tax credit than anything else," U.S. Sen. Mark Pryor, D-Ark., told Arkansas Business. "I think if we can get that re-established, we can get a lot of those jobs to come back."

Pryor said he thought the wind industry had been good for Arkansas, noting that the state's geography and its transportation infrastructure were well-positioned for moving the huge turbine parts around.

Click here for a sidebar on the Arkansas' role in the national wind power field.

"But I think what we're seeing right now is the entire wind power industry, nationwide, is suffering because of the lack of the tax credit and lack of certainty."

U.S. Sen. John Boozman, R-Ark., also voiced opposition to Romney's stand on wind power. "I think it's something we need to talk about," he told the Huffington Post in July. "I'm very much in favor of reinstating [the tax]. I do think that they don't go on forever. I think we extend them over a period of time and then start to phase them out, but you don't pull the plug."

Gov. Mike Beebe, a Democrat, has historically supported the tax credit, and even Karl Rove, a high-ranking Republican strategist, is in favor of it.

Rove told the Associated Press in June that he hoped after the presidential election "people say, look, let's start making some priorities and find some things that we can agree on, and maybe one of them is the production tax credit. It is a market mechanism, you don't get paid unless you produce the power, and we're not picking winners or losers, we're simply saying for some period of time we will provide this incentive as we scale up and get improvements in technology."



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