The American wind energy industry has grown in spite of the “boom and bust” cycle of wind energy development fostered by the renewal-expiration-renewal cycle of the wind production tax credit (PTC). The PTC is one of the primary tools used to spur wind energy development and expired at the end of 2013. The result was a 92% drop in 2013 installations, compared to 2012. Extension of the PTC will likely be the subject of debate about so-called tax extenders during the upcoming “lame duck” session of Congress as the wind industry seeks an extension of the PTC through 2015.
The American solar energy industry has been better off, given the longer time frame the industry earned with the eight-year extension of the Solar Investment Tax Credit (ITC) in 2008. However, that credit will drop from the current rate of 30 percent to 10 percent after December 31, 2016. The solar industry is advocating revision of the credit qualification terms for the ITC from the current standard that states a project must “begin operation” by the deadline, to a requirement that states a project must “begin construction” by the deadline.
While opponents of these credits point to the cost an extension would have on federal tax revenue, it is hard to argue with the dramatic success the credits have had in growing both the wind and solar industries. If federal tax revenue is a concern, it seems harder still to justify the bigger tax credits currently available to the far more mature and profitable fossil fuel industries.
It is entirely possible that the combined pressure of the renewables industry will successfully secure passage of some sort of tax extender legislation. But it’s not likely that whatever extensions are secured will be long-term. Conversations about what comes next after tax credits have been taking place for years, and the next few months will likely bring them back to the fore again.
Is this the end of the line for renewable energy tax credits? Should it be? What impact does the cycle of renewal-expiration-renewal have on the efficacy of these credits?
A century ago, federal spending was less than $1 billion; the Panama Canal opened; the Federal Trade Commission was established; and World War I began. But something else took place… Read more »
Ken, thanks for taking the time to reply. And I really appreciate your addition to the discussion – you’ve added a lot of useful background on the specific benefits of… Read more »
I agree with Ken. But in addition to giving a tax break to clean energy, we must also stop subsidizing dirty energy and, on top of that, put a rising… Read more »
Dan, you make good points. But realistically, what do you think the chances are of phasing out other subsidies? Do you think a carbon tax (or similar) conversation has any… Read more »
Ben: You ask a very important question. First of all, I see this as a forum where we discuss what energy policy should be. Perhaps expert opinion will find its… Read more »
Dan, thank you for your reply and for sharing the link to your very enjoyable Tedx Talk on climate change (I just watched it). Watching your talk made me think… Read more »
Ben: Regarding communicating about climate change, I appreciated the information in your link and I already strive to do what you suggest… I hope that came across in my TEDx… Read more »
Some of us have argued for years that the only way to really compare energy costs is to demand a “level playing field”. How can a supporter of ‘free markets’… Read more »
Jane, thank you for weighing in. I support tax credits for renewables and hope to see the PTC and ITC continued. I’m curious as to the mood of the new/incoming… Read more »
I totally agree that we do not know enough … but I personally worry that de-carbonizing is up for negotiation … the pipeline, exports of carbon fuels, and GHG caps.… Read more »
Looks like I am wrong about the administration’s bottom line … couldn’t be happier!
I must have missed something. Should I be worried?
The job of the energy efficiency and renewable energy and energy storage industries is to be adamant that either all energy subsidies lapse or “all of the above” means no… Read more »
Scott, thank you for taking the time to read and reply to this post. And thanks for sharing the helpful perspective of the cost comparisons – those figures really do… Read more »
The commenters so far all seem to agree that what they want is “a level playing field”, with the wind and solar subsidies portrayed as being crucial and other subsidies… Read more »
Tom: It doesn’t look like you include all the subsidies in your comparison, for example, the risk waiver that the government provides for nuclear. But the biggest subsidies of all… Read more »
Dan, I couldn’t agree with you more about the externalities of fossil fuels which, as I mentioned, shouldn’t be ignored by renewables advocates in the case of natural gas. I… Read more »
Tom: Nuclear doesn’t emit CO2 so I’m for it. But don’t underestimate the importance of public perception on this. Countries are shutting down perfectly fine, working nuclear plants over perceived… Read more »
Dan, you write: “As for renewables, I think they can provide a very large percentage of our energy needs even without nuclear. So the lack of nuclear is not a… Read more »
Tom: I believe you are conflating natural gas and renewables. I agree that NG can be as bad as coal from a climate change perspective. There is no requirement that… Read more »
Dan, I want to reply to your later comment but there’s no reply button there so I’ll address it here. You write: There are many papers and articles written on… Read more »
Tom, I am afraid that the numbers you quote do not include the numbers Scott Sklar and I are talking about. This is because ours are ‘tax expenditures’ and as… Read more »
I would argue all energy subsidies should go away.
Nate, thanks for reading the post and commenting. Would you like to share a bit more of your thinking? I, for one, would be interested in knowing why you think… Read more »
This is what I was referring to: http://ecopolitology.org/2010/03/08/think-renewables-need-huge-subsidies-federal-energy-subsidies-visualized/
Nate, I would agree, with caveats. If you look at big energy projects (dams, etc), they existed only with government involvement. The up-front capital cost of such projects are prodigious,… Read more »
Many thanks to Tom Blees for an excellent posting, even though politically incorrect! We are getting into the details of the tax codes, and there is virtually no chance that… Read more »