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A group of 19 leading companies has sent a letter to Congress asking lawmakers to immediately extend a key tax credit for wind that is set to expire at the end of the year.
The diverse coalition of firms, which includes Ben & Jerry’s, Johnson & Johnson, Levi Strauss, Starbucks, and Yahoo!, says that raising taxes on the wind sector would be bad for businesses that buy large amounts of wind electricity.
These companies join a very large bi-partisan chorus of renewable energy supporters asking Congress to give the wind industry some certainty and put the sector on a level tax playing field with the oil and gas industry, which enjoys billions of dollars in permanent tax benefits.
Over the last year, the National Governor’s Association, County Commissioners, and numerous Republican politicians have all sent separate letters to Congressional leaders in support of extending federal wind tax credits for at least another year. Now this latest group of prominent companies is playing up another theme: Ending support for wind isn’t just bad for the wind industry, it’s bad for downstream non-utility companies that procure energy from wind:
"As major U.S. employers and some of the largest non-utility purchasers of renewable energy, we urge you to extend the Production Tax Credit (PTC) for wind energy before the end of the 112th Congress. A failure to pass an extension will amount to levying a tax on companies committed to buying American energy and growing the U.S. economy. In today’s economic climate, a taxhike on American businesses buying American renewable energy is unwarranted.
"In the past decade American businesses have significantly ramped up their purchase of American wind energy. For consumers of wind electricity, the economic benefits of the PTC are tremendous. Electricity rates, which reflect marginal costs for power plant operations and fuel prices, consistently decrease when wind enters the market. Because wind prices can be locked in up front, businesses incorporating wind into their energy portfolios are better equipped to hedge market volatility in traditional fuels markets caused by supply shocks. We are concerned that allowing the PTC to expire will immediately raise prices for the renewable electricity we buy today."
California Congresswoman Capps Joins in to Pass Legislation to Extend Renewable Energy Tax Credits
Congresswoman Lois Capps (CA-23) joined her colleagues in the Sustainable Energy and Environment Coalition (SEEC) on the floor of the House of Representatives urging the Speaker to immediately renew tax incentives for wind energy. The renewable energy Production Tax Credit (PTC) provides an income tax credit for each kilowatt-hour of electricity produced by a renewable energy source, including wind, and has been a key factor in the expansion of clean energy over the last decade.Unfortunately, the PTC is set to expire on December 31st of this year without Congressional action. A recent report from the U.S. Department of Energy highlighted the importance of extending the PTC to ensure growth in wind energy production and manufacturing.
Video of Capps’ floor statement is available here.
With precious few weeks left in the Congressional calendar, it’s time for the Speaker of the House to stop holding bipartisan legislation to extend tax incentives for wind energy hostage,” said Capps. “The country cannot afford to wait any longer to develop wind energy projects that will create jobs and move our country forward to a cleaner, healthier future.”
In May, Capps spoke about the PTC’s role in creating jobs on the Central Coast with employees at Infinity Wind Power of Santa Barbara. She has co-sponsored bipartisan legislation, the American Renewable Energy Production Tax Credit Extension Act of 2011 (H.R. 3307) to extend the PTC through 2016. She also wrote to the Speaker in May urging him to bring this legislation to a vote. Earlier this month, the Senate Finance Committee included extension of the PTC when reporting a bipartisan tax bill just before Congress adjourned for the August district work period, but the House has yet to act.
Feed-in Tariffs Do More for Wind at Less Cost to Ratepayers than RPS, Says German Agency
In a recent report, the German Renewable Energy Agency says that across Europe countries using feed-in tariffs develop more wind energy and pay less for it than countries using quota systems.
In North America, the quota model is known variously as Renewable Portfolio Standards (RPS) or Renewable Energy Standards.
The agency, the Agentur für Erneuerbare Energien, says that RPS-related tendering programs raise the payments for wind energy in Europe to as much as €0.15/kWh ($0.19/kWh) in Italy. In contrast, Germany, which uses a feed-in tariff, pays only €0.089/kWh ($0.11/kWh). Spain, which also uses a feed-in tariff, pays even less.
Germany operates the most wind energy capacity in Europe, 29,000 MW, Spain follows with nearly 22,000 MW.
Italian wind generation has fallen behind electricity generation from solar photovoltaics for the first time in an industrialized country. Italy uses feed-in tariffs to pay for solar energy instead of a trading system in green certificates, one of the hallmarks of a quota system.
Great Britain, which also uses a quota system for large-scale wind energy and has the best wind resources in Europe, pays 20% more for wind energy than Germany: €0.108/kWh ($0.135/kWh). More than half of German wind capacity is now installed in lower wind areas of mid-Germany and yet Germany still pays less than Great Britain for wind energy.
Payments for wind energy normally reflect the costs of wind energy and costs are substantially less where the wind resources are greater. Thus, it is unusual that Britain pays more for wind energy than Germany even though its wind resource is so much better.