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Can President Obama Renew the Wind Energy Tax Credit Before it Expires?
For the past several months, the American wind energy industry has been at a near standstill, as political uncertainty clouded the industry’s future. On December 31, a federal tax credit that makes wind power more cost effective for developers is set to expire. Mitt Romney was outspoken in his opposition to renewing the tax credit, and it was widely believed that if he were to win the election it would be a death knell for the wind energy industry. But even with President Obama‘s reelection for a second term, renewing the tax credit still isn’t a sure thing.
The wind energy tax credit, which dates back to 1992, is a 2.2-cent tax credit that wind energy companies receive for every kilowatt hour of energy they produce. That might not sound like much, but it can cut costs by as much as one-third for wind energy companies. The wind energy sector represents a significant number of green jobs in this country; last year, the industry employed as many as 75,000 people, including 30,000 in the manufacturing sector. Uncertainty over the political climate has hurt the industry, though. The German company Siemens, one of the biggest wind energy companies in the world, cut more than 600 jobs in the US this fall, and several other companies across the country have had to follow suit.
For many Republicans, the wind energy tax credit is another example of the government meddling in the private sector, favoring certain green energy projects over fossil fuel production. In September, 47 Republican congressmen in the U.S. House of Representatives drafted a letter to Speaker John Boehner, urging him to eliminate the tax credit. “The Obama administration has poured billions into subsidizing its favored green energy sources,” said the letter. “Twenty years of subsidizing wind is more than enough.” But support for the tax credit cuts across party lines; wind energy is a big job creator in many rural Republican districts, and as a result it has support from several key Republicans.
President Obama campaigned on his support for the continuation of the tax credit. The president traveled to states with strong wind production, like Iowa, maintaining his support for the subsidy. In his victory speech, Obama notably mentioned climate change. “We want our children to live in an America … that isn’t threatened by the destructive power of a warming planet,” he told supporters in Chicago. But in reality, it’s up to Congress to renew the tax credit in the lame-duck session, before in expires on New Year’s Day.
Lead photo via White House Flickr Photostream
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