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March 28, 2012 / Mike Piskur

Congressional gridlock causes problems for the wind energy industry

The future of wind energy in the U.S. is at stake, if Congress fails to extend the federal renewable energy production tax credit (PTC), which is set to expire at the end of this year. This tax credit has contributed to the wind energy industry’s rapid growth in recent years.

Earlier this month, the U.S. Senate failed to pass an amendment to the chamber’s transportation bill, proposed by Michigan’s U.S. Sen. Debbie Stabenow (D), that would have extended a number of green sector programs that have already expired or are set to do so soon. (Illinois U.S. Sen. Dick Durbin (D) voted for the amendment, recovering U.S. Sen. Mark Kirk (R) did not vote on the matter.) Meanwhile, a bipartisan House bill that would extend the PTC by four years has been in committee since November 2011 and was not included in last month’s payroll tax bill as was expected. President Barack Obama has called on Congress to pass an extension on the PTC. Congress’s continued inaction could lead to its expiration, threatening one of Illinois’ strongest sectors, thousands of jobs, and billions of dollars in revenue statewide.

The wind energy industry experienced robust growth even as the economy stagnated and high unemployment lingered in Illinois and across the United States. According to the American Wind Energy Association (AWEA), Illinois was second only to California in new wind energy installations in 2011, and is the nation’s fourth largest wind power producer. The Chicago area is home to 14 wind developers or manufacturers and hundreds of other wind industry companies are located in Illinois. Overall, the state’s wind energy manufacturing sector employs over 1,000 workers.

The current PTC provides an income tax credit for utility-scale wind energy generation. The tax credit is meant to incentivize development of new wind turbines, but is only extended one or two years at a time and has occasionally lapsed since beginning in 1992. This erratic policy creates a high level of uncertainty for wind energy developers whose projects generally take several years to move from planning to completion.

Peter Kelley of AWEA said, “Industrywide we are seeing a slowdown in orders for towers and turbines after 2012 that is rippling down the supply chain and the big issue is the lack of certainty around the production tax credit that gives a favorable low tax rate to renewable energy.” AWEA estimates that without the PTC extension, the wind industry would lose 37,000 jobs and $10 billion in total investment in 2013.

Earlier this month, Illinois Governor Pat Quinn announced the Rock Island Clean Line, a $1.7 billion wind power project expected to create 1,450 construction jobs in the state and spur $7 billion in new renewable energy projects. Rock Island Clean Line will construct approximately 500 miles of high voltage transmission cable to carry wind energy from Iowa, Minnesota, Nebraska, and South Dakota to Illinois and other neighboring states. Southwire of Flora, Illinois will supply the transmission cable, and construction should commence in 2014.

Quinn said of the project, “Just in this recovery period in Illinois, we’ve created almost 20,000 new manufacturing jobs– that’s made in Illinois and made in America. We can manufacture with any country in the world; we’re the best in the world. We’ve got to really understand that we’ve got excellent men and women who know how to get things done right when it comes to manufacturing, and this project is a huge investment in Illinois manufacturing.”

A 2011 study by Illinois State University found that the state’s 17 largest wind farms created approximately 600 permanent jobs and more than 13,000 construction jobs. These systems produce $10.3 million in payments to landowners, $22.2 million in local property tax revenue each year, and more than $4 billion in total economic benefits.

The state added 692 Megawatts of wind energy in 2011, and another 615 Megawatts are under construction. Rock Island Clean Line and other such projects would pave the way for new clean energy development that lacks adequate transmission infrastructure.

Mounting budget deficits and calls to end all energy subsidies conflict with the need to create jobs. According to AWEA CEO Denise Bode, “The stakes for early passage of the PTC could not be clearer. Congress must act. With every day that goes by, layoffs are occurring and further job losses and even plant closings will accelerate with each month we near expiration in December. Economic studies have shown that Congressional inaction on the PTC could kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment. We are committed to finding any opportunity for an early extension and we are working with Members of Congress to make that a reality.”

This article originally appeared in Progress Illinois on March 26, 2012.

One Comment

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  1. energy saving bulbs / Apr 11 2012 12:37

    Thanks for the post, keep us updated!

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