U.S. Reps. Dave Reichert, R-Wash., and Earl Blumenauer, D-Ore., members of the tax-writing House Committee on Ways and Means, have introduced the American Renewable Energy Production Tax Credit Extension Act (H.R.3307), which would extend the tax incentive for the production of wind power, geothermal power, hydropower and some other forms of renewable energy through 2016.
The bill proposes a four-year extension of the existing production tax credit (PTC) for wind, biomass, geothermal, small irrigation, landfill gas, trash and hydropower. It was created by the Energy Policy Act of 1992 and has frequently been extended in year-end packages of expiring tax provisions, as well as in the Energy Policy Act of 2005.
The current incentive is set to expire next year for wind and in 2013 for other renewable energy sources. Advocates note that historically, at least six to eight months before the tax credit expires, financial lenders hesitate in providing capital for projects because of the uncertainty created by the pending expiration of the credit, thus stalling projects from coming online.
The rush to complete projects as the PTC nears expiration also adds costs, resulting in higher electricity prices, the congressmen noted.
"Extending this long-standing tax incentive will leverage private investment to bring proven energy projects online, bolster domestic manufacturing and reduce electricity costs for businesses and families," Reichert said. "Renewable energy resources play an important and increasing role in America's total energy supply and reducing our reliance on foreign energy resources controlled by hostile nations. The certainty this bipartisan bill will provide can further spur growth in this vital sector, increase economic development and create jobs."
American Wind Energy Association CEO Denise Bode expressed her support for the legislation, noting that it would benefit not only the wind industry, but also the nation's workforce and overall economy.
‘The recent stability of the production tax credit has provided the foundation of wind energy's transformation of a new manufacturing sector based on American ingenuity," she said. "Over the last six years, U.S. domestic production of wind turbine components has grown 12-fold to more than 400 facilities in 43 states. Extending the PTC will keep growing U.S. wind energy manufacturing jobs, rather than losing them to other countries.’