Although some political leaders have suggested Congress won't take on a stalled tax extenders bill until after the November elections, a coalition of 302 groups is calling for action now, not later.
The coalition, representing companies and associations from the renewable energy, energy efficiency and biofuels industries, has issued a joint letter to the heads of Congress. The letter asks for the immediate passage of the EXPIRE Act, legislation that would extend over 50 lapsed tax credits, including several that benefit the coalition members' respective sectors. For example, the bill includes a two-year extension of the production tax credit (PTC) and wind developers' option to choose an investment tax credit in lieu of the PTC.
The Senate Finance Committee had passed the tax extenders package in April, but the full Senate later halted progress on the legislation amid a partisan feud regarding amendments. In its letter, the coalition warns that prolonged inaction – and the resultant uncertainty – threatens clean energy growth in the U.S.
"Businesses and investors need stable, predictable federal tax policy to create jobs, invest capital and deploy pollution-reducing energy technologies," the coalition writes. "Allowing the lapsed clean energy tax provisions to languish undermines investor confidence and jeopardizes continued economic and environmental benefits."
During a telephone press conference hosted by the American Wind Energy Association (AWEA), several representatives from the coalition explained why their groups signed the letter.
Frances Beinecke, president of the Natural Resources Defense Council, said the public overwhelmingly backs continued federal support for clean energy. In fact, she cited recent polling that showed nearly 70% favor spending more government money on developing wind and solar power.
In addition, Beinecke said renewing tax credits is essential to help the U.S. meet its clean energy goals. That includes the Environmental Protection Agency's (EPA) recently released Clean Power Plan, which proposes to set carbon pollution limits on new power plants.
"Renewable energy and energy efficiency stand at the center of that [EPA] plan," said Beinecke. "Clean energy is already putting Americans to work and improving the air we breathe, but we can and must do more: The EXPIRE Act is central to that."
Not surprisingly, a representative from the wind industry noted the importance of the PTC to the sector. Terry Royer – CEO of Winergy and president of Winergy Drive Systems, an Illinois-based wind turbine gearbox manufacturer – said the PTC helps drive down the cost of wind power and helps create jobs.
Royer recounted the effects, both good and bad, that the policy has had on Winergy. When the company started up in 2001, it had only 11 workers, but he said stable tax policy between 2008 and 2012 created huge growth. In fact, the company grew to 400 workers in that period.
"But then when the legislation of the PTC expired at [the end of 2012], it created a tremendous amount of uncertainty, and investors weren't willing to invest in wind farms," explained Royer. As a result, Winergy's employment dropped to less than half of what it was in the peak of 2012.
However, he said that the last PTC extension, which Congress passed in the beginning of 2013, helped fuel the wind industry again. According to AWEA statistics, over 12 GW of new wind projects were under construction at the end of last year – though 2013 still saw a 92% drop in new installed capacity due to the last-minute extension.
"My request is that Congress acts now," Royer said. "Do the right thing for the economy, do the right thing for the American energy buyer and the industry, and pass this legislation today."
Stu Dalheim, vice president of shareholder advocacy at mutual fund provider Calvert Investments, also deemed the PTC and other renewable energy incentives important to provide certainty for investments. He said, "Unstable and unequal policy is a challenge to progress."
Rob Walther, director of federal affairs at ethanol producer POET, said that without an extension of some biofuel incentives in the EXPIRE Act, the company and others in the biofuels industry will have difficulty finding financial backing. POET is launching a new cellulosic ethanol plant in Iowa this year and certainly wants to build more.
"This technology hasn't been done before, and we really need to build multiple plants in order to lower the risk profiles that capital markets associate with our plant technology, construction and operations," explained Walther. "These are the things that make firms hesitant to invest. But in order to build more plants, we need project capital, so it's a catch-22."
He said the tax incentives help biofuel companies ease investors' concerns. "Biofuels made up two percent of the fuels market in 2005. Today, we are 10 percent. That doesn't happen without certainty," Walther said. "And without certainty, well, we cannot continue to invest in this country. A company like POET, which is wholly American, will begin to look outside our borders.
"So,’ he continued, ‘the question that we're facing as a company is whether, the next time we announce a plant, we draft our press release in English or we have to first think about drafting it in Portuguese or Chinese. The answer to that question will be largely dependent on stable tax policy in the U.S."
Furthermore, Mark Wagner, vice president of government relations at technology and industrial controls company Johnson Controls, said energy efficiency incentives in the EXPIRE Act greatly help business.Â
"Tax deductions can sometimes make or break where a project goes and really tip the scales in terms of making a project's cashflow," said Wagner, who is also chairman of the Business Council for Sustainable Energy. "These have been very important tools for us."
Other signers of the coalition letter include a range of major players in the U.S. economy, including Sherwin Williams, MidAmerican Energy and the American Farm Bureau Federation.
To read the full letter and see all of the companies and associations that signed it, click here.
