For Wind Tax Credit, Same Fight, Different Congress

Sun Set behind wind turbine
The Senate Finance Committee yesterday approved a measure to revive a tax break for the wind power industry – even though many speculated a Republican Congress would bury the Production Tax Credit for good.

By a vote of 23-3, an extension of the credit, which gives tax breaks to renewable energy companies – wind power, mostly – breezed through the Senate Finance Committee as part of a broader package that would extend expired tax provisions for two years. Chairman Orrin Hatch (R-Utah), who has remained neutral on the PTC, called the extenders package the result of “a lot of bipartisan work and cooperation.”

Voting “no,” Republican Sens. Mike Enzi (Wyo.), Pat Toomey (Pa.) and Dan Coats (Ind.) all withdrew amendments to kill the PTC. “It’s apparently obvious that support for what Sen. Toomey’s amendment would do is not going to pass,” Coats said during the markup.

For energy policy veterans, it’s a familiar fight that’s moved one step closer to a familiar outcome: short-term extension of a reliably controversial tax credit. “I don’t think the dynamics have really changed at all, except that you have more Republicans in the House and Senate,” said Oren Cass, a former top policy advisor for Mitt Romney. “[The PTC] is going to face the same opposition that it has faced since 2012,” said Cass, now a scholar at the Manhattan Institute.

Since its inception in 1992, the PTC has lapsed several times, including each of the last three years. This time, supporters hope the credit will be allowed to enjoy a two-year extension through the end of 2016. “This is a big step in the right direction,” said Tom Kiernan, CEO of the American Wind Energy Association, in a statement on the approval of the extenders bill.

The policy enjoys support from most Democrats and some Republicans. More than four-fifths of wind farms are located in red districts, according to AWEA, potentially offering some Republicans, like Sens. John Thune (S.D.) and Chuck Grassley (Iowa), political cover for supporting what Cass called “the only green program that the right has had much success in killing.”

“The real battle will be with the House,” said Chris Warren, a communications director for the American Energy Alliance, a conservative energy advocacy group that opposes the PTC. Though Warren predicted increased opposition compared with last year, he agreed the PTC was in a similar political landscape.

If there’s one thing that could tilt the debate in favor of those opposing the credits, it’s mounting opposition to the Obama administration’s climate plan – particularly, rules on power plant emissions due to be finalized later this summer.

The possibility of legislators being perceived as forwarding the administration’s climate agenda by supporting the PTC might convince Republicans who have supported the idea in the past to abandon that position, Warren said. “Supporting the subsidy works against efforts to reign in EPA’s overreach.”

Warren suggested that the concept of subsiding green energy in general has left a bad taste in voters’ mouths, but Morning Consult polling suggests that might not be the case. Seventy percent of Americans support tax breaks for renewable energy, including 62 percent of Republicans, according to a June poll.

A February survey also found that voters favor federal policies that promote the deployment of renewable energy over traditional fossil fuel energy sources by a ratio greater than 2:1.

In 2014, the fight over tax extenders didn’t resolve itself until the last day of the year. By taking up tax extenders earlier this year, Hatch hopes Congress will move to extend the provisions quickly, clearing up space to consider broader tax reform legislation.

“One of our goals in tax reform should be to create more permanence in our tax system so that individuals, families, and businesses don’t have to wonder whether the tax code is going to change from year to year,” he said.

The June poll was conducted from June 26 through June 27 among a national sample of 1,976 voters, with a margin of error of plus or minus 2 percentage points. The February poll was conducted from Jan. 30 through Feb. 1 among a sample of 1,684 voters, with a margin of error of plus or minus 2.4 percentage points.

Morning Consult