Growth of wind energy industry in limbo
WORTHINGTON -- Minnesota Sen. Al Franken took the floor of the Senate this week to urge his fellow lawmakers to extend the renewable energy production tax credit -- legislation he had hoped would be included in a larger payroll tax bill the legislators compromised on Thursday night.
The tax credit, slated to expire on Dec. 31, provides 2.2 cents per kilowatt hour for electricity produced from wind turbines. The credit extension didn't make it into the payroll tax bill, however, and some now fear the credit won't come before lawmakers again until after November's election.
In his speech on the Senate floor Wednesday, Franken said thousands of jobs would be lost without a four-year extension of the renewable energy production tax credit. Minnesota ranks fifth in the nation in terms of installed wind capacity.
"If Congress lets the renewable energy production tax credit expire we will let down the 80,000 people working on wind farms and manufacturing facilities across the nation, and we may cost this country $10 billion in lost investments," he said. "America cannot afford to wait any longer. Congress must act now to extend this important measure for American business and manufacturing."
Franken urged Congress to pass the extension yet this month, saying expansion of the industry in 2013 hinges on the tax credit.
"If we don't extend the tax credit this month, it will be too late for the wind industry to build any turbines in 2013," he announced on the Senate floor. "If wind farms can't depend on the tax credit for 2013, they can't make plans to build for next year, which means they can't make orders to 400 manufacturing facilities across the country for parts."
Franken said 2012 production has already come to a halt because of the uncertainty of the tax credit.
"For the past few months, we've celebrated reports that the unemployment rate is improving. This is fantastic news. But we can't rest on our laurels yet, and we must be sure to enact smart policies that promote businesses and job growth in the parts of the economy that need it the most," Franken said. "The renewable energy tax credit does just that. It will promote growth in manufacturing and construction industries that deserve our help the most."
Nobles County Commissioner and Community Wind South proponent David Benson said he's disappointed Congress wasn't able to pass a four-year extension of the renewable energy production tax credit this week.
"This really is a bipartisan issue -- it's an issue for economic development and support for renewable energy everywhere, not just in the Midwest," Benson said Friday.
Offering tax credits and depletion allowances for new industries is nothing new in the U.S., and Benson said the tax credit has allowed the wind industry to make advancements over the past 15 to 20 years.
"(The tax credit) is what drives the industry," he said. "It's a disappointment if it's not going to be continued."
Benson said the Community Wind South project, which is planned in collaboration with Minwind Energy LLC in Luverne, is hoped to be producing energy by Oct. 1 -- before the credit expires.
Still, he said future projects will be hurt by the lost credit.
"It will stop the investment," Benson said. "People need some long-term assurances. We need to develop a long-term, comprehensive energy policy."
In his speech, Franken cited a recent study by Navigant Consulting that said failure to extend the tax credit could mean a 75 percent drop in construction of wind turbines in 2013. Along with that comes a loss of jobs -- estimated to go from 80,000 jobs in 2012 to 41,000 jobs in 2013. On the other hand, the report stated that a four-year extension would boost construction of wind farms by 25 percent and create 15,000 new construction and manufacturing jobs.
There are more than 400 wind energy-related manufacturing facilities in 43 states across the country, including 16 facilities in Minnesota that employ approximately 3,000 workers.
The tax credit was initially established in 1992, and has remained in place through numerous one- or two-year extensions. The extension set to expire at the end of this year was part of the 2009 American Recovery and Reinvestment Act.
In a call to Franken's office Friday afternoon, the senator vowed to continue pushing for the extension. As co-sponsor of the legislation, he said he's looking for the "first vehicle to attach it to" to generate a vote on the extension.