NCPA - National Center for Policy Analysis

Tax Credit in Doubt, Wind Power Industry Is Withering

September 25, 2012

The wind turbine industry is struggling to sell its product, which, along with political setbacks, is forcing companies to scale back their operations and layoff employees, says the New York Times.

  • The wind industry receives a tax break of $1 billion a year.
  • However, the subsidy has become a wedge issue in the election, dooming any chances of an extension and at the very least delaying it.
  • Furthermore, there has been reduced demand for electricity from wind energy, competition from cheap natural gas, and other Asian competitors.
  • As a result, 10,000 jobs have disappeared since 2008, when the industry employed about 85,000 people.

The impacts of layoffs are not isolated to one area of the country or the world, but are being felt all across the industry. For example:

  • Siemens recently announced it would lay off 945 workers in Kansas, Iowa and Florida.
  • Katana Summit, a tower manufacturer, said it would shut down its entire operation if it could not find a buyer.
  • Vestas, the world's largest turbine manufacturer, laid off 1,400 workers globally in addition to the 2,300 layoffs announced this year.
  • Clipper Windpower, a manufacturer located in Iowa, is cutting its employment numbers down from 550 to 376.

As it stands, the tax credit subsidizes wind power by 2.2 cents a kilowatt-hour, which has prompted many people to invest in wind power. However, opponents of the subsidy argue that the industry has had long enough to stand on its own feet and doesn't need the government's support anymore. And with wind representing such a small percentage of total energy generation, the taxpayers are not getting enough of a return on their investment.

Source: Diane Cardwell, "Tax Credit in Doubt, Wind Power Industry Is Withering," New York Times, September 20, 2012.


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