NCPA - National Center for Policy Analysis

Wind Tax Credit May be Gone

March 24, 2004

The nation's wind power industry has relied on a federal tax credit which has been in place since 1993. But the credit, which expired in December 2003 before a new energy bill was passed, may cripple wind power developers if it's not renewed, say observers.

The tax credit was designed to help the infant industry by lowering development costs. Currently:

  • Wind power comprises less than one percent of national energy output, producing about 16.7 billion kilowatt hours (enough for 1.6 million households).
  • The tax credit gives project owners 1.8 cents for every kilowatt-hour produced over ten years.
  • Without the subsidy, Texas, the second-largest producer of wind power, is expected to cut up to one-third of its 2,000 jobs in the industry.

Congress is still debating over components of the energy bill. It has been currently cut from $31 million to $16 million, but some lawmakers would like to see it eventually slashed to $8 million. Among the bill's sticking points is a provision to protect oil companies from litigation over MTBE, a gasoline additive.

Meanwhile, some legislatures, particularly in major wind power states, are calling for an extension of the tax credit for up to 10 years. Wind power advocates argue that since other major resources are subsidized, they should continue to be as well.

Source: Sudeep Reddy, "Wind Resistance," Dallas Morning News, March 2, 2004.

 

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