Lankford, Cramer, Hoeven, Capito Push to Eliminate Wind Tax Credit
WASHINGTON, DC – Senators James Lankford (R-OK), Kevin Cramer (R-ND), John Hoeven (R-ND), and Shelley Moore Capito (R-WV) today introduced the Production Tax Credit (PTC) Elimination Act to completely phase out the federal production tax credit (PTC) for renewables. The bill specifies that any new projects would need to begin construction by the end of this year in order to qualify for the credit, as is the case under current law. Lankford discussed the need to end the PTC for renewables like wind in a Senate Energy and Natural Resources Committee hearing two weeks ago.
“The wind industry is strong and thriving in Oklahoma and around the nation. Wind energy producers no longer need the production tax credit to stay afloat,” said Lankford. “Wind is a great source of energy, but it does not need billions of dollars in subsidies to grow. The tax credit keeps getting extended each year despite Congress voting nearly six years ago that it should be phased out and eliminated. We are reintroducing this bill to tie up the loose ends of the credit at the end of this year for renewables and let these industries continue to successfully stand on their own.”
“The wind production tax credit is fundamentally unfair and has long outlived its expiration date,” said Cramer. “Our bill would help level the energy market by forcing this disruptive tax credit to finally expire.”
“As recent severe weather has clearly demonstrated, we need reliable baseload power sources that are available 24 hours a day, seven days a week, and are able to keep operating when power is needed most,” said Hoeven. “The wind industry is now commercially-viable, and the continued extension of the wind PTC further distorts energy markets away from critically-needed baseload power, like coal. That’s why we reached a bipartisan agreement in 2015 to phase out and end this tax credit, and our efforts are about ensuring Congress follows through on this commitment.”
“When the renewable energy production tax credit was implemented, it was intended by its authors to be a temporary support for a generation technology that was then too expensive to compete. Since then, we have seen renewables take greater market share, particularly wind energy production, and yet the tax incentive remains in effect. This creates an unfair advantage against other energy sources, such as power plants fueled with West Virginia coal and natural gas. I’m proud to join my colleagues again to reintroduce this legislation that would level the playing field within our electric markets. We should not be wasting more taxpayer dollars on a credit that completed its goal years ago,” said Capito.
The bill allows any project that previously qualified, or will qualify before the end of this year, to receive the value and duration of the tax credit that was in place at the time the project qualified. The bill would ultimately remove the PTC from the tax code once projects qualifying in 2021 finish receiving what is promised to them under current law to guard against future extensions of the credit and to provide certainty around when PTC-related tax expenditures will disappear. Lankford introduced similar legislation as a standalone bill in September 2020 and has offered the provision as an amendment to other previous legislation.
The PTC was established nearly three decades ago as part of the Energy Policy Act of 1992 and since its adoption, wind power has grown tremendously into a self-sustainable, multibillion-dollar industry. Wind generation has grown more than 3,000 percent, and capacity has spiked from 1,500 million megawatts in 1992 to over 110,000 megawatts recently. Meanwhile, the cost to taxpayers for the PTC for all qualified renewables has increased from $5.7 billion over the first five years of the credit to $19.5 billion over the 2019-2023 period.
Roughly 40 percent of Oklahoma’s entire electricity generation comes from wind energy. Wind power is an economically sustainable industry, and many states have production incentives in place through either renewable portfolio standards or renewable portfolio goals. Ultimately, the federal PTC is a redundancy that subsidizes policies that states are already pursuing through local resources and utility markets. The PTC also creates distortions in electricity markets. Wind producers’ negative bids are subsidy-driven and distort the market by sending incorrect price signals, which can harm the long-term reliability and cost effective operation of the utility.