Senator Lankford Pushes To Permanently Phase Out Energy Tax Credit
Lankford: “Wind is a good energy source, but it does not need additional federal dollars.”
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WASHINGTON, DC – Senator James Lankford (R-OK) today delivered a speech on the Senate floor on the Energy Policy Modernization Act of 2016 and his two amendments: one to completely phase out the Production Tax Credit (PTC) and another to reform the Land and Water Conservation Fund (LWCF).
Yesterday, Lankford introduced an amendment to completely end federal renewable energy production tax credits by the end of 2031, making 2019 the last year a project could qualify for a credit. Lankford also introduced an amendment to reform the Land Water Conservation Fund to allot funding for the performance of needed maintenance on federal lands.
Mr. President, I have two different amendments that are coming to the floor in the moments ahead that deal with the energy bill. One deals with the land and water conservation fund. This bill does a permanent extension of the land and water conservation fund. My question has been the monies that have been allocated for the land and water conservation fund to be able to purchase properties, are we also allocating monies to be able to maintain those properties? Currently, in the current existence of this bill, there is some money allocated to it in some future way, but I have a request, as much money as we allocate to dealing with purchasing new properties we should also focus on maintaining what we already have because we have billions of dollars in maintenance backlog. Right now one of the worst conservation that could happen in parts of the country to land is put it into federal trust, because it’s not being taken care of once it actually goes into federal trust. But that’s not the prime issue I want to get a chance to talk about right now.
Oklahoma is an all of the above energy state. Truly. Oil, gas, coal, wind, geothermal, hydroelectric, solar. We actively use all of those platforms in a very diverse energy economy. A tremendous amount of wind energy is produced in Oklahoma, used in Oklahoma and exported to other states around us. It's a very important energy source for us and it’s been incredibly beneficial and is an important part of our portfolio of a diverse energy platform. We have a challenge to deal with our tax policy. Just a few weeks ago, this Congress in the House and the Senate passed a change in the way the wind production tax credit has been handled. Just as a quick review to this body, the wind production tax credit was put in place in 1992. It was a short-term tax credit to give a little bit of help to a brand-new wind energy and several other diverse energy portfolios. It is especially targeted at wind to help a brand-new energy source get started.
24 years later this temporary tax credit is still sitting there. As of a few weeks ago it was changed. It was changed so that in 2015, in 2016, the full tax credit would still be there. But starting in 2017 that tax credit would drop to 80 percent of what it is now. In 2018 it would drop to 60 percent, and in 2019 it would drop to 40 percent. In 2020, it's left undefined. Now, I heard multiple individuals say this is a phase out of the production tax credit, a phase out. That's something that many of us have pursued for many years to say how do we get out of this perpetual cycle? The problem is it wasn’t a phase out. It was a phase down of the production tax credit, because in 2020, the PTC is left undefined.
Now, for most, they would say well, that's not a problem, it just goes away, it's left undefined. The problem is ten times in the past 24 years, the production tax credit has been undefined for a future year, assuming it would go to zero. And ten times this Congress has gone back and retroactively put it back into place. Ten times. So to say in 2020, we're just going to leave it undefined and it goes away is not a true phase out. That’s a phase down, and it leaves it in the tax code. My amendment is simple. This body agreed a few weeks ago that we would phase out the production tax credit. The best way to do that is to remove that part from the tax code in the year 2020 and that it would be eliminated and would actually go away. Why would I encourage that? Well, I would encourage that for several reasons. It provides certainty in the industry. Several individuals that I talked to in the industry say they need certainty in their planning. This would help in certainty in planning. It is assumed right now that it goes away in 2020.
I would like to make sure that everyone understands it really does go away in 2020. It's eliminated from the tax code. This is keeping everyone honest, based on what they said they wanted to do, that what we actually do is eliminate that production tax credit that year. It provides that great certainty that industry really needs to know for their own planning, for their investment, for their outside capital resources and how that money comes in. It's also because these extensions are extremely costly. The extension that was just done in December by this Congress will cost $17 billion over the window. $17 billion. May I remind us, that we just had an extended argument over how we were going to fund the transportation bill last year when we needed to find $13 billion a year to fund transportation, and we just did a production tax credit for wind that is $17 billion.
If we're going to deal with a lot of our national priorities, I'm great with having wind in our portfolio, but this is not a new industry that continues to need support, and to provide the clarity that's needed to make sure that we actually end this tax credit when we said we were going to end this tax credit. Let’s remove it from the tax code in 2020 and make sure it goes away. And the only way it can be renewed at that point is to go through the normal tax process, create a new tax and actually do it in the full sunlight, rather than to actually just say we’re going to do a tiny extension again. Wind has increased generation dramatically over the past 24 years, and I'm glad. It's a good source. In our nation, since 1992, wind generation has increased 3,000 percent. It's well developed. It's economically stable. It's pulling its own weight in the system, and we should allow it to continue to fly on its own. It's not as if wind goes away if we don’t provide a tax credit.
It's interesting to me in 2014, we face something very similar to this. In 2014, it was one of those years the tax credit was to go away and it was to not exist anymore, and it had expired. The problem was at the very end of 2014, Congress did a retroactive renewal of the production tax credit for the year 2014 in the last days of December. So the whole year had gone by without the tax credits. At the very last days of 2014, Congress once again renewed the production tax credit and did it retroactively. That year in 2014, the wind association notes that that year in 2014, there was $12 billion of private investment into wind that year. Be it the tax credit was only applied in the final days. Wind is a good energy source, but it does not need additional federal dollars to be able to compete in this market. We have made that decision.
Now it's time that we actually both trust and verify, that we actually reach out to this last year when we said, as a body, wind energy would not get a production tax credit anymore, that we actually reach out to that year and remove it from the tax credit and verify for ourselves no, it's not going to happen. One last thing, Mr. President. I came into this body five years ago serving in the House of Representatives and for the four years that I served in the House of Representatives, I remember distinctly the very first year in 2011 when I sat down with some folks from the wind energy, and I said how much more time do you need for the production tax credit because wind continues to increase its efficiency, and they said it is becoming much more efficient. If we had three more years, we could make it. This was in 2011. So the discussion was by doing a phase down in 2011 with just three more years and then it would go away.
In 2014, I was in a hearing in the House of Representatives, and I asked those same individuals how much more time do you need for a phase down and a phase out of the production tax credits? And the same person said to me if I just had four more years, we could phase this out. I am concerned, and I believe rightfully so, in 2019, this body will have lobbyists come and say if we just have a few more years of the PTC extension, we can make it just fine. I would argue they're doing very well as an industry, and I'm glad they are. Let's make it clear the PTC ends in 2020 and does not return. With that, Mr. President, I yield back.
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