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Last week, the Senate Finance Committee addressed several expiring tax provisions, including the production tax credit for wind energy. Although this provision has been extended multiple times with broad bipartisan support since 1992, it is one of several energy policies that have become unnecessarily politicized.
Fortunately, bipartisanship returned at the Finance Committee markup on April 3. Chairman Ron Wyden, D-Ore., and Sen. Charles E. Grassley, R-Iowa, who was the original author of the PTC, brought their colleagues together to support an extension through the end of next year. The full Senate and the House should pass that bill.
In addition, Congress should use the opportunity of a PTC extension to develop a viable long-term policy that would replace it. We must end the expire-and-extend cycle of the PTC. We must bring policy predictability to an industry that truly needs it. We must develop an alternative that would allow wind energy to continue to attract private investment in the years ahead.
Private investment in wind energy creates jobs and drives down the cost of energy. By the end of 2012, more than 80,000 Americans were employed as a direct result of private investment in wind energy, which has averaged $18 billion per year from 2008 through 2012. This investment has driven technology improvements that have reduced the cost of wind energy by more than 40 percent between 2009 and 2012.
Unfortunately, energy policy has become politicized by too much zero-sum thinking. Some say the shale gas revolution is bad for renewable energy. Others insist that renewable energy is bad for the nuclear business. Many are quick to criticize tax provisions related to one technology, such as the PTC, while being slow to acknowledge long-standing federal policies related to other technologies like oil and gas, solar, and nuclear energy. Investments and improvements in one technology must spell disaster for all the others, or so this thinking goes.
My company thinks very differently. Yes, we are the largest wind developer in the country. Yet we also operate one of the nation’s largest nuclear fleets. We are a major developer of utility-scale solar power and we purchase more natural gas than any other U.S. electric utility. We do not merely advocate for an “all-of-the-above” energy strategy — we live it. And from our perspective, nuclear plants in competitive markets are not challenged by wind energy but by low natural gas prices caused by the shale gas revolution. Blaming the wind industry for the challenges in the merchant nuclear business may be politically expedient, but it will not help any company or technology operate more successfully in a low natural gas price environment.
Our country should reject zero-sum thinking about energy technologies and develop a long-term alternative to all the single-fuel provisions in the tax code, including the PTC. The best way to do that is through broad and bipartisan tax reform. Tax reform could enable private investment in all energy technologies without picking winners and losers. Tax reform could eliminate inefficiencies and perverse incentives throughout the nearly 74,000 pages of the federal tax code, and end the repeated public flogging of one tax provision at a time.