Renewable energy advocates are raising alarms that the House Republican tax plan released Thursday would sharply reduce a tax credit that has driven the rapid deployment of wind and solar power over the past two years.
The tax bill includes a provision that would remove an inflation adjustment from the renewable energy production tax credit, likely dropping it from 2.3 cents per kilowatt hour for tax year 2016 to 1.5 cents per kilowatt hour.
Eliminating the inflation adjustment would generate nearly $12.3 billion in increased revenues over the next 10 years, according to the Joint Committee on Taxation analysis. The additional revenue would be generated even though the diminished credit would be extended to additional sources of green energy.
“Despite comments to the contrary, this proposal reneges on the tax reform deal that was already agreed to, and would impose a retroactive tax hike on an entire industry,” said Tom Kiernan, CEO of the American Wind Energy Association, or AWEA. “The House proposal would pull the rug out from under 100,000 U.S. wind workers and 500 American factories, including some of the fastest growing jobs in the country.”
Kiernan added that AWEA expects “members of the House and Senate to oppose any proposal that fails to honor that commitment, and we will fight hard to see that wind energy continues to work for America.”
The proposal is unlikely to gather much support in the Senate, where Iowa Republican Charles E. Grassley has already vowed that the wind credit will remain untouched.
The wind production tax credit received a five-year extension at the end of 2015 as part of a deal that enabled the end of the crude oil export ban. As part of that agreement, the production credit was set to slowly phase out by the end of 2020. AWEA estimated the new tax plan puts at risk more than $50 billion in wind-related, planned investment.
The tax plan does, however, extend credits to a host of so-called orphaned alternative renewable technologies like geothermal, small-scale wind and fuel cells. It also includes modifications to an advanced nuclear tax credit that should help sustain construction of the over-budget Vogtle nuclear plant in Georgia.
The bill removes some credits for marginal oil and gas wells, as well as the enhanced oil recovery credit, which the oil industry appears not to have a problem with.