Grassley Urges House To Support Wind Energy Tax Credit

by Leroy Baker, Tax-News.com, New York

12 February 2008

Senator Chuck Grassley wants to make sure the House of Representatives doesn’t repeat the failed effort it made last year to limit the wind energy production tax credit, in an energy tax bill that members will consider this week.

Grassley was able to successfully push back on the House legislation in 2007 and establish a record of Senate support for the tax policy, and last Friday he asked Congressman Bruce Braley of Iowa to weigh in with House leaders against another attempt to scale back the wind energy tax credit.

In a letter, Grassley warned that there is not much time for members of the Iowa delegation to make their views known, as it has just been made clear that the House will take up an energy tax package this week. Braley introduced legislation last week to extend the wind energy production tax credit for seven years. Grassley was the author of the legislation that created the credit in 1992, and has led congressional efforts to repeatedly extend this tax incentive, along with tax incentives for ethanol, biomass and biodiesel.

Braley’s Clean Energy Investment Act of 2008 would extend the Wind Energy Production Tax Credit for seven years, providing wind energy producers with the incentive to expand production of wind energy.

“Iowa has the potential to be the wind energy capital of the Midwest,” Braley stated, continuing: “Wind energy is good for the economy, good for the environment, and good for farmers. That’s why we need to do more to encourage the development of Iowa’s wind energy industry."

He added: “My bill will help boost the wind energy industry in Iowa by extending the wind energy tax credit for seven years. This will create stability and predictability in the wind energy marketplace so wind energy producers can invest more freely in production and the latest technology.”

First established in 1992, the Wind Energy Production Tax Credit allows a credit against income taxes for producers of wind energy. The credit is currently set at 2 cents per kilowatt hour. (A coal plant can produce electricity at about 5.4 cents per kWh, and a wind farm at about 7.6 cents per kWh. Thus, a 2 cent per kWh credit helps make wind competitive with conventional production.) Without Congressional action, the Wind Energy Production Tax Credit will expire on January 1, 2009.

Historically, the credit has been extended in one- and two-year increments. This approach, however, makes it difficult for producers to predict the nature of the wind energy marketplace since there is no guarantee that Congress will extend the tax credit.

Braley’s Clean Energy Investment Act of 2008 would extend the Wind Energy Production Tax Credit for seven years, to January 1, 2016. This would provide producers and investors with a more stable market, which should spur greater investment in wind energy.

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