Can Wind Energy Survive Without Tax Subsidies?

By John Tarantino

Can the wind energy industry survive on its own? That's the question that a wind energy report answered when it released its findings on December 12th. Navigant consultants evaluated the two possible outcomes that would come from an expiring subsidy for the wind energy industry. The federal subsidy, called the production tax credit or PTC, would expire at the end of 2012. The study outlines two scenarios with one leading to a positive outcome for the wind energy industry while the other one poses a grim outlook with potentially thousands of jobs lost. Needless to say, the American Wind Energy Association is lobbying hard for congress to choose the first scenario, where thousands of jobs are saved or created by extending the tax credit until the end of 2016.

To assess the success or failure of the current PTC one could search around for various viewpoints and you’re likely to find pros and cons. The basic argument for extending the tax credit is in the numbers. Current projections for 2012 installations of wind power are estimated to be around 8GW or higher. The report also estimated that without the PTC extension, annual installations could drop to just 2 GW in 2013 and wind supported jobs could drop from 78,000 in 2012 to 41,000 in 2013. On the other hand, a 4-year extension is estimated to sustain annual installations of between 8-10 GW every year until 2016 and wind-supported jobs could grow to 95,000.

Larger wind companies like Vestas and Iberdrola have created actual manufacturing and service jobs in the United States. It seems that if the government is in favor of weaning off of the fossil fuel industry, they should be looking at cutting subsidies to those guys while simultaneously boosting subsidies for renewable energy. European countries and the rest of the world are setting their sights high by racing to become leaders in clean technology industry clusters including renewable energy. Germany, a major industrialized country, is already producing more than 16% of its energy from renewable sources like wind energy. In addition, its federal Environment Agency already has studied switching to 100% renewable energy by 2050.

Numbers aside, it’s important to keep the wind energy industry supported while it makes the gains necessary to compete with coal, oil, and natural gas. Pulling the plug on the PTC would not only seriously decimate wind energy jobs in the United States, it could also strengthen the grip the fossil fuel industry has in the US market. In addition to losing ground on making advancements in renewable energy, in our globalized economy, the United States could fall further behind while emerging markets gain even more of a competitive edge.

Am I for the extension of the PTC? You bet I am. Supporting an industry that reduces environmental issues, health problems, and reliance on foreign imports ought to be a no brainer. It takes time and new technologies and innovations to foster a successful new industry. As William Shakespeare said “to climb steep hills requires slow pace at first” and that is exactly the happenings of the wind energy industry. If the industry is cut at the throat, it will never have a chance to thrive.