PTC reaches important milestone: U.S. Senate Finance Committee agrees to extension

On Tuesday, the U.S. Senate Finance Committee voted for the extension of a financial package including the PTC and ITC in addition to nearly 50 other tax schemes by a large majority. If the package is approved by all instances, this would mean an extension of the tax cuts for the renewable sector until the end of 2016.

PTC and ITC enable renewable energy projects important tax benefits for a specified period as long as the projects start construction in time of duration of the PTC. The regulations helped a great deal in the past to give the wind industry the momentum it needed to start flourishing in the US, since it managed to cut the construction costs by more than half. Meanwhile, the country hit No 1 in yearly wind energy addition – and even overtook the Chinese. Nevertheless, the extension of the PTC hangs in the balance every year again and again. Each decision was preceded by serious political battles as strong lobby opponents voiced their objections against giving the industry any more benefits.

The American Wind Energy Association AWEA welcomed the 23-3 vote for the package, making it pass through the Senate Finance Committee supported by both parties. “This is a big step in the right direction,” said Tom Kiernan, CEO of the AWEA. „We applaud the committee’s vote because it recognizes that the vast majority of American voters support these policies and want them continued. We urge the full Senate and the House of Representatives to follow the Senate Finance Committee’s bipartisan lead, and quickly pass this tax extenders package, which will continue to grow American jobs and heavy manufacturing, and support rural economic growth.“

What will happen when the PTC will not be extended, was experienced by the industry numerous times: At the end of 2012 the PTC had expired without an extension which almost lead to a collapse of the entire industry in the following year. The installation of new wind farms dropped by 92 percent, resulting in an immediate loss of 30,000 jobs in 2013. After Congress finally prolonged the PTC, 23,000 jobs were again created by the industry, so that at the end of 2014 73,000 people were employed in the US wind industry.

Mostly rural communities benfit from the wind industry. (Picture by AWEA)

Rural communities benefit from tax revenues by the wind farms, but also local service providers, schools and public health care are affected. More than 98 percent of all wind farms are located on private land, bringing the landowners an additional lease income of $ 195 million per year.

Even the private sector recognizes the benefits of wind energy and therefore supports the extension of the tax benefits. Google, Intel, Amazon, IKEA – all of them have already invested in wind energy projects this year – and there is no end in sight: Earlier this week, Hewlett-Packard announced its first investment in wind energy. According to AWEA, more than 100 billion dollars of private investment have flown into wind power since 2008, whereby an entirely new domestic industry represents more than 500 companies with subsidiaries in 43 US states.

After the approval of the Senate Finance Committee the next step for the package would be the approval of Congress – consisting of the House of Representatives and the Senate – before President Obama can sign the agreement. Associations and companies already urge Congress to come to an agreement as quickly as possible to prevent further delay like in recent years. The National Association of Manufacturers emphasized to The Hill on Tuesday, they “urged Congress to act as soon as possible to extend these provisions for as long as possible, to provide manufacturers with certainty to help with business planning decisions until comprehensive tax reform is enacted into law.”

The United States have been struggling for some time to achieve a comprehensive tax reform which would abolish the temporary tax packages definitively. So far, however, there hasn't been an agreement which means the uncertainty for the industry concerning the PTC will stay for years to come.

The US Congress. The future of the PTC will be decided here. (Picture: „Uscapitolindaylight“ by Kevin McCoy. Licensed by CC BY-SA 2.0 via Wikimedia Commons)