Congress has historically preferred to implement energy policy through a series of tax incentives rather than mandates. Although the efficacy of those different approaches are subject to debate, it is clear that the lack of a consistent energy policy hinders private investment, causes the loss of American jobs, and stymies business growth in the sector. Further, it is essential for Congress to provide certainty about the long-term availability of an incentive. One such tax policy that demonstrates the impact of uncertainty is the Production Tax Credit (PTC).

This tax credit has been wildly successful, helping to fuel 400 wind manufacturing facilities in 43 states and twelve-fold growth in domestic manufacturing of wind turbine components in the past six years alone. However, the credit could expire this year for the fourth time in two decades.

This uncertainty has put off investors and led to boom-and-bust cycles in the industry: Wind installations have declined by 73 to 93 percent in years without a PTC. Because of the long timelines (wind projects can take nine to 16 months from groundbreaking to power generation), investors seeking new wind projects must look two to three years into the future to decide whether the costs and benefits warrant investment. As we’ve seen in the past, investors are wary of supporting new projects if the availability of the tax credit is uncertain. With the PTC’s future once again in doubt, factories are already seeing a sharp decline in new orders for 2013—when the credit will have expired—and layoffs have begun.

Transparency, longevity, and consistency—TLC—are critical signals to investors and essential factors to increase American jobs, support businesses, and create renewable power.

While we dither, other countries are moving ahead, providing strong policy signals and incentivizing the growth of the clean energy sector in their countries. Even oil-rich Saudi Arabia understands the opportunity and has announced its intention to become the “kingdom of sustainable energy.” It also has set an ambitious renewable-energy goal.

As a result of our indecision, America could again lose its leadership position in a sector that we helped invent, innovate, and engineer. Why turn our back on a slice of the global economy that has experienced growth of 600 percent (excluding R&D) since 2004?

Congress should act now to extend the PTC rather than wait for an already over-packed lame-duck session after the 2012 election or a new legislative session in 2013. It would hardly be controversial. The PTC enjoys widespread, bipartisan support from groups as diverse as the National Governors Association, the National Association of Manufacturers, the American Farm Bureau Federation, environmentalists, labor unions, and others. Members of the House and Senate have indicated their agreement that the PTC should be renewed.

Intermittent policies hurt the ability of the United States to consistently compete and turn clean energy innovation into manufacturing, deployment, and export opportunities. Congress should act now—not wait—to provide investors with the assurance that they need to fuel American investment, job, and business growth and to assure our global leadership in a rapidly emerging new sector.

(These comments were submitted by Tom Windram, Partner at McGladrey’s Washington National Tax Practice.)

The current state of energy incentive provisions in the Internal Revenue Code has become a morass of confusing and overlapping provisions. In the absence of an overarching energy tax policy, this is simply the result over many years of different bills being proposed, passed and modified to provide incentives or stimulus to many different energy sources that have developed over time.

The ideal process as part of a serious tax reform effort would be to approach our energy industry on a comprehensive basis rather than in an ad hoc manner so that one policy could be applied in a uniform way. However, with the current state of affairs in Washington, that is unlikely to happen. What we can hope for, at least, is a realistic review of expiring tax provisions--not as a group, but each one individually, on its merits. Incentives that aren’t working or are no longer needed could be allowed to expire and incentives that are working well and creating jobs could be extended.

Now to the specific questions at hand:

It seems likely that Congress will extend the PTC for wind energy. As industry advocates have pointed out, failure to extend the PTC for wind farms would result in the loss of 30,000 jobs.

While there are certain energy tax incentives going to the largest integrated oil companies, who generate substantial profits, there are a substantial number of smaller, independent domestic producers that rely heavily on these tax incentives in order to defray the cost of exploration for new oil sources. Accordingly, one may conclude that Congress may revisit these incentives and consider eliminating certain tax breaks for the largest oil companies as part of the base broadening that is needed to offset a reduction in the top corporate tax rate.

It can certainly be argued that all energy resources should receive the same tax treatment. However; one could also argue that emerging energy technologies are likely to need stronger incentives to help fund development projects until the industry can sustain itself, whereas more mature energy sources may not need to continue to receive the same level of incentives, as they have already achieved economies of scale. In order to provide effective incentives for start-up ventures, Congress may consider moving away from tax credits that are subject to the general business credit limitation and instead consider refundable credits or cash grants, which are more efficient incentives.

This article represents the views of the author or authors only, and does not necessarily represent the views or professional advice of McGladrey.

Disclaimer

The information contained herein is general in nature and based on authorities that are subject to change. McGladrey LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. McGladrey LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

It's time for Congress to cross a partisan divide and forge a common sense extension of the federal Production Tax Credit (PTC), which has a track record of success. The on again and off again approach to the PTC in the past decade didn't work, it cost jobs, deterred economic investment and stalled U.S. wind power development while other countries grew. Over the past five years, however, wind projects have driven billions of dollars in private investment while creating 75,000 direct jobs. This development is good for the environment, good for job creation and good for economic growth.

In the Midwest wind belt, Iowa is #2 in the nation for installed wind power, Illinois was #2 in the nation for new wind power installed in 2011, Indiana wind power is being developed where experts doubted it would happen, Minnesota is a wind leader, and North Dakota and South Dakota have huge untapped wind power resources.

The uncertainty over the PTC extension is drying up investment and America is losing jobs. GE, our country's largest wind turbine manufacturer, has said publicly that reduced demand due to PTC uncertainty may lead the company to shed several of its component plants. Overall, the harmful impacts on wind power supply chain manufacturers would be considerable.

There really aren't Democratic wind farms or Republican wind turbines. Extending the wind power PTC is a common sense policy for job creation, economic growth, cleaner air and more homegrown American clean energy supply. Congress should get this done very soon.

With an apparent opportunity for larger corporate tax reform on the horizon, now is a good time to consider an appropriate role for energy taxation in the coming years. In doing so, it may be useful to take a cross-border perspective.

I recently participated in the 2012 U.N. Conference on Sustainable Development ("Rio+20"), where PwC took part in capstone events for the Green Economies Dialogue – a series of in-depth discussions across the globe focused on how to cultivate and maintain greener growth and jobs. A consistent theme of the Dialogue was business's desire for clearer, more stable policy frameworks. These would enable businesses to better plan their longer-term capital investments and make decisions about deploying renewable energy and resource-efficiency technologies. Getting beyond distinctions about "green jobs," multinational businesses are taking the lead in making every sector of our economy greener. But they need to be able to evaluate their returns on green investments over the long term.

In that context, the most desirable attribute for energy tax policy right now is predictability. As Congress balances trade-offs among energy subsectors, the desire to lower overall corporate tax rates and the need to close federal budget deficits, lawmakers should strive for policies that can be maintained consistently throughout the 10-year budget window. For example, several other nations and our own wind industry have endured boom-and-bust cycles triggered by abrupt changes to, or time limits on, incentives. The instability and cyclical risk that result makes it difficult to encourage and attract needed long-term investments by businesses.

The U.S. can be an attractive destination for both domestic and inbound investment in a wide variety of renewable-energy and resource-efficiency technologies. But matching the policy horizon to the capital investment time horizon becomes key to unlocking that potential.

Matt Haskins is a principal with PwC, where he leads PwC’s Sustainable Business Solutions tax practice, focusing on renewable energy, energy efficiency investments and tradable environmental rights.

As Congress looks to reform tax policy, they should also recognize the value of targeted, time-limited and performance-based incentives in speeding innovation that serves our national interest.

A most- glaring need for innovation is our dependence on imported oil. According to a Wall Street Journal piece published on June 27, the Brookings Institute reports that the U.S. spends $50 billion a year protecting oil shipments. Although foreign oil purchases are expected to decline in the coming years, U.S. government forecasters still predict the U.S. will purchase about 2.5 million barrels of petroleum a day by 2020 from the Middle East, Africa and Europe and 860,000 barrels a day from the Persian Gulf. With more than 20 plug-in light duty vehicle models coming to the U.S. market by the end of 2012, there is a real opportunity to break the stranglehold of oil on transportation and our nation.

By reinforcing private investment, tax incentives can help emerging technologies, such as electric drive, overcome initial market hurdles. To expand the use of electricity in transportation, tax incentives can speed the deployment of electric drive infrastructure and vehicles beyond light duty applications by reducing first-cost challenges for consumers and manufacturers.

The return on taxpayer investment is a nation less dependent on foreign oil and one with a greater competitive position in the global marketplace.

I can highlight two specific incentives that help consumers and businesses invest in oil alternatives and that can help grow the industry and the jobs associated with it. The IRS Code Section 30C, the alternative fuel vehicle refueling property credit (or the “infrastructure credit”) is a technology-neutral incentive for installation of infrastructure in homes and businesses to support electric drive and other alternative fuel vehicle technologies, including natural gas, hydrogen fuel cell, and propane and vehicles powered by biofuels. However, the credit expired at the end of last year – just as plug-in vehicles were entering the market.

Another area in which the tax code can reinforce private investment with public benefits is in electric drive trucks. Medium and heavy duty trucks consume more than 52 billion gallons of fuel each year. The increased efficiency of battery and hybrid trucks reduces businesses’ fuel costs, which benefits consumers throughout the economy. These advanced trucks are, for now, more expensive than the mature technologies in the market. Updating the now-expired Section 30B credit, as has been proposed in bipartisan legislation, will keep our energy dollars at home and will grow employment in the advanced vehicle industry.

Section 30B and 30C are just two examples of how the tax code can advance the national interest of reducing our dependence on oil while simultaneously growing jobs. By ensuring that important tax incentives will be in the right place at the right time, the federal government can leverage private investment in electric drive infrastructure and fully capitalize on growing electric vehicle adoption. Taxpayers will see dividends in reduced spending on petroleum and increased energy and economic security.

(These comments were submitted by Chase Huntley, Clean Energy Policy Advisor at The Wilderness Society.)

For generations American tax payers have helped subsidize the fossil fuel industry in an effort to guarantee that we have an adequate supply of energy to run our country. This antiquated policy has steadily grown to give the oil and gas industry tax breaks each year that total $4 billion, even at a time when the industry is turning profits of over $100 billion. Since 1992, Congress has had the opportunity to ensure that future incentives be aimed at clean energy sources to level the playing field and allow innovation and new technology to drive our future energy development, including wind and solar. If Congress fails to extend the Production Tax Credit (PTC) they are sending a clear signal that they are picking winners and losers in the energy sector by putting their support behind dirty energy subsidies while turning their back on clean energy and the jobs the wind industry provides across the country.

We must do more to continue what we started and allow new sustainable energy industries, which have the deck stacked against them in the current marketplace, to flourish. Any new tax policy should include long term solutions that promote clean energy sources.

According to the American Wind Energy Association, over the past five years, while the wind industry has benefitted from a PTC, the industry has seen a robust average annual growth rate of 35%. Equally impressive, electricity from wind power capacity in the U.S. supplies electricity equivalent to that used by over 10 million American homes. There are now 38 states with utility-scale wind turbines. And, there are 75,000 jobs supported by the wind industry across all 50 states, including manufacturing jobs at over 400 facilities. Without the tax benefits received through the PTC, those 75,000 jobs, and the jobs that will be created going forward, are at risk.

America cannot afford to continue spending $4billion dollars on limited resources like oil and natural gas, yet not invest in abundant and permanent sources of energy like wind and solar. Investment in future energy sources has been a constant throughout United States history, going back to the days of President Thomas Jefferson [link to: http://www.dblinvestors.com/documents/What-Would-Jefferson-Do-Final-Version.pdf], who levied a tariff on imported British coal. To encourage and incentivize new technologies is a long held American tradition. Any major tax reform has to include addressing our future energy policy, not a narrow focus on oil and gas. We cannot continue lavish subsidies on profitable and highly polluting industries, while leaving promising, clean technologies of the future to fend for themselves. Congress simply must renew the PTC for wind to ensure a smart energy policy that looks to the future and so that the wind industry will continue to flourish.

The looming expiration of the production tax credit is already taking its toll on the wind industry and threatening its substantial benefits to our economy. Lawmakers must prioritize the renewal of this vital provision to sustain the success of this growing industry.

Wind power is a resounding victory of American manufacturing. The sector has seen a 53 percent increase in wind installations since 2011, completing one of its best quarters ever. 60 percent of wind turbine components are now domestically produced, compared to just 25 percent in 2005. Private investments in wind energy are helping lead the way in this growth, averaging $17 billion annually over the last four years alone.

The rise of wind energy is directly tied to the production tax credit, the industry’s biggest source of federal financial support. By incentivizing investment in wind energy, the PTC encourages innovation in clean, sustainable technologies and creates localized jobs that cannot be outsourced. For this reason, the tax credit has strong bipartisan backing – the House bill has 99 cosponsors, including 22 Republicans, and has earned the support of both President Obama and the U.S. Chamber of Commerce.

Should the PTC expire, the effects on the wind industry would be devastating. Already foreign wind manufacturers are shifting their investments overseas, citing uncertainty over tax credits and the lack of a federal energy policy behind their decisions. Local companies are also abandoning plans for new projects and being forced to cut jobs; the Energy Information Administration currently forecasts no wind projects for 2013.

Without the PTC in place, the growth we’ve seen would disappear, and thousands of American jobs would be lost. The last time this tax credit was allowed to lapse, wind investments fell by 77 percent – and the horizon now looks similarly bleak. Economic consulting firm Navigant estimates that not renewing the PTC would cut private investment in the industry by nearly two thirds and kill 37,000 American jobs within the next year. Keeping it in place, on the other hand, would keep the wind industry on track to create 54,000 new jobs in the next four years and support 500,000 jobs by 2030.

Today, the need to generate these local jobs is more critical than ever. The PTC is set to expire on December 31, but uncertainty over its future is already stalling what is now the second fastest-growing energy source in the country. Congress must make the renewal of this tax credit a key priority. A failure to do so will cripple the creation of new American jobs and our push toward a clean energy future.

In recent years, we have seen an overwhelming spending binge for energy. In 2010 alone, we saw $16.3 billion in tax expenditures, primarily benefiting the nebulous, politically favored “green technologies,” allowing Washington to pick winners and losers in energy. Now, we’re running the risk of such high levels of spending becoming the “new normal,” with predictable camps in Washington bemoaning any cuts that keep them from picking winners in energy.

The Joint Committee on Taxation lists 30 distinct energy-specific tax provisions that form a messy patchwork of incentives without any discernible long-term plan or purpose. As budget and tax reform debates force us to make decisions on which provisions to keep, we can expect to hear little more than an ideological tangle over fossil versus renewable spending. The questions that really demand answers are: What is the purpose of tax expenditures? What role do they play in implementing a strategic energy strategy that increases the reliability of energy sources, restores and improves infrastructure, pushes private investment into the marketplace, and minimizes waste to hold costs down?

At present, disparate fuels and technologies receive dissimilar tax treatment. This muddies the marketplace and prioritizes investment based upon the availability of government expenditures – not what the market indicates are the most important or useful energy technologies. More than that, tax breaks are too often extended piecemeal for short periods. The resulting boom-and-bust cycles are a predictable extension of our convoluted and confused energy strategy.

Federal tax policy is also complicated by policy decisions at the state level. For instance, Renewable Portfolio Standards and variations of the policy, present in 38 states, require providers to source a specified and increasing portion of the electricity supply from renewable sources. Projects designed to meet these state requirements benefit from large federal tax incentives, meaning individual state policies are subsidized by all tax payers in all states.

Finally, offering tax incentives generally keeps energy prices below market, particularly for electricity. With artificially low energy prices, individual customers have minimal incentive to engage in conservation or efficiency measures. Without private investment in conservation, government provides pricey tax incentives for that, too.

The current conflict over whether to extend the production tax credit for wind is a great example of the unintended consequences of the existing tax code. Undoubtedly the credit has been successful in encouraging investment in new wind generation capacity; an extension of even one year will cost us about $1.4 billion. At the same time, current capital investments fail to support the grid improvements and storage technologies necessary to help new wind capacity compete with baseload fossil power. This is an incomplete approach to bringing wind power (and other intermittent sources) on-line in significant amounts, and is an unfortunately overlooked reflection of the short-sighted energy strategy built in to our tax code.

In the absence of a proactive federal policy, tax expenditures and direct government spending are the most comprehensive and powerful set of signals we have to shape capital investments in energy. The relevance of these expenditures compels a serious evaluation of what our energy priorities are. Political expedience has given us a complicated and sometimes counter-productive tax code; let’s use tax reform to advance a sensible domestic energy agenda.

At Growth Energy, we are focused on putting fuel choices in the hands of the consumer and championing the next generation of biofuels that will help decrease our dependence on foreign oil. We understand that with choice comes competition, and we welcome it. The ethanol industry has continually advocated for an open market where fuels compete on a level playing field. And we have done our part in advocating for a better tax policy. In 2009, Growth Energy called for an end to the Volumetric Ethanol Excise Tax Credit (VEETC). Our industry recognized that it was time to move in a different direction and to find ways to make alternative fuels accessible to consumers.

Increasing the accessibility of renewable fuels, such as ethanol reduces our dependence on foreign oil and creates economic opportunity and jobs right here in America that cannot be outsourced. Plus as gas prices still remain well over three dollars a gallon, drivers deserve a choice in how they fuel their vehicle. They should be able to choose between a more affordable, cleaner burning, high octane, homegrown, American made ethanol over the more expensive foreign oil alternative.

We believe that a top priority should be a tax incentive to install Flex Fuel pumps. Currently the Alternative Fuel Vehicle Refueling Property tax incentive helps fuel retailers defray the cost of installing equipment to dispense alternative fuels, including ethanol, natural gas, propane, electricity, biodiesel and hydrogen. Unfortunately, Flex Fuel pumps are ineligible for the full credit because the technology was not in use when the tax incentive was enacted in 2005. It is important to note, that this tax incentive goes directly to the retailers, providing the consumer real savings and a true choice of how they fuel up at the pump. By investing in infrastructure, we are investing in our future and diminishing our need for foreign oil.

Flex Fuel pumps give drivers a choice by offering a range of ethanol blends.Over the last five years, ethanol has enjoyed a price advantage over regulargasoline, with ethanol currently trading at wholesale a dollar a gallon cheaper today. Every dropof ethanol that drivers put in their car lowers the price at the pump.And Flex Fuel pumps don’t just benefit drivers – they also give adistinct business advantage to fuel retailers because it allows them tooffer a more affordable motor fuel. Recent survey results, with 10 percent of the Flex Fuelpump retail population represented, show:

• 81 percent see a price advantage in selling ethanol blends;
• 60 percent advertise the price advantage of ethanol; and
• 48 percent found that overall store traffic improved after installing Flex Fuel pumps.

To ensure a fair playing field, we believe this important tax credit should be extended and modified to give Flex Fuel pumps the full value of the tax incentive. As Congress considers tax legislation later this year, we think providing retailers an incentive to invest in infrastructure and giving consumers a choice at the pump should be a top priority.

Our industry has led the way in the first generation of biofuels and is poised to do so for the next generation, but a level of certainty must be established for investments and innovation. Similar to the Research and Development tax credit, the cellulosic ethanol tax credit is integral to bringing the next generation of biofuels to the marketplace. If we fail to invest in or future, investors will sit on the sidelines and the promise of alternative fuels will never be realized.

If we fail to act, 40 years from now, we will be in the same position we finds ourselves in today. If we do not provide the certainty and foster the innovation, we will continue to find ourselves at the mercy of foreign oil. Alternative fuels are better for our environment, create jobs and economic opportunities, as well as provide a meaningful contribution to our nation’s energy security. As we continue to seek a diversified energy portfolio, it is imperative Congress provides the same incentives to the ethanol industry that other energy producers receive.

IPAA has long urged that our nation needs a common-sense, predictable tax code in order to encourage American businesses to invest in our economy and create the American jobs necessary for a vibrant society. However, measures that eliminate the successful tax provisions vital to a thriving U.S. energy sector are foolish and short-sighted.

America’s oil and natural gas producers, who drill 95% of wells in this country, do not receive government handouts to operate. They are the “wildcatters,” entrepreneurs who are willing to risk it all to strike oil and natural gas. Not only do independents endure risk, they also reinvest their capital at a rate of 150 percent into new exploration projects. They certainly do not depend on the federal government to subsidize them – not in the past and not now.

Intangible drilling costs (IDCs) and percentage depletion are two necessary, job-creating provisions for the oil and natural gas industry. Contrary to the misleading rhetoric of fossil fuel opponents, these tax provisions are neither subsidies nor handouts. IDCs are typical business deductions comparable to those that manufacturing and agricultural industries receive. It allows producers to write off certain equipment, which does not have value in itself, in the year that costs are incurred. Eliminating IDCs would account for a 25-30% hit on producers’ budgets, which would result in less investment and fewer jobs.

Percentage depletion accounts for the diminishing value of an energy resource, and only applies to small, independent companies. Without percentage depletion, America’s marginal wells, with an average output of just over 2 barrels per day, would not be worthwhile to operate. Although small in output, they are large in numbers – marginal wells make up 80% of America’s oil and natural gas wells. Losing them would be a devastating blow to our nation’s energy supply.

There are lawmakers who argue that these historic provisions won’t be necessary as long as we cut the corporate tax rate. However, that’s not the case because members are small business with an average of only 12 employees. These companies do not file as corporations but as “pass-through entities.” A tax reform plan which cuts the corporate rate while eliminating these provisions will actually be a tax increase for these small businesses.

Simplifying the tax code is necessary – but we must carefully consider the implications on our nation’s energy supply. A tax consensus that denies and eliminates the critical role intangible drilling costs and percentage depletion play would jeopardize American jobs and economic growth.

Our current energy policies at the local, state and federal level create distortions in the marketplace that limit diversity, stifle innovation, restrict consumer choice, and oftentimes result even more bad policy in an attempt to correct an outdated approach. In particular, the current energy tax policy landscape is a complicated patchwork of provisions that does not mesh with the needs of businesses in the marketplace, nor address the energy needs of our country. We are long overdue for a re-evaluation and modernization of the energy tax code.

As discussed in a recent post, our unhealthy obsession with the price of energy—rather than the full cost—results in energy choices and policies that can exacerbate our susceptibility to price spikes and, in turn, further feed this obsession. Public backlash to price spikes and subsequent calls to end all energy subsidies illustrate the same shortsighted, reactionary, and politically opportunistic thinking that got us into this problem in the first place.

In this new era of budget austerity, policymakers are increasingly (and rightfully) sensitive to the burden on taxpayers. However, too often the debate becomes mired in the politics of which programs to cut and which to keep and focuses on individual tax policies in a vacuum. The goal of tax reform should not be to decrease government spending alone but also to make the government a better steward of the taxpayer money. Energy policy is a key example of how tax policy can be used as an effective tool to help decrease the overall cost to the taxpayer of running the government.

Existing energy policies force taxpayers to cover the hidden costs of the energy we currently use, thus increasing the cost of running the government. For example, when consumers fill up their gas tanks, they do not pay for the national security costs of protecting oil supply chains. When consumers pay their electric bills, they do not pay for the public health costs of over-reliance on old power generation technologies. Instead, they pay these costs in other ways: the tab for these ‘hidden costs’ adds to the national deficit and ultimately the national debt. Tax policies aimed at increasing domestic energy diversity and advanced energy alternatives can play a role in decreasing these hidden costs over the long term by lessening our dependence on foreign oil and older, dirtier generation technologies. Ignoring hidden costs does not make them go away. It simply shifts them onto an already over-burdened tax base and shifts the responsibility to future generations through the debt. We need to make a change.

As always, moving toward a solution requires a balance of long-term goals with short-term realities. The short-term reality is that there are real consequences for thousands of hard-working Americans if Congress abruptly ends all energy tax incentives or allows some credits to expire at the end of this year. Moreover, we must move away from the current paradigm of “permanent for some, temporary for others” in order to create a more level playing field in the marketplace. Recognizing these issues, here is one possible two-step approach to address the current situation that could achieve this balance.

Step 1: Extend and End: Existing tax incentives should be put on a medium to long-term (e.g. 5-10 year) glide path to being turned off. This includes an extension of soon-to-expire credits like the production tax credit (PTC) for wind and an eventual ‘sunset’ of permanent incentives such as those for the oil and gas industries. This will lessen the short-term shock to the economy, level the playing field for advanced energy technologies, and allow businesses and investors the certainty they need to plan accordingly for life without these existing tax incentives, while finally bringing an end to many credits that are long past their justifiable life.

Step 2: Redefine and Reform: Congress has fallen into a cycle of granting new tax incentives to make up for market distortions created by old tax incentives. We must redefine the role of energy tax policy and reform the way future energy tax provisions are crafted. While this is a longer conversation than this post can tackle, recent testimony addresses this topic offers greater detail. Simply put, future credits should focus on addressing issues vital to the economic success and security of our country, including increasing energy diversity, decreasing dependence on foreign oil, and creating a better return on investment for the American taxpayer. As such, any new incentives should be limited, metric driven and aim to drive nascent technologies closer to commercial scale by filling voids that the private sector is currently unwilling to fill.

We have a golden opportunity to recreate our energy tax code in a way that creates a better business environment for advanced energy technologies while also creating a better return on investment for the taxpayer. We cannot afford to continue to let politics of the time negatively influence our energy policy for years to come.

As part of an "all of the above" energy strategy, Congress should continue its long-standing support for a broad array of clean energy tax incentives to spur investment, create jobs and diversify our nation's energy portfolio. While Congress considers comprehensive tax reform proposals, the federal commitment should be maintained by acting as soon as possible to extend expiring, and expired measures.

Tax incentives are an important part of our energy policy and have been as effective as any state or federal energy policy mechanism in helping to ensure an adequate, reliable, safe, clean supply of energy resources.

Tax incentives can be effective, efficient tools to encourage private sector investment, reduce costs for consumers and industry, spur technological innovation and enhance the viability and deployment of a variety of clean energy options.

Further, smart federal tax policy has assisted the natural gas, renewable energy and energy efficiency sectors in adding hundreds of thousands of jobs to the U.S. economy. By way of example, the shale gas revolution that is providing benefits across the United States was supported, in part, by federal tax incentives.

Continued support for clean energy incentives is in the best interest of American taxpayers and supports a well-reasoned national energy strategy that improves our economic conditions at home and strengthens America’s competitiveness in the global marketplace. The Business Council for Sustainable Energy will engage in discussions on how to structure comprehensive tax reform as Congress moves legislation in this or a future Congress. However, until comprehensive tax reform is enacted, the Council strongly urges Congress to extend expiring and expired clean energy tax incentives.

I generally agree with AWEA's commentary on this blog, and that's true of today's entry as well. But I'm disappointed that the American Wind Energy Association isn't looking at the bigger picture.

While the PTC is advantageous for land-based wind, and should be extended, it will not yet benefit offshore wind development. Due to the infancy of the offshore wind industry and the lengthy federal permitting process, that industry would most benefit from incentivized investment, and therefore the Investment Tax Credit (ITC), which also expires at the end of this year. Extension of the ITC would send the necessary signals to the financial markets that offshore wind farms can be developed and financed. With their high capital costs and long lead times, offshore wind farms will be extremely difficult, if not impossible, to finance without the continued applicability of the ITC. Therefore, it is important that when we urge Congress to extend wind tax incentives, we include tax incentives that are advantageous for all wind. Extending the ITC does not add a significant amount to the price tag.

The U.S. has incredible offshore wind potential that can create hundreds of thousands of new jobs, reduce our reliance on fossil fuels, and make our nation more secure, and we haven’t even begun to tap into it. According to the DOE, the total gross offshore wind potential of the U.S. is over 4,000 GW, which is about four times the generating capacity of the current U.S. electric power system. This vast resource is a huge job-creator, too. For example, achieving the President’s goal of developing 54 GW of offshore wind by 2030 would create about 164,000 new jobs. These are jobs in manufacturing and transportation, construction and installation, and operations and maintenance, all of which can help to jump-start our struggling economy.

Beyond being inclusive of all wind, I also have been continually disappointed that clean energy leaders have been mum about the elephant in the room – that is the continued multi-billion dollar tax breaks going to their competition – the oil and gas industry. I’ve certainly commented before, even on this very blog, about the need to cut those subsidies, but if the clean energy industry wants a turn at benefiting from tax breaks, it would help for their trade groups to speak up about the need to level the playing field by ending tax breaks to an established and extremely profitable industry. It's not rocket science. We should support companies that need help and will solve our problems, not those that are profiting massively and creating them. While Oceana supports AWEA and it’s message, I would personally like to see them and other clean energy leaders speak up for the bigger picture.

America’s tax code is holding the country back from a more productive and prosperous economic future. Third Way has long advocated for an updated comprehensive tax policy to promote innovation and job creation, help domestic industries compete in the global market, and draw business and investment from international competitors. This vision for general tax policy reform easily applies to energy, as well. To leverage our energy tax policy to the nation’s greatest advantage, we need to look at both the short and long term strategies simultaneously. The short term is pretty easy, so let’s take care of the long-term first. As Mom would say, you finish the brussels sprouts before you get dessert.

The tax system should essentially level the playing field in the energy market. And while the ultimate goal should be tax fairness among energy industries, there should be an “on-ramp” that allows innovative technologies to break into an energy market that requires large sums of capital, has long lead times for development and deployment, and is often dominated by well capitalized incumbents. Providing tax incentives for energy technologies that could help America meet its economic or environmental goals is one way of creating this type of on-ramp. We need, however, to make sure that such benefits do not become a permanent means for companies to do business. Any tax incentive should have a duration that is long enough to provide certainty and attract private investment, but short enough to avoid a scenario in which the government is propping up a technology that may never be able to stand on its own feet. Finding this balance of support from the government and performance from the industry will be a challenge, but will also allow U.S. firms and technologies to remain at the forefront of global energy markets.

Now, on to dessert. Our short term energy tax policy strategy should simply be to start laying the groundwork for a fuel-blind energy policy. A good start would be to open up the master limited partnership (MLP) tax status to all energy producers, in addition to fossil fuel producers who currently enjoy the option of using it. The MLP Parity Act introduced by Sen. Chris Coons (D-DE) and Sen. Jerry Moran (R-KS) would provide fairness to other energy industries, and unlock billions of dollars in private investment in the U.S. Beyond this and other small tweaks, we simply need to maintain current energy tax incentives until a more comprehensive and permanent reform is decided upon. Doing otherwise would disrupt and deter investment. Just look at the effect of tax policy uncertainty on the American wind industry. With extension of the PTC in question, wind turbine manufacturing is grinding to a halt, putting 37,500 jobs and the future of profitable U.S. industries at risk. America can’t afford this, especially now. So until we figure out our long-term strategy for leveling the playing field while maintaining technology on-ramps, it is imperative that we continue our current support for promising energy technologies.

Wind power is one of our most sustainable energy sources. In the absence of more comprehensive energy and/or climate policy, that would incorporate an effective price signal to drive increased energy efficiency and renewables, production tax credits have proven to be valuable incentives, playing an important role in reducing our reliance on fossil-fuels and, thus, our carbon footprint. However, the constant uncertainty in their future availability has also proven to be a significant impediment to decisive long term investments in an effective supply chain. The impact of production tax credits in the U.S. would be significantly amplified if they conformed to a predictable multi-year schedule, set to achieve an established renewable energy mix, and wound down to mirror improving economics.

Owens Corning is a company with a seven decade long research and development history in the composites industry. The company invented, collaborated on, and commercialized many of the fiberglass products, and their applications, saving or producing energy today. Among those key applications are wind turbine blades which, with the use of our patented, high performing glass and fabrics, are now made lighter, stronger and more efficient in operation.

The manufacturing of products and realted processes for the wind energy market create and sustain U.S. jobs. Owens Corning facilities, such as those in Maine and Texas, benefit from a robust and predictable wind energy market. In addition, hundreds of talented scientists, engineers and support staff, primarily located at our Science and Technology Center in Ohio, are constantly developing innovative technologies to improve applications like wind turbines.

Tax credits have proven to be a sound foundation through which to launch new, cleaner and sustainable technologies. These should not be permanent or ongoing investments to sustain or subsidize a developed market. However, the present wind energy production tax credits have proven their value in encouraging investments in wind farms and, as importantly, investments in the capital intense and long lead time manufacturing processes throughout the wind turbine supply chain.

In considering energy and tax reform, policy makers should include all issues and industries in the mix. In addition, focus should be given to issues, such as increased access to our plentiful domestic resources, which help generate jobs, economic investment and overall government revenue. There is certainly value in a lower rate and a more simple approach to calculating a corporation’s income tax, but care must be given to the impact of cash flow and cost recovery.

The production of energy requires significant capital and long lead times. The ability to recover those costs to invest in new projects is necessary for companies to prosper and supply the energy our economy needs to grow. Further, efforts to define “winners and losers” or separate out certain industry players will only detract from the goal of a simplified tax code and could impose inappropriate restrictions that limit America’s tremendous energy potential.

At a recent Senate Finance Committee hearing on energy and tax policy, Senator Olympia Snowe (R-ME) provided a compelling economic rationale for why it’s so essential for Congress to renew energy tax credits.

She cited the case of a struggling Maine family that was having difficulty paying their winter heating bills. When their struggles attracted attention, there was an outpouring of assistance. One Maine company, in fact, generously volunteered to pay for the cost of insulating their home. The price tag was about the same as the family’s wintertime utility bill.

Yet the added insulation instantly reduced the family’s energy bills by some 45 percent! Those savings, the Senator pointed out, will continue next winter – and the winter after that, and so on, for many years to come.

That family in Maine is not alone. There are tens of millions of American homeowners who could save the family pocketbook big money each month by bringing their insulation levels up to current codes and tapping other energy efficient measures. They’d not only be saving money; they’d be saving energy for the country and advancing the cause of American energy independence!

Americans have heard about the energy crisis for our entire lives. If asked to suggest solutions, many of us would cite offshore oil drilling, or windmill farms, or electric cars, or nuclear power. It may well be that they're all part of the solution to our energy woes. But each is costly, some carry significant risks, and others unduly depend upon uncertain technologies.

The simplest and cleanest source of energy - conservation through greater efficiency - may not be nearly as "exciting" - but it's entirely proven. Enormous gains are still possible by taking simple steps such as properly insulating our homes and businesses.

There are more than 45 million under-insulated homes in America. Senator Snowe’s example, therefore, could be repeated across the country, reducing demand for electricity and fossil fuels and their associated costs. All of this could be done – today! – without having to wait on new technology.

Since 2004, the U.S. has invested a modest amount, some $250 million a year, in tax credits to encourage insulation of new homes (the tax code provision known as 45L), upgrade the energy efficiency of existing homes (25C), and improve the efficiency of commercial buildings (179D). Compared to the dollars devoted to supporting wind farms, or oil exploration, or the development of solar technology, this investment is miniscule. Studies show that these tax provisions have encouraged thousands of Americans to invest in insulation and lower their energy bills.

Concrete conservation gains are being made today – with the potential for huge advances in the future. Unfortunately, with relatively little notice, the two provisions (45L ad 25C) encouraging energy savings in new and existing homes were allowed to expire at the end of 2011.

This is a political season; there is no shortage of big and controversial ideas being tossed about. There is little debate, however, that tax incentives to increase energy conservation really do work.

Wouldn’t it be a nice surprise if, even amid a hyper-partisan climate, a consensus could be reached to extend these critical provisions and get energy efficiency back on track?

Kate Offringa is the CEO and President of CNAIMA, the Council of the North American Insulation Manufacturers Association.

Some tough political decisions must be made by the end of 2012 if America is to avoid falling off the well-popularized “fiscal cliff.” Most economists believe the expiration of the Bush tax cuts and the attendant mandatory reductions in federal spending would push our weak economy back into recession. In addition, Congress must decide whether to extend the current production tax credit for wind power beyond December 31. Most likely, the split Congress will kick the can down the road by temporarily extending both the Bush tax cuts and the PTC for wind energy

Next year, presumably, Congress will get down to the business of seriously discussing tax reform and ‘revenue enhancement’ (though no politician will dare to use the term “tax increase). In terms of revenue enhancement, the oil and gas industry is likely to be the first target. Why? Because for several years both politicians and the general public have bought into the misconception that oil and gas companies earn obscene profits and, therefore, it’s time for them to pay their “fair share” of taxes.

At present, the oil and gas industry receives about $2.8 billion in tax preferences. These are the same types of “deductions” that are available to most other manufacturing and mining industries. Simply put, deductions from gross revenue allow businesses to write off legitimate expenses incurred in the production of that revenue to ensure that taxes are levied on net income. In return, federal and state governments have collected $1.2 trillion in excise and sales tax on petroleum products and more than $400 billion in corporate income taxes since 1981. What’s more, though the industry’s profits are high, the rate of return on investment is about average for all manufacturing and mining industries.

Government “handouts,” also known as subsidies, incentives, or protections, occur when Uncle Sam collects taxpayer dollars and redistributes them according to political agendas or the national interest. When it comes to energy handouts, the vast majority are targeted at renewables such as wind, solar, and biofuels. Tax breaks and direct subsidies are used not only to promote research and development of these technologies, but they’re also used to hold down prices so these energy sources can compete with fossil fuels. The federal government is currently paying out $11.3 billion annually in renewable subsidies, though only about five percent of domestic energy is produced by these sources. By contrast, fossil fuels supply 78 percent of the nation’s energy.

When discussing fiscal reform, should all energy resources receive roughly the same tax treatment? After nearly 20 years and more than $100 billion of direct federal subsidies to renewables, the answer is clearly yes. Alternate energy should be subjected to the same tax treatment as the oil and gas industry. Only then will we know if they are able to stand the market test.

Conventional wisdom says that tax reform (and tax credits) are crucial to the development of renewable energy industries because wind, solar and advanced biofuels are not yet ready to compete in the marketplace with oil and gas. This construct frames the renewable energy industry as the high cost alternative to fossil fuels, which in turn badly handicaps any effort to build bipartisan support for supportive tax policy because “propping up new industries” is a job hazard for politicians in today's political climate.

As long as this mythical construct survives -- that, in essence, current energy markets are free and tax breaks for new technologies are special favors handed out to those not ready to stand on their own two feet -- the renewable energy industry will continue to be tax disadvantaged and any tax reform debate that emerges in Congress will be about reforming (i.e. cutting) our stuff and leaving in place the permanent tax advantages offered to oil and gas.

In theory, comprehensive tax reform would address any inequity that exists between industries. But in order for this vision to become a reality, the renewable energy industry must do its part to talk more openly about what the inequities actually are and how they tilt the playing field in favor of incumbents. Here's why:

First, talking about the market as it exists today puts our asks (e.g. extension of the Producer Tax Credit and Accelerated Depreciation for cellulosic biofuels) in their proper context. These are government supports already offered permanently to incumbents (e.g. percentage depletion is a fossil-only hybrid between accelerated depreciation and a production tax credit that will cost taxpayers tens of billions of dollars over the next 10 years), as opposed to a special allowance. Allowing our incentives to expire (re)tilts the playing field toward one industry, not the other way around. The goal is not to convert the oil patch, but instead empower the political center which often dictates policy outcomes. In simple terms, the right thing to do is extend the PTCs for cellulose and wind until Congress fixes the underlying system.

Second, setting the record straight about energy subsidies puts the developing tax reform debate in its proper context. If and when the tax reform discussion congeals in Congress, we will be faced with questions about why our incentives exist, what they have produced, and how long we need them for. Offering to phase out our incentives is a mistake at this stage. The right answer -- offered carefully -- is "well, for how long is Congress going to offer fossil fuels the same type of benefits?" If our advocates are too afraid to call out these inequities for fear of making the big dogs mad, then we need bolder and more unencumbered advocates.

Third, it puts everything else in perspective. The biofuels industry has the Renewable Fuel Standard (RFS). Renewable electricity producers want a Clean Energy Standard. These programs are critical not because (price) inferior industries need government-imposed demand drivers to survive. They are critical because fuel energy markets are price fixed (i.e. OPEC) and/or too consolidated and vertically integrated to properly reward innovation. Just look at ethanol, a domestically produced alternative fuel that is almost $1 cheaper than gasoline but nonetheless faces flat demand because of the artificially priced, constrained and consolidated liquid fuel marketplace.

On June 12^th, the CEO of the largest leaseholder in the Bakken formation in North Dakota and Montana testified before the Senate Finance Committee that without the current tax treatment of oil and gas production, the advances in horizontal drilling and hydro-fracking technologies would never have taken place, because the industry “would not have been able to fail over and over again, which is what it took to advance the technology needed to produce the Bakken and numerous other resource plays across America.” This is the scope of opportunity created by today’s asymmetric U.S Tax Code. Imagine what parity could do.

Where does energy policy fit into tax reform?

(These comments were jointly written by Weiss and Richard W. Caperton, Director for Clean Energy Investment with the Energy Policy team at the Center for American Progress.)

The tax code is the primary way that the government invests money in the energy sector. It’s unlikely that this is going to change any time soon, so tax reform could be a key driver in future energy policy.

Instead of looking at existing tax incentives for energy and simply deciding what should be extended and what should be ended, Congress should take a step back to determine what the tax system to do. First and foremost, the tax code needs to generate revenue, which pays for all of the useful services the government provides, from education to defense. Then, working within a system that generates this revenue, Congress can provide incentives to critical industries or activities by offering targeted tax incentives.

On the revenue side, Congress should put a price on industrial carbon pollution, which would most likely be structured as a carbon tax. Making polluters internalize the cost of the damage their pollution causes to the atmosphere and climate is not only good public health policy, its good fiscal policy.

In 2011, the Center for American Progress, the American Enterprise Institute and three other think tanks from across the political spectrum recommended establishing a price on carbon pollution to help balance the budget as part of Fiscal Summit sponsored by the Peter G. Peterson Foundation.[1] A 2012 Washington Post op-ed from 2 Democratic representatives and 2 former Republican representatives also noted that a price on carbon pollution would have fiscal and health benefits.

“We could slash our debt by making power plants and oil refineries pay for the carbon emissions that endanger our health and environment. This policy would strengthen our economy, lessen our dependence on foreign oil, keep our skies clean — and raise a lot of revenue.”

Congress should also make sure that mature fossil fuel industries pay their fair share. Today, the three largest publicly owned U.S. oil companies – ExxonMobil, Chevron, and ConocoPhillips – paid an effective federal tax rate of 13, 19 and 18 percent, respectively in 2011. Reuter’s noted these rates are a “far cry from the 35 percent top corporate tax rate.” Any tax reform proposal should not allow some of the most profitable companies in the world pay so much less than their fair share.

In addition, Congress should finally end special tax credits to the oil and gas industry, which would generate more than $4 billion in revenue each year. The five largest oil companies made a record $137 billion in 2011 profits, yet four of the five companies laid off 11,200 workers over the past five years. In addition, these companies collectively produced less oil despite higher prices in 2011 compared to 2006. So big oil’s claim that it needs these tax breaks to create jobs or produce oil ring false.

Some people argue that we should end all tax incentives for the entire energy industry. This would be a mistake. The existing tax code and direct government subsidies have been extremely generous to the oil and gas industry over the past 100 years, particularly compared to existing clean energy technologies. A 2011 comprehensive analysis by DBL Investors, “What Would Jefferson Do?,” found that

“From 1918-2009, the oil and gas industry received $446.96 billion (adjusted for inflation) in cumulative energy subsidies. Renewable energy sources received $5.93 billion (adjusted for inflation) for a much shorter period from 1994-2009.

“Subsidies for these ‘traditional’ energy sources were many, many times what we are spending today on renewables.”

Eliminating all energy tax provisions now would cement this overwhelming advantage for oil and gas over clean energy.

In addition, the domestic development and manufacture of the emerging clean energy technologies that will power the world in the 21^st century is essential for economic growth and national security. Most large industrial nations are heavily investing in such technologies to grab a large share of this $2.3 trillion worldwide market. The United States can’t sit on the sidelines while China, Germany and other nations race ahead. Instead, we should responsibly use the tax code to provide incentives to nurture new industries. In particular, Congress should include the production tax credit (which supports technologies like wind and hydropower), the investment tax credit (which primarily supports solar power), and the advanced energy manufacturing tax credit in the reformed tax code.

Finally, we need to end the practice of treating tax expenditures as different from government subsidies. Tax expenditures are government spending programs that deliver subsidies through the tax code via special tax credits, deductions, exclusions, exemptions, and preferential rates. They must be regularly reviewed to ensure that they’re delivering results in a cost-effective manner. This is good policy for the entire tax code, and energy is no different.

[1] The other think tanks that supported a price on carbon were the Bipartisan Policy Center, the Economic Policy Institute, and the Roosevelt Institute Campus Network. The Heritage Foundation participated in the forum, but did not support a price on carbon. All reports can be found here: http://www.pgpf.org/Issues/Fiscal-Outlook/2011/01/20/PGPF-Announces-Grants-to-Six-Institutions-to-Develop-Solutions-to-Americas-Fiscal-Challenges.aspx

Today, about every economic indicator points towards the reality that our country still faces serious challenges in the way of long-term economic recovery. Unemployment is up, recent job creation has been dismal, optimism among both consumers and businesses is down, and turmoil in Europe threatens to dampen our own situation even further. For its part, the Obama Administration has pushed greater government intervention, leaning heavily on federal programs and taxpayer-funded stimulus packages to spark growth. As we’ve witness, the results have been disappointing.

Recently, the Senate Finance Committee, headed by Senator Max Baucus, announced earlier this month its intentions to make reforms targeted at four goals: innovation, job growth, competitiveness, and greater business opportunity. Few would argue these are commendable objectives, but the committee should be careful policy in fact accomplishes competitiveness and doesn’t play favorites. Tax policy should incentivize the private sector to take the lead on economic growth, enabling lawmakers to limit the role of government intervention.

That kind of tax reform will address the federal deficit from two angles. On one hand, by modifying tax provisions that don’t move the economy forward, it will allow us to cut wasteful spending. At the same time, smarter tax codes will encourages business activity, which will generate revenue growth as a result of renewed prosperity. Yet, that won’t happen in the way some tax-hikers in Congress would think.

It’s important energy policy not be viewed separately from overall tax reform. To do so would probably be the first step in a reform initiative that would actually walk our country backward. Earlier this year, Kevin Hassett and Alan Viard of the American Enterprise Institute published a paper in Tax Notes on oil industry taxes. The paper argues the tax system should not discriminate among classes of tax payers, individual or business. The current tax code and numerous industry specific tax proposals run roughshod over the concept of tax fairness, equal treatment, and predictability.

The foundation of the tax system should be to raise money for government to carry out its legitimate activities, not to promote industrial policy. It should minimize the use of the tax code to penalize or reward on the basis of political favorability. The current tax code is a magnet for rent-seekers and has taken crony capitalism to a new high. Since no tax system will be perfect, reform should be guided by the principle that the best should not be the enemy of the better. And, we can do better, much better.

For individuals a simpler and flatter system would be a big improvement. A few decades ago, economists proposed a system that would allow people to file their taxes on the equivalent of a post card. Moving as close to that system is a worthy goal since the current system is so complicated that fewer and fewer citizens can complete their own taxes.

For corporations, we need a system that helps US businesses compete in the global economy. The current system fails to do that. The US corporate tax rate is the highest in the developed world and that hampers competitiveness. In addition, it is riddled with loopholes and special interest provisions. Data show that although the corporate rate is 35 percent, the average actually paid is around 25 percent, and many companies pay far less, including nothing.

PricewaterhouseCoopers (PwC) and the World Bank Group recently assessed more than 180 countries’ tax systems. The United States ranked an embarrassing 69^th. According to the PwC analysis, 33 countries made business taxes less onerous last year by reducing rates or streamlining filing procedures. Guess who didn’t make that list? The U.S. That makes no sense.

Energy producers are essential to economic growth. Our tax code should encourage their development, not punish them or show favoritism. The current system does not. Special tax provisions for alternative energy, including ethanol, have created a dependency similar to an addiction. The rationale that these provisions would help infant industries get off the ground has been exposed as meritless. The experience with alternative energy subsidies by Germany, Spain, Italy, and the UK – where they’ve largely failed – should provide an important lesson to Congress. The question is does Congress really want to do the right thing or does it want to create another government charade.

While a lot of talk is taking place in Washington, the oil and gas industry is investing, producing, and leading the way in job creation. It has an important role to play in fostering a real economic recovery. Let it do its job!

One of the most urgent items on Congress's tax agenda should be renewing the federal wind energy Production Tax Credit (PTC) as soon as possible, for two reasons: (1) new wind power manufacturing jobs are already being lost, and if a PTC extension is delayed until the lame duck session, many more will certainly follow; and (2) the PTC is virtually unique among policy measures in having strong bipartisan support--it is something that Congress can get done now, even in the hyper-partisan atmosphere that traditionally precedes an election.

Boom-and-bust cycles like the ones the wind power industry has endured multiple times since the PTC was first allowed to expire 13 years ago are extremely disruptive to new, growing industries. Instead of making strategic business plans and executing them, companies are forced to lay off skilled employees for indefinite periods and then recall them later or hire and train new workers--a colossal waste of money and time and a wrenching economic hardship for workers and their families, particularly at a time when the overall economy is still struggling.

Wind power also shows what can be done with stable policy. In the past five years of bipartisan policy stability on the PTC, American wind power has:

o Brought in as much as $20 billion annually in private investment to the U.S.

o Created one of the largest providers of new American electric generation with 35% of all new power capacity, right behind natural gas.

o Driven technology advances that have made wind more affordable than ever. A typical wind turbine now generates 30% more electricity, while still driving down costs.

o Created nearly 500 new American manufacturing facilities and employed 75,000 overall, including 30,000 in the manufacturing sector, from coast to coast.

o Produced enough electricity last year to power the entire state of Michigan.

Wind power is affordable and helps hold down the price of other fuels, which means that it helps stabilize consumers' electric rates. Utilities like wind because it acts as a hedge against future volatility of natural gas prices. And it offers a long-term contract – utilities can lock in a price for 20 or 25 years, as a fixed-rate home mortgage does versus adjustable rates.

Southern Company’s first contract for wind power “is expected to be lower than the cost the company would incur to produce that energy from its own resource, with the resulting energy savings flowing directly to the Company’s customers,” according to the Alabama Public Service Commission. And, electric rates increased three times more in the 40 states with the least wind power between 2005 and 2010 than in the top 10 states for wind generation.

A House bill seeking to extend the PTC has 105 cosponsors, including 24 Republicans, while a similar Senate bill is cosponsored by seven Senators, including three Republicans. PTC extension efforts have received the endorsement of a broad coalition of more than 370 members, including the National Association of Manufacturers, the American Farm Bureau Federation, the Edison Electric Institute, and the Western Governors’ Association. A PTC extension also has the support of the U.S. Chamber of Commerce, the National Governors Association, and the bipartisan Governors’ Wind Energy Coalition, which includes 23 Republican and Democratic Governors from across the U.S. A PTC extension has been endorsed by a number of newspapers across the country, including the Houston Chronicle, The New York Times, the Denver Post, the Daily Oklahoman, and the Toledo Blade.

Congress should act now to extend the PTC and avoid further harm to one of the country's most promising new energy options. Let wind finish the job of building a new manufacturing industry and making the most of an abundant, affordable, clean, domestic resource.