WINTER 2015
in January. However, despite the newly
Republican Senate, the White House was
unwilling to support the compromise and
threatened a veto, killing the potential deal.
While Republicans may be happy to see a
liberal, environmental issue fade away, it
seems that the true source of Congress’s
failure to pass a PTC extension had more to
do with partisan unwillingness to compromise than actual differences on the issues.
Unfortunately, given that more en-
DOMESTIC
type of return from the government.
The tax credit also worked to foster
innovation within the industry. AWEA
reports that consistent government funding bought companies time to create better, more cost-efficient machines. Now,
engineers have lost years of guaranteed
time to innovate while current business ventures were guaranteed revenue.
The PTC was never perfect as inconsistent renewal over the past twenty
in natural gas plants over wind or solar
options, despite environmental concerns.
In recent years, states and municipalities have implemented restrictions on
natural gas production because of emerging research on the dangers of fracking.
Many New York and Texas towns have
adopted anti-fracking legislation according to The New York Times, and Fox
Business reports that Colorado is in the
midst of its own fracking fight. The fu-
Without the Production Tax Credit, the future of renewable
energy is in flux; current technology does not allow companies
to offer renewable energy solutions at a price competitive with
traditional energy sources... More companies, then, choose to
invest in natural gas plants over wind or solar options, despite
environmental concerns.
vironmentally friendly energy ventures
are also more expensive ventures, the
failure of the PTC extension means a
substantial decrease in the United States’
ability to produce cheap, environmentally friendly energy. The wind energy
industry, in particular, has been hit hard
by the expiration of the tax credit. Over
the last five years, wind energy has provided roughly 30% of the United State’s
new energy, according to the American
Wind Energy Association (AWEA). Additionally, as Forbes notes, the wind industry benefitted hugely from the PTC,
as its main competitor natural gas had
been subsidized since long before the
creation of the PTC and saw no change in
revenue after the PTC’s implementation.
Without the PTC, the future of renewable energy is in flux; current technology does not allow companies to
offer renewable energy solutions at a
price competitive with traditional energy sources. According to the AWEA,
the PTC gave companies leverage in
securing funding for new projects by
guaranteeing investors at least some
years has led to inconsistent industry
growth. Stephen Wiley, a partner at the
Austin-based Enovation Partners was
quoted in Forbes Magazine saying that
the tax credit prevented companies from
making capital decisions regarding new
energy projects. Despite these drawbacks, developers cite the PTC as having
added $15.5 billion worth of business to
the United States economy every year.
Moreover, wind energy, which is highly affected by the tax credit, is, cost-wise,
a less desirable option than natural gas
according to a study done by the American Council for an Energy-Efficient
Economy (ACEEE). The cost of solar and
wind power has “plummeted over the last
five years,” according to The New York
Times, but the costs of wind power plants
are still higher than natural gas or coal
plants in the majority of circumstances.
The ACEEE reports that wind power
costs can reach 10 cents per kilowatt
hour (the unit of measurement used for
wind production), while natural gas costs
reach only 8 cents per kilowatt-hour.
More companies, then, choose to invest
ture feasibility of procuring natural gas
cheaply may be in flux as a result of
tightening restrictions, and, in any case,
mining for natural gas is controversial.
The PTC provided a more feasible alternative to the controversial production
of natural gas by allowing other more environmentally secure industries to compete
in the market. The larger return on investment that the PTC guaranteed investors
created stability in the market and encouraged new projects, keeping wind energy
companies in business while essentially
buying time for the wind industry to innovate more cost-effective technologies.
The New York Times contends that
the wind and solar industries are close
to reaching cost levels competitive with
natural gas, even without a government
subsidy. However, they are not there yet.
Congress, by failing to pass the tax credit
renewal, has hindered the nation’s ability to introduce another environmentally
friendly, efficient source of energy. A partisan squabble over a small government
subsidy may have long-lasting drawbacks
for energy growth in the United States.
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