Wind’s PTC Receives 12th Extension (competitive not)

A common question is: how many times has the Production Tax Credit (PTC) for wind power production been extended since the original law was enacted in 1992.

The answer is a dirty dozen, which makes the federal lifeline to wind power 28 years old. That’s old age for a government subsidy, particularly one where the industry itself has long proclaimed its impending competitiveness.

“The U.S. wind industry has … demonstrated reliability and performance levels that make them very competitive,” stated a representative of the American Wind Energy Association (AWEA) back in 1986. [1] And Joe Romm a quarter-century later: “It is clear that solar and wind are competitive in many situations right now.” [2]

And so Milton Friedman’s warning that infant industries receiving government protection never seem to grow up has a stellar example. [3] Below, I try to get the laws and dates right to account for the twelve extensions, relying in particular on two documents: the Renewable Electricity Production Tax Credit (CRS: November 27, 2018) and United States Wind Energy Policy (Wiki).

The Beginning

The Energy Policy Act of 1992 (P.L. 102-486) enacted the renewable electricity production tax credit at $0.015/kWh, adjusted for inflation. Available for new projects beginning in 1993 for ten years, the provision was set to expire July 1, 1999.

Twelve Extensions

Twenty-one years and a dozen extensions later, the tax credit stands at $0.024/kWh for existing projects. The extensions when new construction could receive the 10-year credit are chronicled below.

• Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170 extending the wind PTC through 2001 (Sec. 507)
• Job Creation and Worker Assistance Act of 2002 (P.L. 107-47) extending the wind PTC through 2004 (Sec. 603)
• Working Families and Tax Relief Act of 2004 (P.L. 108-311) extending the wind PTC retroactively for 2004 and prospectively for 2005 (Sec. 313)
• Energy Policy Act of 2005 (P.L. 109-58), extending the PTC for 2006 and 2007, and extending the payment period through 10/1/2016 (Sec. 202)
• Tax Relief and Health Care Act of 2006 (P.L. 109-432) extending the wind PTC one year to 2009 (Sec. 201)
• Emergency Economic Stabilization Act of 2008 (P.L. 110-343) extending the wind PTC one year through 2010
• American Recovery and Reinvestment Act of 2009 (P.L. 111-5) extending the wind PTC three years through 2012
• American Taxpayer Relief Act of 2012 (P.L. 112-240) extending the PTC for one year through 2013 (Sec. 407)
• Tax Increase Prevention Act of 2014 (P.L. 113-295) extending the PTC through 2014 (Sec. 151)
• Consolidated Appropriations Act of 2016 (P.L. 114-113) extending the PTC for 2016 through 2019 (but at reduced rates for new facilities beginning construction in 2017, 2018, and 2019).
• Bipartisan Budget Act of 2018 (P.L. 115-123) extending the PTC for 2017 and with a phasedown through 2019
• Bipartisan Budget Act of 2019 (P.L. 116-37) extending the PTC through 2020 at a value of $0.015/kWh (versus 40% of the pre-existing $0.25/kWh). (Sec. 45)

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[1] Statement of Michael L.S. Bergey, American Wind Energy Association in Renewable Energy Industries, Hearing before the Subcommittee on Energy Conservation and Power of the Committee on Energy and Commerce, House of Representatives, 99^th Cong., 2^nd sess. (Washington, D.C.: Government Printing Office, 1986), p. 129. (emphasis added)

[2] Joe Romm, “Fred Hiatt Back to running Climate and Energy Disinformation from the Likes of Bjorn Lomborg,” ThinkProgress, April 21, 2011.

[3] “The infant industry argument is a smoke screen. The so-called infants never grow up. Once imposed, tariffs are seldom eliminated.” Milton and Rose Friedman, “The Case for Free Trade,” [1997: 4] Hoover Digest.