Rocky path to wind growth offers cautionary tale for cleantech tax credits

Executive Editor
Source: The World Resources Institute • Congress first authorized the production tax credit in 1992. Lawmakers have extended and allowed the tax credit to expire for varying lengths of time.

The U.S. Congress’ on-again-off-again relationship with wind energy tax credits portends choppy roads ahead for all types of cleantech.

Such a rocky road is now more likely for future and existing clean energy tax credits.

Congress is unlikely to pass any time soon more comprehensive legislation that would include up to $300 billion in clean energy tax credits since Sen. Joe Manchin (D-W.Va.), a key vote in the evenly divided Senate, indicated his lack of support for such a package earlier this month.

That likely leaves a piecemeal effort on subsidies that Congress often engages in at year’s end to extend a suite of tax credits, known on Capitol Hill as “tax extenders.”

The wind industry’s production tax credit has expired and then was extended (or renewed), numerous times since Congress first created it in 1992 as the colorful chart above shows—many of those times being during the “tax extenders” season.

“The repeated expiration and short-term renewal of the PTC was particularly harmful for wind turbine manufacturing as it was working to gain a foothold in the United States,” states a June 2021 report by the World Resources Institute.

“Tax credits should, therefore, be in place for a reasonable period of time, assuring market players that it is worth making the investment,” the report states.

In other words, the above chart should be displaying a lot fewer colors, reflecting more consistency.

Other temporary clean energy subsidies that require regular congressional approval, including an investment tax credit for solar, contrast sharply with subsidies for fossil-fuel production, which are mostly permanent because they’re imbedded in the tax code as deductions.

Editor’s note: The WRI report was supported by Breakthrough Energy, which supports Cipher.