Keep America's Clean Energy Economy Growing
Federal tax incentives help create jobs, spur private investment, and drive innovation
Once again, an episodic approach to clean energy tax incentives is up for debate. U.S. Senator and Finance Chairman Ron Wyden (D-OR) has pledged to end last-minute renewals of expiring tax credits with significant reform in the next Congress. However, the first step is a two-year extension of more than 60 expired or expiring tax provisions for individuals, businesses, and technologies, including key policies that have a well-documented history of attracting private investment in the growing clean energy sector.
Among the provisions included in the Expiring Provisions Improvement Report and Efficiency Act, or EXPIRE Act, is a renewal of the expired Production Tax Credit, or PTC, for wind energy and the Investment Tax Credit, or ITC, for alternative fuel vehicle infrastructure. Both credits have a strong history of diversifying the U.S. energy mix by encouraging the deployment of and private investment in cleaner power generation and transportation technologies.
The EXPIRE Act is critical to ensure that businesses and investors have the certainty they need to plan and invest. When the PTC was allowed to expire in 2013, deployment of wind installations in the United States fell 92 percent compared with 2012. A reliable policy environment is necessary for the wind industry and its 80,000 U.S. employees to advance new projects and to provide cost-effective clean energy generation for communities across the country.
“Clean energy industry leaders need policy certainty in order to make long-term investments that grow their businesses, create jobs, and spur deployment,” said Phyllis Cuttino, director of Pew's clean energy program. “Clean energy technologies should be afforded the same predictable tax treatment already enjoyed by conventional energy technologies. We support a tax policy that provides parity and certainty and encourages a diversification of our fuel mix.”
Waste heat to power keeps industry powered up
In addition to the PTC, the alternative fuel vehicle infrastructure credit, and various energy efficiency incentives included in the EXPIRE Act, Senator Tom Carper (D-DE) has authored an amendment that would allow waste heat to power, or WHP, technologies to qualify under the existing energy ITC, along with solar, geothermal, combined heat and power, and renewable technologies. WHP is an efficiency technology that captures wasted heat from the production of steel, chemicals, paper, oil, gas, and other industrial processes and recycles it to create electricity, reducing energy use and costs.
WHP has the potential to produce the same amount of power that 10 million homes would use in a year.1 Increasing the amount of energy generated by WHP could create more than 100,000 American jobs and save as much as $3 billion annually in electricity costs.2
“These tax policy changes to the PTC and ITC would benefit our economy and environment as well as diversify our energy mix,” Cuttino said.
The expired clean energy policies face a less certain future in the U.S. House of Representatives, where lawmakers have recently taken a different approach by beginning to advance tax policies one at a time, rather than considering all expiring credits as a package. As a first step, the Ways and Means Committee has made the corporate tax credit for research and development activity permanent. Given this approach, it is unclear whether the PTC, the ITC for alternative fuel vehicle infrastructure, or energy efficiency provisions will be brought up and considered by the House.