Oklahoma U.S. Sen. James Lankford has introduced an amendment to the Senate energy bill to completely end federal renewable energy production tax credits by the end of 2031. Under his amendment, 2019 would be the last year a project could qualify for a credit. The recently-passed Consolidated Appropriations Act of 2016 enacted a gradual phase down of the Production tax Credit by 2031 but it also failed to give the industry statutory certainty after the drawdown. Lankford’s amendment would eliminate the credit at the end of the drawdown by completely removing the policy from the U.S. tax code.
“As I have said before, I fully support an all-of-the-above energy strategy, including wind and renewable energy,” said Sen. Lankford in announcing the introduction of his amendment. “But the taxpayer should not be forced to prop up an industry for decades when the tax credit was originally meant as a short-term jump start. The wind industry is established and prosperous, they no longer need taxpayer subsidized help. Any state or local government can issue tax credits, but it is time for the federal government to stop these credits.”
It is his second attempt to bring an end to the tax credits. He fled a standalone bill last October before the Consolidated Approprriations Act of 2016 became law. The PTC Elimination Act as he called it would have started the phase-out immediately.
It was 23 years ago when the Production Tax Credit was established as part of the Energy Policy Act of 1992 and since its adoption, wind power has grown tremendously into a self-sustainable, multibillion dollar industry. Wind generation has more than 3,000 percent and capacity has spiked from 1,500 million megawatts in 1992 to more than 50,000 megawatts in 2012. But Sen. Lankford says the cost to taxpayers for the PTC for all qualified renewables has also increased substantially since it was put in place.
As Sen. Lankford pointed out, once a company qualifies for the PTC for a specific renewable energy construction project, that credit can be claimed for up to ten years once the project starts producing power. The PTC is primarily claimed by the wind industry but it is also used by other renewable energy sources. Specifically for wind, the Consolidated Appropriations Act of 2016, signed into law in December, retroactively extended the PTC for projects beginning construction in 2015 and 2016. The law also extends the eligibility for the credit through 2019, but reduces the credit value for projects beginning construction to 80 percent in 2017, 60 percent in 2018, and 40 perrcent in 2019.
