A move to phase out the federal production tax credit for renewables was launched this week by Oklahoma U.S. Sen. James Lankford and three other Republicans in the Senate.
Together with North Dakota’s Kevin Cramer and John Hoeven and West Virginia’s Shelley Moore Capito, they introduced the Production Tax Credit (PTC) Elimination Act, a bill that specifies that any new projects would need to begin construction by the end of this year in order to qualify for the credit, as is the case under current law.
Lankford discussed the need to end the PTC for renewables like wind in a Senate Energy and Natural Resources Committee hearing two weeks ago.
“The wind industry is strong and thriving in Oklahoma and around the nation. Wind energy producers no longer need the production tax credit to stay afloat,” said Lankford.
He said wind might be a great source of energy but it does not need billions of dollars in subsidies to grow.
“The tax credit keeps getting extended each year despite Congress voting nearly six years ago that it should be phased out and eliminated. We are reintroducing this bill to tie up the loose ends of the credit at the end of this year for renewables and let these industries continue to successfully stand on their own.”
“The wind production tax credit is fundamentally unfair and has long outlived its expiration date,” said Cramer. “Our bill would help level the energy market by forcing this disruptive tax credit to finally expire.”
Hoeven said, “The wind industry is now commercially-viable, and the continued extension of the wind PTC further distorts energy markets away from critically-needed baseload power, like coal.”
“I’m proud to join my colleagues again to reintroduce this legislation that would level the playing field within our electric markets. We should not be wasting more taxpayer dollars on a credit that completed its goal years ago,” said Capito.
Lankford introduced similar legislation as a standalone bill in September 2020 and has offered the provision as an amendment to other previous legislation.
The PTC was established nearly three decades ago 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 grown more than 3,000 percent, and capacity has spiked from 1,500 million megawatts in 1992 to over 110,000 megawatts recently. Meanwhile, the cost to taxpayers for the PTC for all qualified renewables has increased from $5.7 billion over the first five years of the credit to $19.5 billion over the 2019-2023 period.
Roughly 40 percent of Oklahoma’s entire electricity generation comes from wind energy. Wind power is an economically sustainable industry, and many states have production incentives in place through either renewable portfolio standards or renewable portfolio goals.
Ultimately, the federal PTC is a redundancy that subsidizes policies that states are already pursuing through local resources and utility markets. The PTC also creates distortions in electricity markets. Wind producers’ negative bids are subsidy-driven and distort the market by sending incorrect price signals, which can harm the long-term reliability and cost effective operation of the utility.