No Wind Tax Credit Could Mean Fewer Jobs

Oct 10, 2012

Those giant wind turbines that line ridges across the Northwest have brought green energy and construction jobs to many rural areas. But some of those jobs could disappear next year. That’s if Congress does not extend a tax credit that expires in December. Wind developers say the money is critical to the burgeoning industry. But critics say taxpayers should not subsidize wind energy.

Companies have started to lay off workers in the Pacific Northwest – in anticipation that the tax credit will expire.

Wind farm construction is ramping up across the country. Companies are racing to build turbines before December 31. That’s when the production tax credit ends.

So, here’s how the tax credit works: Wind producers receive a credit for each kilowatt-hour of electricity they create. Many wind industry analysts say the production tax credit is keeping developers afloat. It’s also putting people to work building and installing wind turbines.

Some of those newly built turbines line a hilly ridge on Washington’s Palouse. A few blade-less towers dot the horizon. Blades the size of semi trucks lay on the ground. Wind whips around, slightly bending them back and forth. Project manager Aaron Pedigro points to what looks like a large yellow jaw biting down on one of the blades.

Pedigro: “That thing kind of clamps around the blades…”

Reporter: “Kind of like a giant tong for wind turbine blades?”

Pedigro: “Yeah exactly. It’s a blade gripper. Instead of installing the blades on the ground, they’ll actually install one blade at a time.

That’s one 17-thousand pound blade at a time. Pedigro says this new technology speeds up construction. Right now Palouse Wind Farm’s 17 yet-to-be-finished turbines look like giant toothpicks sticking out of the ground. But Pedigro says they’ll be up and running in a few weeks. Well on track for the deadline.

But that does little to help next year’s jobs. Developers are nervous they’ll lose project money. But it’s the wind construction and manufacturing sectors that are hit hard.

Pedigro: “I think 2013, I’ve not really talked to anybody that’s, that’s told me they have something hard on the books for next year. And I think a lot of people are wondering if their jobs are going to be around for next year.”

This debate comes at a time when more American jobs than ever depend on the wind industry. Wind turbine manufacturing companies have steadily opened up in the U.S. in the past decade. Before, parts came from China, Indonesia or South America. Pedigro says all Palouse Wind Farm parts came from Colorado. He says that’s helped keep construction on track.

But keeping wind manufacturing in the States could be difficult next year. One wind tower manufacturing company in the Pacific Northwest is Katana Summit. It employs 79 workers in Ephrata, Wash., and more than 200 in Nebraska. CEO Kevin Strudthoff says the plant has received zero orders for 2013. That’s forcing Katana Summit to look for a buyer – or close it’s doors November 1.

Strudthoff: “The industry has been through this before, where we face the expiration of the PTC, and the industry just falls off a cliff. And for whatever reason, our folks in Washington don’t seem to get what that means to jobs out in the field.”

Congress enacted the production tax credit in 1992. The credit has expired three times. In each case, it’s eventually been restarted. But According to the trade group American Wind Energy Association, wind project construction has dropped dramatically every year the credit has ended.

The credit last expired in 2004. Then, construction dropped 77 percent. If it expires this December, industry analysts predict it will halt completely.

Justin Sharp used to work in the wind industry. He’s now an independent consultant in Portland. He says, right now, the wind industry cannot survive without the production tax credit.

Sharp: “To me it seems like really short-sighted policy to essentially be, really, be cutting the legs off from underneath of an industry, which could have so much prospect for helping with our energy security.”

But critics say the credit is nothing more than a welfare subsidy for the wind industry. Benjamin Cole is with the advocacy group American Energy Alliance. It’s funded in part by the oil industry and has lobbied against the credit. Cole says wind energy needs to stand on its own two feet.

Cole: “The problem with the production tax credit, and the lobby that comes to Congress every year is: they always want one more year. They want five more years. Can you extend it for 10 more years?”

But wind energy advocates say all other forms of energy get help from taxpayers. The difference is, those incentives are permanent -- advocates don’t have to defend them to Congress every few years.

The wind credit must be renewed every year or two. Peter Kelly is a spokesman with the American Wind Energy Association. He says wind energy has only had a continuous tax credit for seven years. Kelly says that really grew the industry.

Kelly: “To do without any incentive – in the face of all the many incentives for other forms of energy – the industry is just not at that point yet. Every year we’re more cost competitive, but we need to finish the job of basically creating a new industry.”

Back on the Palouse Wind Farm project, manager Aaron Pedigro stands under a giant crane that will lift the turbine blades 262 feet in the air. That’s about 24 stories. He says wishes the production tax credit was steadier, less like working on a roller coaster ride.

Pedigro: “It would sure put the minds to ease of a lot of people who are out here working now – and working hard now – that don’t know where their next assignment will be.”

Right now, it looks like Congress will not consider the production tax credit until after the election.

Copyright 2012 Northwest Public Radio