Bloomberg News

Wind Energy Subsidy May Be Renewed After Election, Adviser Says

January 26, 2012

Jan. 25 (Bloomberg) -- The U.S. probably will extend incentives for the wind energy industry regardless of whether President Barack Obama or the Republicans win the election in November, a former adviser to the Senate Finance Committee said.

Dean Zerbe, managing director at Alliantgroup, a Houston- based tax consulting services firm, said in an interview that the Production Tax Credit probably will be renewed by lawmakers after the vote or early next year. The wind credit, due to expire in December, grants an incentive worth 2.2 cents a kilowatt-hour of power produced.

Turbine makers such as General Electric Co. and Vestas Wind Systems A/S are among those pressing Congress to renew the credit as a buffer to narrowing margins from subsidy cuts in Europe and Chinese competition. Vestas, the world’s biggest turbine maker, said this month that 1,600 of its U.S. jobs were at risk should the credit not be extended.

Obama reiterated his support for the measure last night, saying subsidies are necessary to build the renewable energy industry just as they’ve sustained oil and natural gas producers.

“I expect most of them to be continued in place,” Zerbe, who served as an adviser to Republican Senator Charles Grassley of Iowa on the Senate Finance Committee from 2001 to 2008, said by phone from Washington.

“I think you’ll see an extension of a lot of these pieces but probably after the election” in the form of an extenders bill, Zerbe said. That could also come before, he said yesterday.

Energy tax-credits are likely to face more scrutiny from both a Republican or Democrat administration, Zerbe said. “Wind and other entities are going to have to show that they’re commercially viable.” The tax credit also covers other renewable technologies such as geothermal power and biomass.

Obama used his State of Union address to urge Congress to pass clean energy tax credits to support renewable power while pledging to establish as much as 10 gigawatts of clean energy on public land and to create jobs.

“We have subsidized oil companies for a century. That’s long enough,” he said. “It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable and double-down on a clean energy industry that’s never been more promising.”

Ditlev Engel, chief executive officer of Vestas, said in November that U.S. turbine sales may “fall off a cliff” unless lawmakers extended the credit.

--Editor: Randall Hackley

To contact the reporter responsible for this story: Sally Bakewell in London at Sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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