Wind Tax Incentives More than Pay for Themelves, GE Study Says
As Congress struggles with extending tax credit incentives for renewable energy, a new report surfaced Wednesday that showed, at least for wind power, that the government more than makes its money back by giving breaks to the industry.
The study from GE Energy Financial Services, a major player in wind, came a day after the U.S. Senate again failed to move forward on legislation that would keep existing tax credits for wind, solar and other renewable energy afloat beyond the end of the year. The same thing happened about a week ago, although a chief Senate backer of the incentives has pledged to keep up the fight for them.
Into this deadlock comes the new research findings showing that wind energy projects that began operating just last year pumped a net of $250 million into the federal treasury, after deducting the so-called production tax credit.
In addition, the study, which was accompanied by a press statement and a fact sheet, asserted the projects generated additional millions in state and local property and income taxes and put thousands of people to work both in construction jobs and to operate wind farms. Others, including environmentalists, have projected that renewable energy could be a big job-producer.
And, so as not to forget one of the underlying purposes behind such renewable projects, it said that the projects had helped avoid 10 million metric tons of carbon dioxide, a greenhouse gas, from going into the atmosphere.
The study estimated that the federal credit, now at 2.1 cents per kilowatt hour, cost about $2.5 billion but generated $2.75 billion in revenues, including $1.9 billion on the project's income (figured on a "net present value" basis), as well as income taxes on workers' wages, taxes on suppliers' profits and taxes on lease payments and royalties to landowners.
Revenues from the projects themselves become "significant" when the tax credits run out after 10 years, the report said. It calculated direct taxes from the projects using a formula that also discounted for federal borrowing to finance the credits. The report also relied on an economic development model developed by the federal government.
There was little doubt the report, which also drew support from the American Council on Renewable Energy, was intended to put pressure on lawmakers to act soon on the tax legislation. In Wednesday's statement, Kevin Walsh, managing director of renewable energy at the GE unit sponsoring the report said:
“Congress is debating how to pay for the wind tax credits perhaps without realizing that, over time, wind farms pump more money into the U.S. Treasury and state and local coffers than they take out. Our study shows that the wind farms more than pay for themselves through existing tax revenues, so it’s time to renew the incentives immediately.”
GE, of course, is no mere bystander when it comes to wind energy. The financial services unit has what it called a "growing portfolio" of more than $3 billion in assets in wind, solar, biomass, hydro and geothermal power. Wind makes up about 80 percent of that, according to the company. Climate Law Update also recently reported that an upbeat government assessment of wind power called another GE unit the dominant manufacturer of wind turbines in the United States market. The company also joined several hundred others in formally urging Congress last week to act on the tax credit extensions.
Various reports, including a story in Forbes and another in the San Francisco Chronicle, have weighed in on the possible causes and consequences of the continuing impasse. The Financial Times, meanwhile, reported that the United States is poised to pass Germany as the world's leading wind power market but the publication also notes concerns over the uncertainty of the tax credit. Recently the U.S. Department of Energy issued a projection that wind could supply 20 percent of the country's energy needs by 2020.
(Photo: GE wind turbines in Iowa; Department of Energy/National Renewable Energy Laboratory; Credit: Todd Spink)
