Congress Should Immediately Approve Clean Energy Tax Credits That Drive Progress, Level Playing Field
Actions that Congress takes this fall in the arcane area of tax policy will have a huge impact on the future of clean energy in the U.S. Whether we can continue the kind of rapid progress we've made as a country over the last six years--installing enough wind and solar energy to power million of homes, creating tens of thousands of good-paying jobs--will depend in large part on tax policy. Much depends on whether Congress renews a set of temporary clean energy tax credits, in a package of so-called tax extenders under consideration this fall. In a letter to Congress today, more than 580 businesses and organizations urged passage of these extenders as soon as possible. These incentives speed the deployment of wind and solar power and help level the playing field for clean energy, which still provides only a small percentage of our electricity, so that it can compete with fossil fuel technologies that U.S. taxpayers have subsidized for decades.
The now-expired Production Tax Credit for Wind Power (PTC), the Investment Tax Credit for Solar Power (ITC), set to expire at the end of 2016, and the also expired Investment Tax Credit for Offshore Wind Power have brought us unprecedented growth in clean energy here in the US. They've also have helped everyone breathe cleaner air and increased our foothold in the multi-trillion dollar international renewable energy market. Not only that: They have significant bipartisan support, among the public and the nation's governors.
By including these bipartisan clean-energy incentives in the extenders package--especially, by creating a multiyear extension rather than the short-term fix now under consideration--we'll be able to ramp up clean energy fast enough to help avoid climate change's worst effects. Failure to extend them, by contrast, will not only further destabilize our climate, it could result in the loss of almost 80,000 jobs in the solar industry alone.
For NRDC, the choice is clear.
Over the years, these clean-energy tax credits have worked exactly as planned: spurring renewable-energy demand, speeding economies of scale, driving competition in the marketplace and investment in new technologies, and leading to dizzying price declines. If we want to see further price reductions, especially in regions slow to leverage their clean-energy resources, we need to extend these incentives for long enough to allow the marketplace to bring costs down further.
There are many important reasons why tax policy should support clean energy. Clean-energy incentives are an investment in the public good. To begin with, they improve public health. In fact, a recent study found that replacing conventional power in the Midwest and Mid-Atlantic with clean energy would result in health and climate savings worth $66-170 per megawatt hour. These incentives also spur private investment, like the $100-plus billion industry has put into wind power since 2008.
Extending clean-energy incentives until the EPA's Clean Power Plan to cut carbon pollution from the nation's power plants takes effect also makes sense. The price declines that these incentives will catalyze will mean clean energy prices will drop. That, in turn, will lower the overall costs of meeting Clean Power Plan emissions limits and ensure they can be realized primarily through renewable energy and energy efficiency.
Here's another reason we shouldn't let these incentives go: The promising offshore wind power industry is beginning to ramp up here in the US. It offers many benefits, including supplying the most electricity when the electric grid needs it most. In Europe, offshore wind power already provides an impressive 10 gigawatts of pollution-free electricity, employs tens of thousands, and is becoming more cost-competitive by the day. Why stop the most important incentive for jumpstarting the US offshore wind industry before the industry has even begun?
Extending the tax credits for wind, solar and offshore wind beyond 2016 will make them, and our country, stronger. It's time to help level the playing field for clean energy now.