Opinion: Want economic growth? Make the wind tax credit permanent
The wind power industry could provide a generation of climate solutions - and labor, parts and innovation - if Congress could provide some stability with a production tax credit. Photo courtesy Danish Wind Industry Assoc.
March 21, 2013
The wind production tax credit is making a huge difference in places like Newton, Iowa. But Congress' scattershot approach is undermining those gains.
By Marlene Cimons
For the Daily Climate
Clean energy opponents who insist that the wind industry does not create new jobs – and that tax credits favoring the industry are bad for the American economy – should talk to the people of Newton, Iowa.
Newton Development Corp.
"Wind energy has been a savior for this community," says Frank Liebl, executive director of the Newton Development Corp. "If it hadn't been for wind energy, I don't know how we would have survived."
Just weeks after the wind production tax credit received a last-minute reprieve from Congress, opponents of the credit began gearing up to ensure it would never happen again. The American Energy Alliance and the National Center for Public Policy Research both accused the wind industry of inflating job numbers.
Newton, a town of 16,000 about 30 miles east of Des Moines, offers a convincing case to the contrary.
For more than a century, Newton was a company town whose business was washing machines. Maytag was everywhere, from the statue of its never-needed repairman "Ol' Lonely" on a "Maytag Park" bench, to the plant's address, 1 Dependability Square.
But Maytag didn't turn out as dependable as its washing machines. In 2007, Maytag, by then part of Whirlpool, closed its plant after 115 years, laid off nearly 2,000 people and left town. Most Maytag employees were stunned, having assumed they would work their 30 years, then retire with a nice pension. Instead, they were jobless.
"I put in all that time, and then it was just gone, overnight," says Arie Versendaal, a 20-year Maytag employee whose grandfather and uncle also had worked there.
Today, Versendaal, 60, and other former Maytag employees have new skills and new jobs, thanks to the arrival of TPI Composites, which makes blades for the turbines that turn wind into electricity, and Trinity Structural Towers, which builds the steel towers supporting the massive turbines.
TPI, based in Scottsdale, Ariz., built a new plant in Newton – with a spate of temporary construction jobs – while Trinity, headquartered in Dallas, moved into the old Maytag building.
Since then, Newton has added nearly 1,000 new jobs and its unemployment rate has plummeted from 9.5 percent to 6.7 percent, well below the national average of 7.7 percent reported in February.
"It was like hitting the lottery," says Chaz Allen, Newton's former three-term mayor. "I don't think we intended to become 'green.' We were just looking for some kind of economic development to produce jobs. We kind of fell into it, but we certainly see its benefits. And now it's become a real commitment."
Generation of climate solutions
Renewable energy offers the promise of a new generation of climate solutions that need labor, parts and installation. And this means new jobs for American workers.
During the last five years, wind capacity has tripled to more than 50,000 megawatts, enough to power nearly 13 million homes and retire 44 typical coal-fired power plants, according to the Union of Concerned Scientists.
The wind industry needs the production tax credit over the long term to continue its strong growth, especially during a time of fragile economic recovery. Among other things, the credit gives developers a boost, and helps secure purchase agreements with utilities.
The tax credit provides income tax relief of 2.2 cents per kilowatt-hour for the first 10 years of production from utility-scale wind turbines.
But its history is erratic, and Congress' scattershot approach undermines the industry's growth. Since approving the tax credit in 1992, Congress has extended it mostly in one-and two-year intervals and sometimes allowed it to expire.
When the credit is in place, the industry grows. As it nears expiration or expires, wind projects slow, orders lapse, and layoffs begin.
"Our volume just dropped off like a rock," says Bill Pesch, chief executive officer of Able Manufacturing, a Joplin, Mo.-based company that offers custom light metal fabrication and welding, thermoform plastic production, and composite fiberglass products for larger companies. "We lost momentum in the wind segment."
Able Manufacturing entered the wind business in 2008, making composite parts for wind turbine nacelles and blades. "We had a good three years," Pesch says. "Our business had really grown, and we were excited about it. But the uncertainty over the tax credit hurt us. We had to lay off some workers, and we lost a major domestic customer."
The tax credit needs more than a series of interim approvals.
"All this stopping and starting is exhausting and, quite frankly, will probably end up doing more harm than good," says Jeff Siegel, managing editor of Green Chip Stocks, a research firm specializing in alternative energy.
Decades of oil subsidies
The oil and gas industries have enjoyed decades of government support without having to beg for any short-term breaks. "The wind industry is trying to create a level playing field," Siegel adds. "So maybe they will get another year or two. But they will still have to go through this year after year after year."
Meanwhile, in Newton, Liebl, who speaks with pride about Iowa's status as the nation's second leading state, after Texas, in clean energy production, says: "The wind industry truly has been a wonderful thing for us."
Versendaal would agree. A team leader at TPI, he supervises a crew that prepares turbine blades for mounting. He doesn't make as much money as he did at Maytag, but he's happy to have a job.
Moreover, he feels good about what he does.
"The people are great. The benefits are good. And it's close to home," he says. "I also feel like I'm doing something worthwhile, not just for a few, but for everybody."
Marlene Cimons writes for Climate Nexus, a nonprofit that aims to tell the climate story in innovative ways that raise awareness of, dispel misinformation about, and showcase solutions to climate change and energy issues in the United States. Views expressed are those of the author and not the Daily Climate.
Photo of Austin Fairchild atop a wind turbine in Iowa courtesy Iowa Alliance for Wind Innovation and Novel Development.
The Daily Climate is an independent, foundation-funded news service covering climate change.
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