WASHINGTON, DC – Senator Dan Coats (R-Ind.), the Chairman of the Joint Economic Committee, delivered his weekly “Waste of the Week” speech yesterday afternoon and highlighted the wind tax credit.
In his remarks, Coats highlighted how the wind tax credit is a double financial hit to taxpayers who both subsidize the operations of wind farms and purchase the very electricity produced by wind farms. Coats said that taxpayers could save $10.5 billion over the next decade if Congress does not extend the wind tax credit.
Congress passed the Energy Policy Act of 1992, which included the Renewable Electricity Production Tax Credit. For wind producers, this tax credit could only be claimed if a wind farm was making power. While this subsidy was intended to be a short-term boost to help these new energy sources become competitive–the original credit was intended to last only five and a half years–Congress has instead repeatedly extended the credit.
Coats said, “In 2013, nearly two decades after the time which the subsidies were to expire, Congress changed the rules so that facilities only have to begin construction before the expiration date to automatically qualify for a future ten-year subsidy. This is true even before they become operational. In other words, just pour some concrete or place some steel, and then you qualify for the taxpayer subsidy.”
He continued, “The result is that more and more wind facilities are being constructed, irrespective of the needs of our electricity grid or market demand.”
In 2014, Congress retroactively extended the wind tax credit at the end of the year. It is likely that Congress will extend the production tax credit once again this year.
Click here to watch Coats speak on the Senate floor about this issue.