Incentives Watch: Wind Industry Growth Strong Despite Uncertainty Over Federal Production Tax Credit’s Fate

Controversy around the federal production tax credit continues as the clock ticks down to the end of 2012, when the credit is currently set to expire.

Democrats believe the federal production tax credit needs to be extended because it creates jobs and lowers energy costs for consumers, while Republicans feel the credit does not actually lead to more jobs. In addition, Republicans argue that renewable energy is more expensive than other energy types and they feel the free market should be used, instead of subsidies, to determine which type of energy is the most useful.

Despite some concerns from industry representatives that there would be hesitancy to start projects before the fate of the production tax credit has been decided, the first quarter of 2012 has proven to be quite productive for the wind industry. In fact, the first quarter of 2012 was one of the best for the industry. “No other first quarter has been as strong for the American wind power industry, which has tapped the Production Tax Credit,” according to a press release from the American Wind Energy Association.

In addition, the trend toward more states that are not traditionally considered a good source of wind power increasing their wind growth is continuing, according to the American Wind Energy Association. The first quarter showed that these states, including New Hampshire, Arizona, Massachusetts, and Pennsylvania, continue to show wind growth, the American Wind Energy Association said.

Forty one states have some type of wind energy tax incentive, including income tax credits, renewable energy grants, sales and use tax exemptions, and property tax exemptions, according to Bloomberg BNA’s Green Incentives Navigator.

Yet despite the wind industry’s growth in the first quarter, the uncertainty surrounding the production tax credit continues to loom over the industry as a whole. And worsening those fears is recent talk by some House tax writers that the production tax credit may be given a short-term extension with a multiyear phaseout, instead of a long-term extension, according to a Bloomberg BNA Green Incentives Monitorarticle.

In other developments . . .

Oregon increased the number and size of its enterprise zones, according to a recent Bloomberg BNA Weekly State Tax Reportarticle by State Tax Law Editor Denise Ryan. The number of rural enterprise zones that can be designated is increased from 17 to 20.

By: Kathleen Caggiano

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