Wind power

Udall is right to keep pressing for an extension of the production tax credit

U.S. Sen. Mark Udall has taken the lead in championing the wind-power industry. It is a fitting role and a worthy effort. Wind power is a clean, emerging technology with long-term prospects for the betterment of the entire nation and immediate economic benefits for Colorado. It is exactly the kind of new technology the government has always supported and still should.

Udall has been giving daily speeches on the floor of the Senate urging the extension of what is called a Production Tax Credit – an inflation-adjusted per kilowatt-hour income tax benefit for the first 10 years of a wind project. In 2010, the credit equaled 2.2 cents per kilowatt-hour.

That adds up to real money. The congressional Joint Committee on Taxation says extending the tax credit, through 2016 would cost $13.6 billion. That is a nationwide number and includes other renewable energy source beyond wind power.

And, as might be expected, spending that kind of money meets resistance. How much of that reflects exactly what concerns is unclear – as is the question as to whether critics consider any of the credit’s benefits.

Some of the opposition is based on legitimate worries about the deficit. Some is certainly political. Some is probably ideological opposition to anything “green.” But some too is nothing more than self-interest masquerading as free-market principles.

Nonetheless, supporters need to be honest. The idea that granting a tax credit is not a form of spending is disingenuous. Tax credit, tax cut, spending increase – all have the same affect on the bottom line. The cost is real.

But so too are the benefits. The Production Tax Credit is working and Colorado has been among the states to gain the most from it.

According to the American Wind Energy Association, Colorado now has 1,803 megawatts worth of wind power online. More than 500 megawatts was added in 2011, with another 16,602 megawatts in the works. The state is the sixth highest wind power producer in the United States generating more than 9 percent of its power from wind. That translates to enough electricity to power almost 50,000 homes.

Wind power has also created and supported almost 2,000 jobs in Colorado, the bulk of which are well-paying, high-tech positions that cannot effectively be exported or off-shored. There are now wind farms and wind power jobs not only along the Front Range, but all across the eastern plains. At a time when unemployment is high, the overall economy is weak and good jobs are hard to find – especially in remote or rural areas – those are far from negligible benefits.

And Colorado is not alone. Udall’s speeches have included the importance of the Production Tax Credit to states as diverse as Utah, Texas and Pennsylvania.

That is all welcome news. But the long-term impact of the tax credit is to help establish an industry and perfect a potentially transformative technology.

Subsidies are generally unpopular, and rightly so. Too many are boondoggles or simple rent seeking. But every such technological advance has been developed and made viable with the help of some form of subsidy. The key factor is whether it is worth doing.

Airports and highways benefit us all, but they also effectively subsidize the auto and airline industries. The intercontinental railroad was hugely subsidized and, partly because of that, scandalously profitable. And it united a fledgling nation. The electronics, computers and high-tech gadgets that enrich our lives can all be traced to federal support for then immature technologies.

Wind power will not save the world. But it can be part of an overall effort that could significantly improve it.

Udall should be supported in his effort to extend the Production Tax Credit.