Senate to Vote on Extending Production Tax Credit for Renewables
UPDATE: The Production Tax Credit was successfully attached to the Senate Housing Bill that passed today. The action now shifts to the House which must pass its version to send the measure to conference. We will keep you posted.
The Senate is scheduled to vote soon on rewewing the Production Credit (PTC) and your action is needed. But first, what is PTC and why is it needed?
While the price of renewable energy such as wind and solar power is steadily dropping and that of carbon-based fuels steadily rising, renewable power still requires subsidies to compete with carbon-based power. Why? In part, the technology is still developing. However, the comparatively high cost of renewables also includes the price of building new facilities-in contrast to carbon sources where facilities already exist-and carbon-based power such as oil and coal also receive immense subsidies in the form of incentives for exploration, government support of road infrastructure and other programs.
Moreover, while renewables will eventually become cheaper than carbon sources, it would be a mistake to wait until they are already cheaper to begin investing in these technologies as driving the price down requires scale. Every new technology requires a development period when it is more expensive than its predecessor. Blu ray dvd players, for example are far more expensive than the older kind today, but as volume scales, they are likely to drop in price.
In the case of renewable energy, due to the limited number of customers, there currently is no way to drive down pricing by selling to consumers . The answer to this quandary is the production tax credit (PTC), a 2.0 cent-per-kilowatt-hour tax credit for electricity generated from wind turbines and other renewable energy sources. Unfortunately, the US Congress-unlike legislatures in other countries that now lead the US in wind and solar production-has renewed the PTC on an ad hoc basis. A graph of wind power in the US shows it moving in fits and starts, rising when the credit is in place and falling off when it has not been extended in a timely manner as happened, for example, in 2000 and 2004.
Once again, Congress has put off extending the credit but the Senate is now scheduled to vote-perhaps as early as today or tomorrow on legislation proposed by Senators Cantwell and Ensign to re-extend the credit (the Clean Energy Tax Stimulus Act of 2008). If you would like to express your support for the bill, the American Wind Energy Association has a web page that allows you to contact your Senator easily and urge him or her to extend the Production Tax Credit.
