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Tax Credits for Wind Power

The US federal wind power production tax credit is set to expire at the end of the year, and many have been advocating for the expiration or the continuation of the credits.

Supporters of letting the credits expire claim the national fiscal situation has become so dire that the government can no longer afford to maintain a wind power production credit.

Opponents of the expiration claim the wind industry would be stunted and damaged by the expiration, in more than one way.

The production credit allows for the wind industry to be bolstered by federal funds, which leads to more productive infrastructure. This causes more fiscally and environmentally friendly energy development, which eventually leads to more investment from the private sector, allowing the companies to rely on the free market more than the federal government.

The credibility from each side remains to be determined, but U.S. governors have crossed party lines in support of wind subsidies, though the national government appears to still be divided.

In a first sign of a possible shift in the political landscape after the re-election of Barack Obama, governors from both parties urged Congress to extend subsidies for windfarms. The governors from Colorado, Iowa, Kansas and Oregon, who are two Democrats and two Republicans, said ending the subsidies would stunt the emerging wind industry. Kansas governor Sam Brownback told reporters the state is seeking to be a renewable state, but the likelihood of that happening without the production tax credits go to “nearly zero next year…virtually no new wind operations going in next year. That shows you just how dramatic the impact of the production tax credit is.”

On the other hand, Republican senators have been saying the country simply cannot afford to continue the tax credits. Senator Lamar Alexander (R-Tenn.) has been very vocal about his support to end the credits, and the looming “fiscal cliff” has been fuel for his fire. However, this argument falls a little short when the subsidies given to gas and oil companies are brought into the equation.

Ultimately, no one has any idea of what could happen in either outcome pertaining to the production credits. Investment in wind power is fairly risky, given the youth of the industry, but with high risk comes high reward, and the country is ready to make that bet.

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