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US offshore wind industry threatened by expiring tax credits

USA
2 Sep 2012
Environmentalists today released a report highlighting the potential for offshore wind to create thousands of jobs and power millions of homes along the Atlantic Coast but warning that the nascent industry is threatened by the looming expiration of key tax breaks.

The National Wildlife Federation report http://www.eenews.net/assets/2012/09/13/document_gw_02.pdf comes during what clean energy advocates have dubbed "wind week," in which numerous groups are pushing for an extension of wind industry tax breaks that will disappear at the end of this year unless Congress acts. 

The report provides a snapshot of where things stand in the U.S. offshore wind industry, which severely lags the more robust European pursuit of offshore winds that has been growing for the last 20 years. Although no turbines have been constructed along the East Coast, several projects are expected to begin soon, including the Cape Wind facility that aims to begin construction next year. The Interior Department also has set aside wind development zones offshore from Massachusetts to Virginia, and several states along the coast have pursued policies to aid the development of offshore wind. 

"We can no longer afford to ignore the massive clean energy source sitting off our shores," Catherine Bowes, who co-authored the NWF report, said on a conference call today. 

The Atlantic Coast has the potential to generate about 1.3 million megawatts of energy from offshore wind, according to a 2010 study from the Department of Energy's National Renewable Energy Laboratory. Bowes noted that capacity is ideally situated near population centers along the East Coast and that offshore wind blows the most during times of peak demand in the afternoons and during heat waves, as opposed to onshore wind that blows most frequently at night. 

However, Bowes said, a tax credit for offshore wind must be extended so developers are able to secure financing. 

The Senate Finance Committee last month approved a package that would extend the 2.2-cents-per-kilowatt-hour production tax credit for a year and allow developers to opt for an alternative investment tax credit, which covers 30 percent of a project's costs, instead of the PTC. Offshore wind developers prefer the ITC. However, progress on the package appears stalled, as lawmakers have shown little interest in tackling the issue until after November's elections. 

Separately, industry and environmental groups from Iowa today sent a letter urging that state's congressional delegation to support an extension of the PTC and ITC. Iowa is one of the windiest states in the nation, and about 7,000 people work in the wind industry; every member of Congress from the state -- Republican and Democrat -- is on record supporting an extension of the tax credits. 

"This is not a partisan issue; it's an Iowa jobs issue. We cannot as a state or as a country afford to let the PTC expire," says the letter, signed by 65 groups including the state's farm bureau, Chamber of Commerce and several companies and environmental groups. "With low taxes, wind power can continue to generate tremendous benefits -- in jobs, investment and clean energy -- to Iowa and the nation."

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