A majority of the Senate went on record yesterday against reinstating an expired renewable energy tax credit through the end of the decade.
The 47-51 failure of a nonbinding measure calling for a five-year extension of the production tax credit (PTC) delivered a tough start to the year for supporters of the wind energy industry, the credit's primary beneficiary. The credit lapsed at the beginning of the year, and industry supporters hope to see a longer term extension or phaseout of the credit enacted as part of comprehensive tax reform or an "extenders" package, which typically provides a temporary extension for numerous expired credits at once.
Sen. Heidi Heitkamp (D-N.D.) offered the PTC amendment to the Senate's pending bill to approve TransCanada's Keystone XL pipeline, and it was one of more than two dozen energy and climate change amendments that have received votes in the three weeks the bill has been on the floor. The Senate is expected to wrap up its work on the underlying KXL bill today (see related story).
"Just like I'd love to give certainty to TransCanada so that they know exactly what they need to do, there's another industry that needs certainty, too," Heitkamp said before the vote. "And that's the wind energy industry. They've been whipsawed back and forth on whether they're going to get the credits or not get the credits."
Sen. John Thune (R-S.D.), one of the GOP's biggest wind boosters, said the amendment did not help advance the goal of providing more certainty to the wind industry, given that it called for a straight five-year extension when many lawmakers -- especially wind-supporting Republicans -- were coalescing around proposals for a phaseout of the credit.
"I think the longer conversation is going to commence, irrespective of how this goes, but probably it would be better if we went about this in the right way," Thune said before the vote. A senior member of the tax-writing Finance Committee who holds the No. 3 GOP leadership post, Thune added that the committee is primarily interested in moving a broad tax reform package this year, which could address the PTC's future.
If that tax reform falters, Thune said, the committee likely will do "some sort of an extenders package, in which case I think we'll probably be able to get some certainty in some kind of a reasonable phaseout."
Heitkamp cast the amendment as an effort to see where senators stood on the issue and dismissed concerns that it could complicate delicate negotiations around a PTC extension and/or phaseout later this year.
"How can I muddy it by asking people where are they today? And if they don't want to say they're for wind energy, then we know what we're up against," Heitkamp told E&E Daily. "This idea that somehow taking this vote will somehow limit options later on, well, taking any of these votes will limit options later on, and at least this way we're going to know where we are."
Just three Republicans backed the measure -- Sens. Susan Collins of Maine; Chuck Grassley of Iowa, who wrote the first PTC law in 1992; and Mark Kirk of Illinois, who is expected to face a tough re-election race next year. West Virginia Sen. Joe Manchin, who has criticized the credit in the past, was the only Democrat to vote against it.
Sen. Cory Gardner (R-Colo.), who campaigned in part on his support for clean energy when he unseated Mark Udall last year, released a statement immediately after the vote declaring his continued support for "incentives" directed toward the wind industry but declaring yesterday's amendment misguided. Specifically, he said the PTC should be addressed in the context of tax reform and faulted the amendment for offering "no vision of how to eventually ramp down" the PTC.
"Regrettably, the lack of responsible planning in this amendment makes it harder for those of us who do support the Wind Production Tax Credit to come to a bipartisan agreement about its extension," Gardner said. "I hope that the Senate can work on the badly-needed reform that could properly incentivize clean American energy while modernizing our nation's tax code."
The vote came after the American Wind Energy Association yesterday released its fourth-quarter report showing the industry added 4,850 megawatts of new capacity last year and has more than 12,700 MW under construction as of the beginning of this year. Almost all of that under-construction capacity will be able to qualify for the PTC thanks to a change in the law's eligibility requirements enacted a few years ago.
An AWEA representative faulted the venue for yesterday's amendment vote and said its consideration alongside the KXL bill obscured the true level of support in the Senate.
"Senator Heitkamp's amendment to extend the PTC could have encouraged a constructive, bipartisan conversation about how to do that," Jim Reilly, AWEA's senior vice president for federal affairs, wrote in a blog post. "Instead the amendment, like many offered today to the Keystone XL bill, was viewed as a political issue rather than an opportunity to advance important policy and America's energy security."
Another industry lobbyist, who requested anonymity to speak freely, said no one in the industry asked Heitkamp to offer the amendment and said its five-year horizon was likely more than could be supported by some members who could still be convinced to back a phaseout or shorter-term extension. The source also noted that the 47 votes in favor of the amendment would be more than enough to sustain a filibuster of a tax bill that would not extend the PTC later this year.
Still, PTC opponents were more than pleased with yesterday's results. Sen. Lamar Alexander (R-Tenn.), one of the credit's fiercest critics, said the vote was "a considerable improvement" over previous votes to extend the credit and represents "a growing recognition that it's time for that government subsidy to go away."
Alexander also suggested Heitkamp may have erred in forcing the vote so early in the year.
"Well," he said, "it wasn't smart to show your weakness."