Did President Obama's State of the Union remarks on wind power's leadership role indicate a shift in support for the production tax credit? During today's OnPoint, Tom Kiernan, CEO of the American Wind Energy Association, explains why his industry continues to need the PTC, despite its global leadership. He also talks about his organization's lobbying strategy for the Republican-controlled Congress.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Tom Kiernan, CEO of the American Wind Energy Association. Tom, thanks for coming back on the show.
Tom Kiernan: Great to be here.
Monica Trauzzi: Tom, so the president in his State of the Union address talked about wind power. It's always significant to get a mention in the State of the Union. Did you take his comments to mean that your industry is well on its way -- like solar, like oil and gas -- and that it's no longer in need of assistance?
Tom Kiernan: I think his comments first talked about the excitement, the growth and, frankly, the efficiency and the productivity of the industry. We are the world leader in producing wind energy in the country, and we're excited to have that reference. I think there's a lot that needs to be done to continue that growth and excellence in the industry.
Obviously, the production tax credit that focuses on production is one of the reasons that we've gotten to this leadership role. We'd like to have it extended so we can stay as the leader in the world.
Monica Trauzzi: But based on what the president said, is this administration putting its efforts behind its climate policies, the Clean Power Plan, rather than fighting the congressional battles over the PTC?
Tom Kiernan: I think the PTC needs to be extended. It's proven to be a very successful, productive, effective policy that has now generated 73,000 jobs throughout the country, 500 manufacturing facilities. This is an industry that is vibrant, but we don't want it to fall off a cliff by not having the PTC extended again. It needs to be extended so that the industry can have some predictability and a reasonable, stable policy going forward.
Monica Trauzzi: But if the industry is as strong as it is, it's not going to fall off a cliff if the PTC goes away.
Tom Kiernan: Back in 2013 when there was uncertainty then about the extension, we lost 30,000 jobs. We saw a 92 percent drop in the industry because of that uncertainty. We don't want that to happen again. We're looking for reasonable policy going forward.
Monica Trauzzi: But that's a reflection on the uncertainty. If there were certainty that it was not going to be extended, then the industry would have no choice but to figure out how to make it work.
Tom Kiernan: Costs have come down 58 percent in the last five years, and right now we have some places in the country where we might be able to compete without the PTC. But there are large portions -- the vast majority of the country -- we still need the PTC so that we can have the manufacturing facilities fully operational. Frankly, and providing low-cost, reliable electricity consumers. So we do need the PTC extended, and we're looking forward to working with folks on both sides of the aisle to come up with that predictable extension to the PTC so that we can make the investments that we need.
We have said that we don't need the PTC forever. But we clearly need it for a period of time going forward.
Monica Trauzzi: And what period of time are you looking for?
Tom Kiernan: Well, we're looking forward to working with both sides of the aisle to come up with that reasonable policy. What's most important is to have that predictability. But clearly, it does need to be extended so that we can effectively compete throughout the country.
Monica Trauzzi: A year, two more years?
Tom Kiernan: I think what's important to remember is every other source of electricity in this country has their tax relief. And this has been a policy of the U.S. for the last 100 years to encourage energy production by giving tax relief to different energy sources. The PTC is our form of support. We're looking forward to having it extended.
Monica Trauzzi: So for people who are unfamiliar with the political and policy conversations happening in Washington on wind power, the message received during the president's State of the Union is that wind power is doing great. So do the president's remarks then create some kind of a PR problem for you or a PR challenge?
Tom Kiernan: I think the president's remarks are outstanding. It shows that this is a great, vibrant industry. We're approaching 5 percent of the U.S. generation. Department of Energy will be coming out with a report soon that has a vision for being 20 percent of the U.S. generation by 2030. That's an exciting vision. To achieve that vision, we need an extension of the PTC for a period of time.
Monica Trauzzi: With states and utilities moving to diversify their energy portfolios and bringing more renewables online, what are your concerns then for keeping wind power No. 1 if you have all of these elements sort of coming together at the same time, moving more in that direction.
Tom Kiernan: I think it's exciting to see that growth. Wind energy is -- we want it as part of the portfolio for utilities throughout the country and for consumers. When you look back at the polar vortex last winter, we saved consumers $1 billion over those two days because gas prices were through the roof. Wind was steady and predictable during that period. So wind is a great hedge for consumers against other fuel costs that can increase at different times. So it should be a part of the portfolio and should be an increasing part of our energy portfolio.
Monica Trauzzi: You talked about working with members of Congress. What's your lobbying strategy with this new Republican-controlled Congress?
Tom Kiernan: The economics of wind are strong and getting better if we have a predictable PTC going forward. So we'll be sharing that message and, frankly, look forward to working with both sides of the aisle. Obviously we're getting to a tax reform discussion. So that's a good context for us to figure out this long-term approach to the PTC extension that works for the industry and can continue the jobs and keep the manufacturing opening in the U.S.
Monica Trauzzi: All right, we'll end it right there. Thank you for coming on the show. Nice to see you again.
Tom Kiernan: Thank you very much, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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