GE Energy Financial Services, a unit of GE, recently released a study estimating that a federal tax incentive set to expire Dec. 31 2008 for wind energy projects more than pays for itself through tax revenues from the projects’ income, vendors’ profits and individual workers’ wages. The study – released at the American Council on Renewable Energy’s Renewable Energy Finance Forum in New York – estimated that wind farms built in 2007, supported by the production tax credit, carry a net present value benefit to the US Treasury of $250 million.

According to the study by GE Energy Financial Services, wind projects that went into operation last year generate federal income tax revenues from the projects, individual workers’ wages, vendors’ profits, and land leases. And they also provide federal tax revenue after 10 years, when the production tax credits expire. In addition to those federal tax revenues, the wind projects generate an estimated $6 million per year in local property taxes, $15 million annually in state income taxes on wages and profits during construction and $1.5 million per year in taxes while operating. Using a model developed by the National Renewable Energy Laboratory, wind farms built in 2007 in the United States created more than 17,000 construction-related jobs and 1,600 long-term operations- related jobs. In addition, the new wind farms provided major environmental benefits, avoiding approximately 10 million metric tons of carbon dioxide emissions annually, equivalent to taking 1.8 million cars off the road, GE estimates. The GE study does not analyze the wind industry’s economic effects on other energy sectors.

In one of the last measures taken by the 109th Congress, an important federal policy for promoting the development of renewable energy received a one-year extension. The production tax credit (PTC) provides a 1.9-cent per kilowatt-hour (kWh) benefit for the first ten years of a renewable energy facility’s operation. The PTC was set to expire on December 31, 2007, but due to the efforts of a coalition of clean energy supporters—including UCS—it was extended for one year as part of the Tax Relief and Health Care Act of 2006 (H.R. 6408). Strong growth in U.S. wind installations is now projected through 2008.

The legislation extending the PTC provides a one-year extension  through December 31, 2008 of the 1.5-cent/kWh credit for wind, solar, geothermal, and “closed-loop” bioenergy facilities (Adjusted for inflation, the 1.5 cent/kWh tax credit is currently valued at 1.9 cents/kWh). Other technologies, such as “open-loop” biomass, incremental hydropower, small irrigation systems, landfill gas, and municipal solid waste (MSW), receive a lesser value tax credit. 

Everyone of us should contact our legislator and demand that the Production Tax Credit be continued for the foreseeable future. Let’s provide the private market place with monetary incentives so that private enterprise can help free us from foreign oil.