Congress extends tax credits for wind, fuels
MILFORD – The bill Congress approved on Jan. 1 providing tax relief for most taxpayers also helps wind energy and ethanol producers by extending tax credits designed to encourage continued development.
States like Texas, the nation’s leading wind energy producer, and Iowa, the leading ethanol maker, should benefit from the incentives.
Many of the credits had expired in 2012.
The bill extends to the end of the year a production tax credit for wind energy on any facility under construction before the end of 2013.
Harold Prior, executive director of the Iowa Wind Energy Association, in Milford, said the extension will help to get some projects back on line in Iowa.
He said the IWEA estimated 1,000 jobs in development, transportation and construction of wind energy were lost as the uncertainty grew about the tax credit’s future.
“We’re hopeful those 1,000 jobs will come back,” Prior said, adding tat most companies are hesitant to make their future plans public.
However, he said, the current situation is better than losing 3,000 jobs if the credit has not been extended.
He credits the administrations of Iowa Governor Terry Branstad, plus the former governors Tom Vilsack and Chet Culver as making wind energy a working concern in Iowa.
“The extension,” Prior said, “will also give us more time to lobby for a longer extension.” He said the constant doubt over extensions keeps the industry sputtering.
The extension also allows for wind farm projects that have, as yet an unspecified, percentage of their projects started, upward to 18 months to complete and still qualify for the credits. For these projects, Prior said, the one-year extension is actually a 2.5-year extension.
The U.S. biodiesel industry applauded as the U.S. House cleared the year-end fiscal package reinstating the biodiesel tax incentive for 2013.
“It’s been a long year with a lot of missed opportunity and lost jobs in the biodiesel industry,” said Anne Steckel, vice president of federal affairs at the National Biodiesel Board. “But we’re pleased that Congress has finally approved an extension so that we can get production back on track.
“This is not an abstract issue. In the coming months, because of this decision, we’ll begin to see real economic impacts with companies expanding production and hiring new employees.”
A recent study found that the industry would have produced an additional 300 million gallons this year with the tax incentive in place. That would have supported some 19,213 additional jobs, for a total of 83,258 jobs supported by the industry nationwide, according to the study, conducted by Cardno ENTRIX, an international economics consulting firm. Looking to next year, the study found that the industry would support some 112,078 jobs nationally with the tax credit in place versus 81,977 without it.
Additionally, the return of the incentive is projected to increase household income by some $1.6 billion next year while supporting an additional $3.1 billion in GDP.
The industry has plants in nearly every state in the country.
The bill also extends a $1.01-per-gallon tax credit for cellulosic ethanol made from corn plants, grasses, algae, and sources other than corn kernels.
The bill allows ethanol makers to depreciate equipment for new plants placed in service in 2013 and extends biodiesel production tax incentives for two years.