US House Republicans on Thursday unveiled their tax reform bill that keeps the scheduled expiration of the production tax credit (PTC) for wind energy but cuts its value and changes the start of construction conditions.
After a 2015 bipartisan deal in Congress the PTC for wind farms was extended through 2019 and is phased down by 20% a year starting in 2017. Projects that start construction in 2017 get 80% of the credit, and those that enter construction in 2018 and 2019, get 60% and 40%, respectively.
The amount of the credit was USD 0.023 (EUR 0.02) for 2016. The tax bill proposes to remove an inflation adjustment, for facilities starting construction after November 2, 2017. According to a summary of the bill by the House Ways and Means Committee, this would cut the value of the credit to its base amount of USD 0.015.
The bill also changes the terms of PTC qualification with respect to start of construction. It says that construction should be treated as beginning if there is a continuous programme of construction, with the proposed change applying to tax years beginning before, on, or after November 2, 2017.
The American Wind Energy Association's (AWEA) chief executive Tom Kiernan said the bill "reneges on the tax reform deal that was already agreed to, and would impose a retroactive tax hike on an entire industry."
According to the association, the proposal puts at risk over USD 50 billion of investment and 50,000 US jobs.
"We expect members of the House and Senate to oppose any proposal that fails to honor that commitment, and we will fight hard to see that wind energy continues to work for America," Kiernan added.
He also said that changing the rules in the middle of the game would be a bad signal for private investment in US infrastructure.
On the proposed start of construction definition AWEA said that "investors who put billions of dollars into factory orders and construction contracts cannot go back in time to meet the revised requirements."
The energy credit provisions in the bill were also criticised by the American Council On Renewable Energy (ACORE). "It is noteworthy that the architects of the House bill focus their efforts to save funds on the dwindling temporary incentives for renewable energy, rather than the permanent incentives for fossil fuel, which have in many cases been on the books for more than 90 years," said its head Gregory Wetstone.
(USD 1 = EUR 0.859)
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