Republicans seek to phase out federal tax credit for renewables

Declaring that the federal production tax credit (PTC) for renewables was established solely to help a fledgling energy industry, a group of Republican senators and a representative have introduced legislation to phase out the tax credit in its entirety.

The effort is being pursued by U.S. Sens. James Lankford (R-OK), Kevin Cramer (R-ND), John Hoeven (R-ND), and Shelley Moore Capito (R-WV), as well as U.S. Rep. Kenny Marchant (R-TX). Under the changes proposed, the Internal Revenue Code of 1986 would be amended to repeal the credit for electricity produced from certain renewable resources. Any new projects would have to either begin construction by year’s end or fail to qualify for the credit, and make 2020 the last extension the credit will ever receive.

“When you drive through my state and many others with countless wind turbines, you can see that the wind industry is no longer a start-up, new energy source,” Lankford said. “The wind industry is thriving and does not need federal taxpayers’ money to thrive. Even though Congress concluded four years ago that the wind tax credit served its purpose and should be phased out by the end of 2019, the PTC was instead unexpectedly extended for the twelfth time at the end of last year.”

The lawmakers dismissed the credit as market-distorting and fundamentally unfair. A bipartisan consensus was reached, they noted, to phase out the wind PTC five years ago, only for the credit to be extended. The PTC was established as part of the Energy Policy Act of 1992.

“When the renewable energy production tax credit was implemented, it was intended by its authors to be a temporary support for a generation technology that was then too expensive to compete,” Capito said. “Since then, we have seen renewables take ever greater market share, particularly wind energy production, and yet the tax incentive remains in effect. This creates an unfair advantage against other energy sources, such as power plants fueled with West Virginia coal and natural gas.”

Lankford authored a similar standalone bill in 2015 and has offered the provision as an amendment to other previous legislation. He and his colleagues have argued that the PTC cost taxpayers $19.5 billion between 2019-2023.