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January 16, 2013
Dear Sustainability Watch Reader,  

I am pleased to provide you with your monthly Sustainability Watch newsletter. This week's topic is "Wind Power."
Tax Credit Extension and Hopes for Future Growth 
 
President Obama signed an extension in the "fiscal cliff" bill for the wind power production tax credit (PTC) that was slated to expire on December 31, 2012. Under the legislation, wind energy projects must now begin construction by January 1, 2014 in order to receive the $0.022/kWh incentive.

The PTC was designed to give the renewables industry a chance to break into the already mature energy market, and some say that the planned twenty-year subsidy should have given the industry ample time to do so. However, industry experts argue otherwise: that continued subsidies are necessary to help compete with the fossil fuel industry (which also continues to receive subsidies in the form of tax breaks). 
 
In 2012, there were 75,000 jobs associated with wind power. The extension gives relief to these jobs for the time being, but in order to ensure that these jobs remain well in the future companies and wind farms must make greater progress by the end of 2013.

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Executive Summary

 

Rising energy prices, worry about national dependence on foreign oil, and concern about global climate change have led many in the energy sector to investigate renewable, non-GHG emitting sources of energy. Among the top contenders is wind power, which can be captured on a small (individual turbine) or large (wind farm) scale.


With modern-day wind power, wind turbines harvest the kinetic energy of the wind and transform it into potential energy to be used for electricity or power. The benefits of wind power are many, including that it is one of the cleanest energy sources possible; with low costs in GHG emissions during construction, it replaces the energy it uses during construction in three months. It emits no pollution, GHG or otherwise, during operation (Diesendorf, 2004). Further, the power supply - the wind - is virtually limitless in the right site.


If the United States were to generate 20% of its electricity from wind power by 2030 as proposed in a recent Department of Energy study, annual CO2 emissions could be reduced by 825 million metric tons by 2030, and cumulative water use could be reduced by 4 trillion gallons (DOE, 2008, p. 13). In sum, as one study noted: "[w]ind-generated power is frequently considered to be the 'best' renewable option because its costs are lower than those of other sources of novel renewable energy" (Prescott, van Kooten & Zhu, 2007, p. 724). 


For all of the enthusiasm evidenced by the industry, it is important to consider the drawbacks and challenges of wind power. Some of these have come in the form of real or perceived threats to wildlife and "NIMBY" (Not In My Back Yard) mentalities of potential wind power neighbors. Further, like other renewable energy sources (like solar and tidal power), wind power is subject to a high level of variability, requiring a backup energy source to provide consistent and reliable energy. In order to address this issue, the industry is pushing for improved storage and transmission technologies. As these technologies mature, wind power will become more feasible.


One question facing the wind power industry is that of government subsidies.The Renewable Energy Production Tax Credit (PTC) was enacted as part of the Energy Policy Act of 1992. It currently gives a tax credit of 2.2 cents per kilowatt hour of wind energy used, and it has been a tremendous driver of wind power development in the United States. It has was extended for an additional year at the end of 2012. The PTC was designed to give the renewables industry a chance to break into the already mature energy market, and some say that the planned twenty-year subsidy should have given the industry ample time to do so. However, industry experts at AWEA and elsewhere argue otherwise: that continued subsidies are necessary to help compete with the fossil fuel industry (which also continues to receive subsidies in the form of tax breaks). In 2012, there were 75,000 jobs associated with wind power, but many companies have already begun shedding jobs in anticipation of the expiration of the PTC (Eilperin, 2012).

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