The above was the title of this Politico article on the prospects for Congressional renewal of the Wind Energy Production Tax Credit. But every time I hear the phrase “not dead yet” I think of the beginning of Monty Python and the Holy Grail where the dead body collector comes around and the guy says “I’m not dead yet.” If you don’t know the scene, Bing it.
But I digress (as always). Why, you ask, is the State of Trade blog talking about wind energy tax credits? Think it’s an interesting renewable energy conversation, but it doesn’t have anything to do with international trade? Au contraire, mon ami! For Washington state, the wind energy production tax credit has a lot to do with international trade…because several of our state’s ports serve as major wind cargo destinations.
In fact, in 2009, the U.S. Census Bureau declared the Port of Vancouver the nation’s leading port for handling wind energy cargo. In 2011, they handled over 3,000 individual wind turbine parts, equating to over 106,000 metric tons, which generated around $10 million and over 75,000 labor hours. But it’s not just Port of Vancouver. I spent last Friday in Longview, and the Port of Longview is also seeing significant new business in this area.
The uncertainty of the wind energy tax credit is having a fascinating impact on this business line. According to the article: “Although the credit expires at the end of the year, advocates said the long time needed to plan, permit and construct wind projects means it is essentially expiring right now.” Historically, at least six to eight months before the tax credit expires, financial lenders hesitate in providing capital for projects because of the uncertainty created by the pending expiration of the credit, stalling projects from coming online. The rush to complete projects also reduces projects and adds costs, resulting in higher electricity prices.
What the Ports are seeing is a huge uptick in wind cargo business now, as folks are trying to complete their wind energy projects before the tax credit expires – which is good for business – but, even if the credit is eventually renewed, there won’t be immediate demand for more projects (which is bad for business). Clearly, this is an issue for international trade in Washington, and it’s great to see that Representative Reichert is one of the co-sponsors of a bill that would extend the credit for four years.