Arkansas wind-energy jobs tied to tax credit

One of Arkansas’ fastest-growing manufacturing sectors has a strong tailwind behind it, but recent momentum could stall if Congress doesn’t extend federal tax credits for renewable energy sources, industry trade officials say.


On Tuesday, the U.S. Senate failed to renew amendments to the transportation bill that would have extended the wind production tax credit as well as a number of other renewable energy-related incentives.

Renewable energy trade officials are now are now putting a March Madness-style full court press on Arkansas’ congressional delegation to move quickly to extend the tax credit before the end of the year.

"We are disappointed that tens of thousands of American jobs are being put in peril by partisan gridlock in Washington. Despite the partisan vote on these broader energy amendments, the fact remains that the wind Production Tax Credit (PTC) enjoys bipartisan support in the House and Senate,” said Denise Bode, chief executive officer of Washington, D.C.-based American Wind Energy Association.

Despite the failed attempt to extend the renewable energy tax credit in the Senate, another attempt to reboot the legislation is expected to take place before the session ends. The U.S. House is now considering HB 3307 and a number of similar bills, which like the Senate amendment, would extend tax credits for energy production from a variety of renewable energy sources up to four years, and immediately for the wind industry.

Gov. Mike Beebe, a staunch supporter of the renewable energy industry in Arkansas, has called for a stronger federal tax policy for the renewable fuels industry in the past. Beebe spokesman Matt DeCample said the governor has not changed his stance and hopes Congress will act soon.

“Obviously, this is something that the governor supports and believes in for the long-term stability of the companies that are investing millions of dollars in the state’s economic development,” DeCample said.

Steve Patterson, executive director of the newly-formed Arkansas Advanced Energy Association, said passage of the wind PTC is integral to the growth of advanced energy jobs in Arkansas. Patterson’s group is advocating a four-year extension of the production tax credit for wind energy and a three-year reinstatement of the Biodiesel Tax Credit.

“Arkansas currently has about 550 jobs in wind manufacturing that are at risk if the PTC is not extended beyond Dec. 31, 2012,” Patterson said. He listed Nordex, Beckmann-Volmer and LM Wind Power as Arkansas companies that could cut jobs if legislation is not reinstated by the year’s end.

Patterson’s organization, which is aligned with 11-state Advance Energy Economy federation, sent letters to each member of Arkansas’ congressional delegation asking for support of the renewable energy extension. Patterson said he received a letter from U.S. Sen. Boozman, R-Ark., indicating he supports extension of tax credit — although he voted against the Senate amendment on Tuesday. U.S. Sen. Mark Pryor, D-Ark, voted for the Senate amendment and is also "inclined" to support the PTC extension, Patterson said.

In the U.S. House,  Rep. Rick Crawford, R-Jonesboro, is a co-sponsor of HR 3307.  U.S. Rep. Tim Griffin, R-Little Rock, has indicated that he supports the bill, while Rep. Steve Womack, R-Rogers, has said he will only support such legislation with the caveat that the tax credit be extended “for wind production only.”

“We have not heard from Congressman (Mike) Ross on HR 3307,” Patterson said of the Democratic representative from Prescott.

The wind industry’s tax credit was first enacted in 1992 and has expired on three different occasions in the past. It offers a tax rebate of 2.2 cents for each kilowatt-hour of energy produced for the first 10 years of electricity production from utility-scale turbines powered by renewable sources.

Wind farms put into service after the end of 2012 won’t qualify for the credit under existing law. H.R. 3307 would extend that deadline by four years. Although Arkansas does not have any wind farms, several manufacturers in Arkansas now make wind turbines and supply other parts to wind farm developments in Texas, California and other states.

According to the AWEA, Arkansas is now a national manufacturing leader in the wind industry with more than $350 million invested in economic development projects across the state. Arkansas has attracted investment from some of the wind industry’s major manufacturers, including blade leader LM Wind Power, turbine manufacturers Nordex and Mitsubishi, and a variety of major component suppliers.

In addition, the wind industry now supports between 1,000-2,000 direct and indirect jobs in Arkansas in 2010, and has the potential to add nearly 3,000 new jobs to the state economy by the end of 2012.

“Arkansas has become a manufacturing powerhouse for the wind industry,” the AWEA said in said in its Arkansas fact sheet.

Not surprisingly, the push by the renewable fuels lobby to extend the federal tax credit comes on the heel of a report by the U.S. Department of Energy showing that renewable energy consumption is increasing.

According to the Energy Information Administration, renewable energy consumption increased by 5.4% in 2009 to 7.8 quadrillion Btus. This follows a 9.6% increase between 2007 and 2008. These two increases, coupled with the consecutive year decreases in total energy consumption, boosted renewable energy's share of total consumption from 6.6% in 2007 to 8.2% in 2009. This is renewable energy's greatest share of the U.S. energy pie since 1984 when there were near record levels of hydropower.

Of that total, Wind energy grew 32% and has more than doubled since 2007, standing at 0.7 quadrillion Btus in 2009. Generation from wind turbines in the United States increased 27% in 2011 compared to 2010, continuing a trend of rapid growth. During the past five years capacity additions wind turbines were the main driver of the growth in wind power output.

Bode warned that if Congress doesn’t pass the  PTC extension soon, Arkansas and the rest of the nation stands to lose one of America’s best new sources of American manufacturing jobs.

“The clock is ticking and the stakes for a timely extension of the PTC could not be clearer,” Bode said. “With every day that goes by, layoffs are occurring and further job losses and even plant closings will accelerate with each month we near expiration in December.”