Who is Sen Chuck Grassley? He is a Republican Senator in Iowa, but you may know him as the one who authored the wind energy tax credit back in 1992. He has been a strong advocate of the wind industry through production tax credits, but he also supports all sources of energy, and believes they all have a place in the energy mix.
He recently released an article and spoke on the senate floor to voice his opinions on wind energy, and the effect of tax provisions on industry growth. Just as a lack of tax credits can harm the start of a new industry, removing tax credits abruptly from a growing industry can negatively impact its continued sustainability.
Here is a portion of his article:
“For example, the 100 year-old oil and gas industry continues to benefit from tax preferences that benefit only that industry. These are not general business tax provisions – they are specific to the oil and gas business. Here are a few examples: expensing for intangible drilling costs; deduction for tertiary injectants; percentage depletion for oil wells; and special amortization for geological costs. These four tax preferences for this single industry result in the loss of more than $4 billion annually in tax revenue.
Nuclear energy is another great example. The first nuclear power plant came online in the United States in 1958 – 56 years ago. Nuclear receives special tax treatment for interest from decommissioning trust funds. Congress created a production tax credit for this mature industry in 2005, which is available until 2020.
Nuclear also benefits from Price-Anderson, federal liability insurance, that Congress provided as a temporary measure in 1958. This temporary measure has been renewed through 2025. Nuclear energy has also received $74 billion in federal research and development dollars since 1950.
Are these crony capitalist handouts? Is it time to end market distortions for nuclear power? A Cato study found that “In truth, nuclear power has never made economic sense and exists purely as a creature of government.”
I don’t understand the argument that repealing a subsidy for oil or gas or nuclear energy production is a tax increase on energy producers and consumers, while repealing an incentive for alternative or renewable energy is not. It’s not intellectually honest.
I authored the wind incentive in 1992. I know it won’t go on forever. It was never meant to, and it shouldn’t. I’m happy to discuss a responsible, multi-year phase-out of the wind tax credit. In 2012, the wind industry was the only industry to put forward a phase-out plan.
But any phase-out should be done in the context of comprehensive tax reform, where all energy tax provisions are on the table. And it should be done responsibly over a few years, to provide certainty and ensure a viable industry.
You can read the rest of Sen. Chuck Grassley’s article here: Why are wind energy tax breaks cronyism but not ones for nuclear and fossil fuels?