Fact check: Breitbart's Shapiro misfires on 1603 wind tax incentive
Breitbart.com's Ron Shapiro wrote a lengthy post Tuesday about alleged misuse of the Section 1603 tax incentive for wind farms--an incentive program that was highly effective in saving wind industry jobs during the height of the recent economic meltdown. In fact:
The 1603 program saved 40,000 jobs. During the recession, project development and financing was difficult to obtain and costly. Wind investment stalled: some projects stopped in mid-construction, laying off construction workers and leaving wind towers and blades on the ground. 1603 allowed a wind farm developer to receive the value of the existing Production Tax Credit in the form of an up-front cash payment from the U.S. Treasury. This was critical: with the economy crashing, companies had no tax liability to take the Credit against. By providing an incentive in a form companies could use, the 1603 program restarted stalled projects and saved all 40,000 jobs at risk, according to a study by Lawrence Berkley National Laboratory (LBNL).
In the end, the program led to a record-breaking year of 10,000 megawatts (MW) of new wind in 2009 and investment of some $20 billion, compared to the 4,000 MW (and $8 billion) feared prior to 1603.
Because 1603 was a tax-based program, payments were non-discretionary. With wind farm construction in free fall and workers being laid off, time was of the essence. By law, 1603 payments were non-discretionary: anyone who produced renewable energy qualified for them, and the Department of the Treasury was required to make payments to applicants within 60 days. (Remarkably, they succeeded in meeting that deadline.) There was no approval process involving decision-making by federal bureaucrats, and therefore, no opportunity for inappropriate influence.
Tax relief for renewable energy helps level the playing field with traditional energy sources. Fossil fuels have received permanent taxpayer money since the 1920s, costing taxpayers well over $500 billion. After nearly a century, fossil energy still receives 5 times the subsidies renewables receive, according to the Government Accountability Office. Even more, Americans pay for fossil fuel in the form of an additional $60 billion in healthcare costs, according to a National Academy of Sciences report issued during the Bush Administration.
We have a choice between a balanced energy plan that includes wind and renewable American energy or continuing our heavy dependence on fossil fuels, which supply more than 60 percent of our electricity.
Every job saved by 1603 was an American job. 100% of projects that received tax relief through 1603 were built in the U.S.. as required by law. The program also supported U.S. wind turbine domestic manufacturing, which has grown 12-fold, with an increase in domestic content from 25% only a few years ago to nearly 70% now, and nearly 500 American manufacturing facilities making wind components. Data from the International Trade Commission (ITC) shows that less than 5% of the value of turbine parts used in the U.S. is imported from China.
There has been a lot of confusion about the 1603 program, some unintentional and some deliberate, by those who would like to deny its success. The fact is, thanks to 1603's emergency help during the meltdown, we still have a strong domestic wind turbine manufacturing industry that can continue to grow, attract private investment, and create jobs if the federal Production Tax Credit (PTC) is extended.
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