ENSP102 Memo Assignment

8/14/2019 ENSP102 Memo Assignment

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To: Senator Ben CardinFrom: Catherine McGrathTitle: Wind Power Dont Let it Blow AwayRe: Wind Power Ta Credit RenewalDate: A!ril "#$ "%&"

Introduction

Wind ener'y i( an )!*and*comin' renewa+le ener'y (o)rce in the ,nited State(-

Accordin' to the De!artment o. /ner'y$ wind !ower co)ld ()!!ly )! to "%0 o. the

nation( ener'y +y "%1%- 2n order .or wind !ower to reach thi( 'oal$ it i( im!ortant to

renew the c)rrent ta credit !ro'ram(- The !rimary .inancial !olicie( .or the wind

ind)(try$ the Prod)ction Ta Credit and the 1%0 2n3e(tment Ta Credit$ are (et to e!ire

on Decem+er 1&$ "%&" 4American Wind /ner'y A((ociation "%&&5- Witho)t the(e ta

credit($ the mar6et .or )tility*(cale t)r+ine( will +e )n!redicta+le- Wind ener'y

com!anie( will +e le(( li6ely to in3e(t in lar'e*(cale wind ener'y !ro7ect($ which will

!re3ent the ,nited State( .rom reachin' the .)ll !otential o. wind !rod)ction- A( a

!re3entati3e mea()re$ it i( e((ential to dra.t wind ener'y le'i(lation and 3ote .or the

renewal o. the wind ener'y ta credit- Wind ener'y will +ene.it the nation a( a whole in

addition to local and (tate economie($ e(!ecially in the (tate o. Maryland- Thi( memo will

e!lain three o!tion( .or wind !olicy renewal o. the ta credit$ !ha(in' o)t the ta

credit$ and no action-

Background

Wind i( con(idered a .orm o. (olar ener'y the )ne3en heatin' o. the

atmo(!here +y the ()n$ the rotation o. the earth$ and the irre')laritie( o. the earth(

()r.ace each ca)(e wind- T)r+ine( harne(( the nat)ral 6inetic ener'y o. the wind and

con3ert it into mechanical !ower- The +lade( o. the t)r+ine (!in$ which rotate( a (ha.t

connected to a 'enerator to !rod)ce electricity- There are two ty!e( o. wind t)r+ine(:


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3ertical*ai( de(i'n$ (ha!ed li6e an e''+eater$ and the more common hori8ontal*ai(

de(i'n- 9ori8ontal*ai( t)r+ine( are made )! o. either two or three +lade( that .ace into

the wind- ,tility (cale t)r+ine( ran'e in (i8e .rom &%% 6ilowatt( to (e3eral me'awatt(-

The(e lar'er t)r+ine( are )()ally 'ro)!ed into wind .arm( that can !rod)ce ener'y .or a

)tility 'rid that !ro3ide( electricity to home( and +)(ine((e( 4,-S- /ner'y 2n.ormation

Admini(tration "%&"5-

Wind ener'y ha( m)lti!le en3ironmental and economic +ene.it(- Wind ener'y i(

an emi((ion(*.ree electricity (o)rce- Con3er(ely$ the !rod)ction o. non*renewa+le

(o)rce( ()ch a( oil$ nat)ral 'a($ and coal ca)(e (i'ni.icant emi((ion( o. 'reenho)(e 'a(e(-

For each )nit o. electricity 'enerated$ wind ener'y emit( the e)i3alent o. &0 o. coal

emi((ion( and "0 o. 'a( emi((ion(- 2. the ,nited State( !rod)ced "%0 o. it( electricity

.rom wind ener'y$ ann)al car+on dioide emi((ion( wo)ld +e red)ced +y ;"< million

metric ton( 4=ational Renewa+le /ner'y La+oratory "%%;5- Additionally$ wind ener'y

create( many lon'*term 7o+( in com!onent man).act)rin'$ con(tr)ction and in(tallation$

maintenance$ mar6etin'$ and tran(!ortation- The wind ener'y ind)(try em!loyed ;


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Critic( o. wind ener'y ar')e that en3ironmental im!act o)twei'h( the +ene.it( o.

wind ener'y- Some en3ironmentali(t( claim that wind t)r+ine( will detrimentally a..ect

+ird (!ecie(- 9owe3er$ wind t)r+ine( ca)(e le(( than &0 o. anthro!o'enic$ or h)man

ind)ced$ +ird mortality- Com!arati3ely$ +)ildin'( and window( ca)(e


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de3elo!ment o. the ,nited State(- 2n order to 6ee! !ace with the de3elo!ment o. other

nation($ the ,-S- m)(t +e'in to !rod)ce more ener'y .rom renewa+le ener'y (o)rce( ()ch

a( wind !ower-

Wind ener'y can +e a!!ealin' to +oth the Democratic and Re!)+lican Party-

Democrat( are !lea(ed with wind ener'y +eca)(e it !ro3ide( emi((ion(*.ree electricity

and will red)ce the con()m!tion o. non*renewa+le and hi'hly !oll)tin' re(o)rce(-

Re!)+lican( are !lea(ed with the !otential to (tim)late the economy +y creatin' lon'*

term man).act)rin' and en'ineerin' 7o+(- Thi( +alance o. the en3ironment and the

economy i( !alata+le .or +oth !artie(- Beca)(e o. the etreme +i!arti(an(hi! in Con're(($

ener'y !olicy le'i(lation m)(t a!!eal to +oth end( o. the (!ectr)m-

Wind ener'y i( an e(!ecially (alient i(()e +eca)(e the Prod)ction Ta Credit and

the 1%0 2n3e(tment Ta Credit are (et to e!ire on Decem+er 1&$ "%&"- The PTC wa(

created )nder the /ner'y Policy Act o. &@@"- 2t !ro3ide( an income ta credit o. "-" cent(

!er 6ilowatt*ho)r .or the !rod)ction o. electricity .rom )tility*(cale wind t)r+ine(- The

PTC al(o o..er( credit .or di..erent ty!e( o. renewa+le ener'y ()ch a( +ioma(($

'eothermal$ and hydroelectric at a rate o. &-& cent( !er 6ilowatt*ho)r- The 2TC wa(

de3elo!ed thro)'h Section %1 o. the American Reco3ery and Rein3e(tment Act o.

"%%@- Wind !ro7ect de3elo!er( can choo(e the 1%0 2TC in !lace o. the PTC- De3elo!er(

can recei3e a ca(h !ayment e)i3alent to 1%0 o. the in3e(tment .or !ro7ect( that +e'an

+e.ore "%&& and will +e com!leted and in (er3ice +e.ore "%&1- Thi( !ayment i( .)nded +y

the De!artment o. Trea()ry 4Data+a(e o. State 2ncenti3e( .or Renewa+le /ner'y and

/..iciency "%&&5-

Description of Options/Arguments

The .ir(t wind ener'y !olicy o!tion i( to renew the Prod)ction Ta Credit and the


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1%0 2n3e(tment Ta Credit- A ten*year renewal o. the Prod)ction Ta Credit wo)ld

!ro3ide a "-" cent !er 6ilowatt*ho)r income ta credit )ntil Decem+er 1&$ "%""- A ten*

year renewal o. the 1%0 2n3e(tment Ta Credit wo)ld allow de3elo!er( to recei3e a ca(h

!ayment o. 1%0 o. their !ro7ect in3e(tment )ntil Decem+er 1&$ "%""- Thi( o!tion i(

!re.erred +y the wind ind)(try in order to en()re mar6et con(i(tency- The(e incenti3e(

will ca)(e more in3e(tor( and de3elo!er( to +e'in new wind !ro7ect(- A( a re()lt$ the(e

wind !ro7ect( co)ld hel! the ,nited State( reach the 'oal o. "%0 wind !ower +y "%1%-

The PTC ha( +een ()cce((.)l .or the !a(t ten year( +eca)(e it ha( enco)ra'ed the wind

ind)(try to 'row at a a3era'e rate o. 1"0 each year 4Bolin'er and Wi(er "%&&5- 2. the

wind ind)(try contin)e( to 'row$ wind ener'y can meet the ,nited State( increa(in'

ener'y demand( witho)t com!romi(in' en3ironmental )ality- The economy will +ene.it

.rom the ta credit renewal in m)lti!le way(- R)ral landowner( will +e more li6ely to

in3e(t in wind ener'y !ro7ect( and$ d)e to the ta credit$ their indi3id)al economic

!ro(!erity will increa(e- Additionally$ the wind ind)(try can ()!!ort ro)'hly


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!romi(in' renewa+le ener'y (o)rce($ incl)din' (olar$ +ioma(($ 'eothermal$ and

hydro!ower-

The net wind ener'y !olicy o!tion i( a 'rad)al !ha(e o)t o. the ta credit-

2n(tead o. renewin' the 2TC and PTC .or an additional ten year($ Con're(( co)ld renew

the(e ta credit !olicie( .or a!!roimately .o)r to (i year(- Con're(( co)ld al(o

'rad)ally red)ce the incenti3e .or each ta credit$ !erha!( +y red)cin' the PTC +y a rate

o. %-" cent( !er 6ilowatt*ho)r each year or +y red)cin' the 2TC +y


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a..ected- Lender( may he(itate to in3e(t in new wind !ro7ect( +eca)(e the ta credit i(

)ncertain-

The .inal !olicy o!tion .or the wind ind)(try i( no action at all- Con're(( can

(im!ly decide not to renew the ta credit and lea3e the wind ind)(try to de3elo! on it(

own- Thi( o!tion wo)ld allow .or more money and e..ort to +e (!ent on the contin)ed )(e

o. .o((il .)el( and the e!loration o. other renewa+le (o)rce(- The money that wo)ld +e

)(ed to .)nd the ta credit co)ld +e allocated to di..erent !ro7ect( 4=atter "%&"5-

The no actionE !olicy wo)ld +e 3ery harm.)l to the wind ind)(try- 2ncrea(ed

)ncertainty in the wind ener'y mar6et will ca)(e 7o+ layo..( +eca)(e .ewer wind !ro7ect(

will +e'in- De3elo!er( may r)(h to .ini(h their !ro7ect( +e.ore the Decem+er 1&$ "%&"

deadline$ ca)(in' hi'h !rod)ction co(t( .rom (hort*term !lannin' mi(ta6e(- =ew

in3e(tor( wo)ld +e rel)ctant to commit to new !ro7ect( +eca)(e o. red)ced incenti3e(

+e'innin' in "%&1- =ew wind ener'y !ro7ect( can +e 3ery e!en(i3e witho)t the ta

credit and$ a( a re()lt$ the wind ind)(try co)ld (tall or .ail com!letely with the a+(ence o.

the PTC and 2TC-

Recommendations

The mo(t e..ecti3e !olicy o!tion i( to 'rad)ally !ha(e o)t the Prod)ction Ta

Credit and the 2n3e(tment Ta Credit- Thi( !olicy will allow the wind ind)(try to

contin)e to 'row and de3elo! witho)t creatin' economic de!endency on the ta credit-

De3elo!er( and in3e(tor( will +e con.ident to +e'in new !ro7ect( .or the remainder o.

"%&" into "%&1 and +eyond$ +)t will +e aware o. the yearly red)ction o. incenti3e(- ne

year !rior to the e!iration o. the ta credit$ Con're(( (ho)ld e3al)ate the .)t)re need o.

the ta credit- 2. the wind ind)(try i( (till )n!redicta+le$ i. new wind !ro7ect( are (till

e!en(i3e$ and i. de3elo!er( are (till rel)ctant to +e'in !ro7ect($ then Con're(( (ho)ld


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renew the ta credit- 2. the wind ind)(try i( (ta+le and .lo)ri(hin'$ there i( no need .or

contin)ation o. the ta credit and Con're(( can di(contin)e incenti3e( .or wind ener'y-

With the 'rad)al !ha(e o)t o. the ta credit$ money can (till +e allocated toward( the

de3elo!ment o. other renewa+le re(o)rce(- Thi( will .)rther decrea(e the de!endence on

.o((il .)el( and allow the ,nited State( to ha3e a more com!rehen(i3e and (ta+le ener'y

!olicy- A( the wind ind)(try contin)e( to 'row to it( .)ll !otential$ 'reenho)(e 'a(

emi((ion( will decrea(e$ leadin' to a healthier en3ironment .or h)man( and animal(- Both

the Democratic and Re!)+lican !artie( will +e !lea(ed with the re()lt(- Democrat( will

()!!ort the !)r()it o. clean ener'y and Re!)+lican( will .a3or the creation o. new

ind)(try 7o+(-

Conclusion

Wind ener'y i( a !romi(in' and e..ecti3e (o)rce o. electricity in the ,nited

State(- Action m)(t +e ta6en immediately to +e'in the !ha(e o)t o. the wind ener'y ta

credit- Pha(in' o)t the ta credit will !rotect the wind ind)(try +y !ro3idin' (ta+ility and

incenti3e(- 2n t)rn$ the en3ironment and the national economy will +ene.it (i'ni.icantly-

The ,nited State( need( the wind ind)(try to re3itali8e the economy$ im!ro3e

en3ironmental )ality$ and increa(e national (ec)rity- 2. the wind ind)(try reache( it(

!otential o. "%0 +y "%1%$ the ,nited State( will contin)e to +ene.it e3en year( later-

ENSP102 Memo Assignment

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