UPDATE 1-U.S. wind tax credit likely to weather 'cliff' deal

Mon Dec 31, 2012 10:52pm GMT

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By Valerie Volcovici

WASHINGTON Dec 31 (Reuters) - A tax credit that provides incentives to produce wind energy, a financial lifeline for the wind power industry, will likely be extended if Congress approves a tentative deal between Senate Democrats and Republicans to avert the "fiscal cliff."

President Barack Obama said on Monday that a deal with Congress to stop a range of spending cuts and tax increases was "within sight," although not yet finalized.

According to the sources close to the 11th-hour negotiations, the deal would include a one-year extension for a tax credit to support the production of wind energy, which was set to expire at year-end without an extension by Congress.

The extension is based on a measure passed in August by the Senate Finance Committee, which would extend the tax credit for all wind projects that begin construction in 2013.

The American Wind Energy Association, a lobbying group, said the Senate Finance Committee extension "accommodates the 18-24 month timeline it takes to build a wind project."

"Thousands of American workers have already been laid off and without an extension of the PTC (production tax credit) soon, those job losses will accelerate until 37,000 American jobs are lost due to congressional inaction," a spokeswoman for the lobby group said.

The fate of the credit, which has spurred the expansion of wind farms and helped boost wind turbine manufacturing, has been uncertain ever since it was enacted as part of the 1992 Energy Policy Act.

The measure has been extended four times and allowed to sunset three times, contributing to a boom-bust cycle for wind energy production, according to the Union of Concerned Scientists.

U.S. wind farms installed a record number of turbines in 2012 but uncertainty about the future of the tax credit has prompted recent layoffs at manufacturers like Vestas Wind Systems' operation in Colorado, Siemens in Iowa and Gamesa Wind Corp's facility in Pennsylvania.

Some wind energy companies have rushed to install wind turbines before the Dec. 31 deadline for the production tax credit.

"The president and many bipartisan members of Congress have been working all year to extend the wind tax credits, with support from clean energy advocates ranging from wind companies and the United Steelworkers to faith groups and environmental advocates," said Courtney Abrams, federal clean energy advocate for Environment America, an environmental advocacy group.

"But nothing has been voted on yet, and we urge Congress to act to protect the future of wind power and a cleaner environment," she added.

The House and Senate still need to approve any deal that emerges on spending and taxes before Monday's midnight deadline.

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