Tuesday, July 26, 2011

Offshore Wind Tax Credit Bill Introduced in Senate

Senators Olympia Snowe (R-ME) & Tom Carper (D-DE) have introduced a bill that would extend tax credits for the first 3 gigawatts of offshore wind capacity in the U.S.
These tax credits are vital for offshore wind projects because there is a much longer lead time for the permitting and construction of the turbines compared to onshore wind energy, the sponsors said. Once awarded a tax credit, companies have five years to install the offshore wind farm.
“This legislation is essential to encourage the continued growth of this fledgling industry," Carper said. "Guaranteeing these tax incentives for the first 3,000MW will spur the industry to get these projects up and running and encourage further development even in these challenging economic times.”
US offshore wind projects have run into numerous financing and permitting challenges.
Dianne Saenz, over at Oceana, has more:
Under current law, the investment tax credit for offshore wind expires at the end of 2012.  This unrealistic deadline currently makes the financing of offshore wind projects nearly impossible.  The “Incentivizing Offshore Wind Power Act” would do away with this deadline and instead provide a 30 percent investment tax credit for the first 3,000 megawatts of offshore wind placed in service. 
The bipartisan bill, introduced by Senators Tom Carper (D-DE) and Olympia Snowe (R-ME), with leading co-sponsors Senators Robert Menendez (D-NJ), Susan Collins (R-ME), Chris Coons (D-DE), Sheldon Whitehouse (D-RI), Sherrod Brown (D-OH) and Jack Reed (D-RI), incentivizes investment in offshore wind projects, while prioritizing those projects that are furthest along in the development process.  By doing so, this bill creates tax certainty for the first movers in the budding domestic offshore wind industry.
“We believe the Carper-Snowe bill is exactly the kind of bold and visionary legislation that is required to get the offshore wind industry moving again,” said NRG Bluewater Wind President Peter Mandelstam.  “This proposed legislation gives a clear signal to developers and their supply chain partners that these projects have long-term policy support, rather than short-term incentives. For early movers like NRG Bluewater Wind, it provides some measure of cost-certainty needed in order to move forward in the process. We fully support the bill as written and the leadership needed for passage,” added Mandelstam.
Last month, the Center for American Progress released a brief and accompanying article detailing the current state of offshore wind in the U.S. Of particular interest to me on this issue is the potential use of categorical exclusions to streamline the permitting process for offshore wind sites under NEPA. While attending the ABA's Section on Environment, Energy, & Resources 40th Annual Conference on Environmental Law in Salt Lake City this past March, I was able to speak briefly on this subject with Laura Morton, Senior Advisor on Renewable Energy Deployment at the Department of Energy's Office of Energy Efficiency & Renewable Energy. She told me that to not expect any movement on this front anytime soon, as many policymakers had a bad taste in their mouths when it came to categorical exclusions thanks to their role in the Gulf oil spill. The conversation essentially confirmed fears that Herman Trabish had expressed the prior summer:
One of the most important suggested solutions for an improved offshore wind approval process is the granting to developers of a "categorical exclusion" from certain environmental study obligations on the grounds that such studies have been conducted time and again and new ones would only yield the same results.
Unfortunately, before the MMS got around to granting wind such categorical exclusions, there was that oily matter in the Gulf of Mexico. In the catastrophe's wake, it was discovered that one of the corners cut on behalf of BP was the granting of a categorical exclusion.
It has long been the common practice to grant offshore oil and gas drillers such exclusions, and it probably had little to do with the disaster that BP's alleged shoddy drilling practices has precipitated. But never mind anybody else asking for such an exclusion right now.
It is unclear when the timing may be right for such an option.  In the meantime, extending the tax credits should help keep early projects moving along.

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