New England’s unlikely ally on wind energy? Red states
WASHINGTON — New England Democrats trying to protect the region’s renewable energy industry from a Trump administration push to cut government subsidies have found some unlikely allies in Congress: Republicans.
During Scott Pruitt’s speech last week declaring the end of the “war against coal,” the Environmental Protection Agency chief came out against federal tax credits for wind and solar power. That boosted speculation that Republicans will try to ax the clean energy subsidies in their tax overhaul.
But by making these credits a target, Republican leaders and Trump administration officials are pitting themselves against members of their own party in states where wind and solar are important economic engines.
Wind farming is concentrated in predominately red states: In 2016, nearly 90 percent of new wind capacity originated in states that went for Trump in the election, according to data from the American Wind Energy Association.
Iowa Senator Chuck Grassley prizes the contributions wind has made in his state, where more than a third of electricity comes from wind power. Grassley, a longtime Republican heavyweight, spoke with Pruitt on Tuesday in a meeting on Capitol Hill. His message on the wind tax credit was simple: hands off.
“He doesn’t have anything to do with it,” Grassley told reporters outside his office on Tuesday. “I told him I was the author of the wind energy tax credit, and he doesn’t have to worry about it after 2020 because it’s going to phase out.”
In Massachusetts, where jobs relating to solar energy rank second-highest in the nation and where officials are still pursuing wind farming off the coast, the GOP opposition to Pruitt’s stance is being met with cheers.
“He’s doing everything he can to sabotage the wind and solar industry in the US,” said Senator Ed Markey of Pruitt. “But if they try to include it in their tax bill, I think they’ll actually be signing the death warrant of their tax plan.”
Pruitt, who spoke last week to a receptive audience of coal miners in Kentucky, argued that the federal government should stop giving wind and solar energy industries a boost and put them on a level playing field with resources such as coal and natural gas. The credits are scheduled to gradually phase out in the next few years.
Congress voted to extend the wind industry’s 2.4-cents-per-kilowatt hour tax credit in 2015, along with 30 percent tax credits for investments in wind and solar energy.
“The idea that Chuck Grassley is going to roll over for Scott Pruitt is a laugh,” said Senator Sheldon Whitehouse of Rhode Island, where the country’s first offshore wind farm began operating last year, south of Block Island.
Grassley already has Republican colleagues on his side. Senator James Lankford of the wind-rich state of Oklahoma, where Pruitt served as attorney general, said in an interview that Republicans should keep their promise of a gradual phase-out of the credit.
And Senator Thom Tillis of North Carolina, one of the top states for solar power, according to the Solar Energy Industries Association, said abruptly cutting off the subsidy would be a mistake. “It’s a disruption to a very important industry,” Tillis said.
Some House Republicans are more receptive to Pruitt’s demand.
Texas Congressman Kevin Brady, chairman of the House Ways and Means Committee, said last week that energy provisions in the tax code are too convoluted and the committee is working on bringing them “toward the free market,” echoing Pruitt’s rhetoric.
Like Texas, Oklahoma is one of the top wind-power-producing states in the country, and Republican politicians have backed the subsidies in the past. But Representative Tom Cole of Oklahoma said even though the federal tax credits have a good deal of local support, he is willing to consider eliminating them to help fund a tax plan with major cuts.
“I’ve been very careful not to lay down any dealbreakers,” Cole said.
Like other new markets, fledgling offshore wind projects in the Northeast are more dependent on federal assistance as the industry gets off the ground in the United States, said Stephen Pike, chief executive of the publicly funded Massachusetts Clean Energy Center.
Senators Markey and Whitehouse have introduced legislation to extend a subsidy giving a 30 percent tax break on investment in such projects through 2025. The credit is set to phase out fully in 2020, setting up a race for companies to begin construction and reap the most of the benefits.
In Massachusetts, at least three companies are competing to lock down the state’s first wind farm off the coast, and the state has invested heavily in the industry’s future. Last year, Governor Charlie Baker signed a bill pledging to create enough offshore wind energy to power roughly 750,000 homes annually by 2027. And the state spent $113 million on a terminal in New Bedford as a construction headquarters for offshore wind projects.
Eliminating the tax credit benefiting investors in offshore wind would not necessarily mean the demise of these Massachusetts projects. But it could lead to higher energy prices for consumers if the overall project price increases, Pike said.
At least for now, the senators from New England are trusting that the other side will stick to their states’ interests. “I think there are enough people who have enough honor to keep their word on this,” Whitehouse said.