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Friday, May 6, 2016

Production tax credits critical to area's alternative energy hopes

Tuesday, April 6, 2004

Area windfarm waits on Congress

What is a production tax credit and why is it important to Northwest Iowa?

In order for continued development of alternative energy in this region of the country, from biodiesel as being considered for a plant in the Newell area, to wind, with a large portion on a massive wind turbine energy farm in waiting for the Schaller region, the people and companies doing the development need an incentive and a reason for doing it.

The reasons are fairly obvious by now: loosening the grip the Middle East has on energy our country needs runs on, mounting evidence that greenhouse gases caused by burning fossil fuels are contributing to global warming and pollution, and the hopes for rural economic development - giving farmers and farm-related economies another income stream.

But how does this get done?

Well, the federal government tries to level the playing field by giving energy companies such as MidAmerican a tax break when developing or using alternative energy of at least enough to compete with present fuels such as nuclear, coal and natural gas. This in turn, means landowners could see a turbine or more on their land. Or at least sign an easement that means an extra $4,000 in their pockets every year for every turbine on their land. If they only sign an easement and truck lines or substations are put up, they still get $4,000 a year.

It is becoming more and more economically feasible to harvest the renewable energy produced by wind. The price of turbines is coming down as the efficiency of the turbines increases and the technology of harnessing wind is getting more sophisticated.

This helps bring down the cost of the electricity the turbines produce. Yet the cost per kilowatt hour is still in more than natural gas- or coal-fired generation plants.

By allowing energy companies that will produce and sell the electricity from wind a 1.5 cent per kilowatt hour tax credit, the government makes it economically possible for the development of wind farms, and increases the likelihood that further development will occur.

But an extension of production tax credits failed to happen when the huge energy bill was stopped in December of last year, which has set back development of Clipper Windpower's Schaller wind farm and other farms like it across the state and nation.

Sen. Charles Grassley, R., Iowa, one of the early supporters of the production tax credit, sees getting the extension for tax credits as imperative for the energy security of the nation and the economic security of the state.

"Iowa has the opportunity to reap huge benefits from the wind energy production tax credit." he told the Pilot-Tribune recently. "Many of the wind turbines that dot the landscape of northern Iowa are possible because of the wind energy tax credit that I helped get through the Congress in 1992.

"By providing an incentive that helps make wind energy competitive with traditional sources of energy, we're giving a boost to the rural economy of Iowa, developing an environmentally friendly, homegrown resource, while helping to provide energy security for the United States."

Due to many strange amendments like building a Hooters Restaurant in Louisiana, commonly called-pork barrel amendments, and protecting the makers of a gasoline additive known as MTBE from lawsuits, the bill never got out of the Senate.

Now a 'slimmed' down version of the original energy bill has yet to be passed by either the House or the Senate. This version is still being negotiated by the leadership in both the House and the Senate.

One of Grassley's staff told the Pilot-Tribune that her understanding was that controversial provisions in the original energy bill will be taken out, but at this point Grassley didn't know for sure because of the ongoing negotiations.

"Sen. Grassley has confirmed that his package of renewable energy tax credits remain in the 'slim' version," she said. "This would include the wind energy tax credits and the biodiesel tax credit. Sen. Grassley believes that this type of energy would easily pass the Senate, but he has concerns with it passing the House."

Grassley's staff said the senator has included in his renewable tax package an income tax credit and excise tax rate reduction for biodiesel fuel mixtures. Grassley knows that Iowa is the nation's largest producer of soybeans and is home to a couple of biodiesel plants, his staff said.

At this time, its a matter of wait and see as to whether the Congress will pass an energy bill, especially with fuel prices so high, taking everyone's mind off wind energy.

MidAmerican says its still working on the wind farm, although they aren't installing towers or putting in lines, they're working on faith that the extensions will happen soon.

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