Extension of Production Tax Credit for Wind draws ire from LEC
In a recent radio interview, Lignite Energy Council President Jason Bohrer was asked that he saw as the top threat to the lignite industry. His reply was the federal government.
“Unfortunately, many of our politicians have decided that they would rather not be energy dominant,” Bohrer said. “They would turn energy leadership over to other countries. They would rather keep billions and trillions of dollars of prosperity in the ground instead of making life better. So our biggest feat is a new Congress or a new President who would renew attacks on the coal industry.”
All the Democratic presidential candidates have come out in favor of the Green New Deal, which would spell the end of the fossil fuel industry. Vice President Joe Biden, who many political pundits see as the leading Democratic hopeful, has said that the coal miners who lost their jobs could turn to careers as computer coders.
While the Presidential election isn’t until next November, the regional lignite industry got a surprise from the US Congress in December with the passage of the Taxpayer Certainty and Disaster Tax Relief Act of 2019. Hidden in the bill was an extension of the federal production tax credit (PTC) that subsidizes wind generation to the detriment of traditional sources, such as coal-based power plants. Besides extending the PTC, it also expanded it from 40 percent in 2019 to 60 percent in 2020.
The PTC tilts the market in favor of wind generators, and electric customers end up with less reliable generation sources. This hurts the lignite industry, because coal-based power plants are needed to back up the wind turbines, but utilities can’t operate the plants as efficiently. The lost sales – due to following wind generation – also hurts the mining industry because of reduced production.
While the PTC extension hurts the lignite industry, the Lignite Energy Council is asking Congress to support a ‘resilience payment’ to generation sources that support dispatchable power and also to seek regulatory and legislative certainty on the 48a tax credit that will help coal-based plants recover costs for capturing and storing CO2.
“The November election is very important to our industry,” Bohrer said. “This is the time when we must all be diligent in picking leaders who respect and support our industry so we can continue mining coal and generating affordable and reliable electricity.”