Nonpartisan congressional report underscores need for stable wind energy policy

Threat of wind tax hike imperils thriving industry

October 3, 2011

The Congressional Research Service (CRS), a nonpartisan agency that provides policy research for the U.S. Congress, confirms in a new report that the U.S. wind power industry is an expanding source of new manufacturing jobs and that its future hinges on consistent state and federal policies.

The report, entitled "U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry," also notes that "… there are several obstacles that may impede the expansion of wind energy manufacturing in the United States. One is the history of policy-induced boom-and-bust cycles in wind energy investment, which may lead wind turbine manufacturers and component suppliers to conclude that future U.S. demand for their products is too uncertain."The single most important policy that has led to past gyrations in the industry is the federal wind energy Production Tax Credit, which has been allowed to expire three times in the past 12 years.

Additional key points from the report:

--"Although turbine manufacturers' supply chains are global, recent investments are estimated to have raised the share of parts manufactured in the United States to 50-60%, up from 25% in 2005…

--"Wind turbine manufacturing is at the core of the multifaceted wind power industry. Because of the use of castings, forgings, and machining, turbine manufacturing is a significant contributor to U.S. heavy manufacturing."

--"Similar to automobile assemblers that make a car or truck, [wind turbine original equipment manufacturers, or OEMs] are mostly system integrators. Assemblers must bring together an estimated 8,000 precision parts and components to produce a wind turbine…Very high levels of expertise and specialization are required of wind turbine suppliers, with the level of precision similar to that of the aerospace industry." --"A wind turbine is a significant investment… Greater demand for wind turbines, cost savings related to transportation, and concern about the risks associated with currency fluctuations are among the reasons wind turbine and component manufacturers have opened new production facilities in the United States since 2005."

--"The size of the U.S. market, notwithstanding the sharp decrease in new installed capacity in 2010, has made the United States an attractive investment location for wind turbine and wind component manufacturers."

Commented American Wind Energy Association CEO Denise Bode, "This report provides critical confirmation of facts we have been working to get across to key decision makers in Washington, D.C. Wind power is one of the fastest growing U.S. manufacturing sectors. Huge progress has been made in 'insourcing' new wind factories and jobs. America needs supportive, consistent policy to unleash the wind industry's full potential. Now is not the time for a tax increase on wind."

The full report may be found here.

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