Sens. Tom Carper, D-Del., and Susan Collins, R-Maine, have reintroduced the Incentivizing Offshore Wind Power Act, which would provide financial incentives for investments in offshore wind energy.
Co-sponsors of the bill include Sens. Chris Coons, D-Del.; Frank Lautenberg, D-N.J.; Sheldon Whitehouse, D-R.I; Sherrod Brown, D-Ohio; Jack Reed, D-R.I.; Angus King, R-Maine; Kirsten Gillibrand, D-N.Y.; Robert Menendez, D-N.J.; William Cowan, D-Mass.; and Ben Cardin, D-Md. The bill is also co-sponsored by Reps. Bill Pascrell, D-N.J., and Frank LoBiondo, R-N.J., in the House.
The legislation provides a 30% investment tax credit (ITC) for the first 3 GW of U.S. offshore wind projects. Once awarded a tax credit, companies have five years to install the offshore wind facility. Companies cannot receive other tax credits in addition to the offshore wind ITC.
In an interview with NAW, Carper said the legislation mirrors a bill he co-introduced with Sen. Olympia Snowe, R-Maine, in 2011 that provides "certainty and predictability" for offshore wind developers. Carper points out that offshore wind differs from onshore wind because of its infancy, long investment time and higher initial costs.
"Investors need a quicker return on such a long-term investment, which is why the ITC is advantageous for offshore wind projects and the production tax credit is not," he notes.
The proposed bill aims to provide the offshore wind industry with enhanced stability by amending Section 48 of the tax code to extend ITCs for the first 3 GW of offshore wind facilities placed in service.
Tax-reform debate The timing of the legislation is noteworthy, given the debate over tax reform expected to occur this summer. In fact, some committees - such as the House Ways and Means Committee - are already looking at tax reform, Carper says, adding that the Senate is currently focused on Medicare reform.
"[The two chambers] have somewhat different priorities," Carper says. Nevertheless, Carper expects that a healthy debate on all tax matters - including those pertaining to offshore wind - will come soon.
However, Carper admits that the upcoming discussion on tax reform "doesn't auger well" for some tax incentives, such as those included in the offshore wind bill. "That's going to cost more than what's in the current code," he admits.
Among other matters, Carper anticipates a healthy debate over the Bowles-Simpson budget plan, a 10-year deficit-reduction plan proposed by Erskine Bowles, a former White House chief of staff under President Bill Clinton, and Alan Simpson, a retired Republican senator. The goal of the plan is to reach a compromise on spending cuts and tax hikes.
Nonetheless, Carper is taking a pragmatic approach.
"Whether it's 3,000 MW or 2,000 or 2,500 - that's a dialable number,” he says. “The important thing is to preserve the concept and not let it die. I want to protect as much of it as I can."
"I'm like a dog with a bone," he adds. "When I know something is right, it's right. And I will fight for it."