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The eyes of the environmental community were on the South African city of Durban over the past two weeks, as diplomats from more than 190 countries met for the annual U.N. climate-change summit. The talks ran 36 hours longer than scheduled — so late that host South Africa had to arrange for bigger flights to accommodate departing diplomats, but in the end representatives managed to come to an agreement, sort of. Essentially nations decided to begin the process of negotiating a bigger and better climate treaty — one that could eventually encompass all major emitters, including big developing nations like China and India — while keeping the Kyoto Protocol alive for at least a few more years. There's no certainty that Durban will actually result in a real climate treaty (virtually nothing agreed to at the summit was binding), but it's at least a little bit better than nothing.
More than 7,000 miles away in Washington, however, another negotiation is underway that could be much more important to the climate than the U.N. summit — and the end isn't likely to be as positive. U.S. wind and solar companies are panicking over the murky future of federal support for renewable energy. Generous tax credits and subsidies — especially since the 2009 stimulus — have helped the U.S. renewable industry thrive, with wind power alone growing 37% annually over the past four years. But much of that government aid is set to expire at the end of the year, and if Congress doesn't act — which seems increasingly unlikely in these politically dysfunctional days — the U.S. renewable-energy industry could suffer a major crash in the years ahead. That could have knock-on effects both for the fight against global warming and for the slowly recovering job market. "Wind-turbine manufacturing has been a bright spot for the U.S. over the past few years," said Denise Bode, CEO of the American Wind Energy Association (AWEA), in a conference call with reporters. "But we're putting those jobs at risk."
Renewable-energy projects are eligible for the Production Tax Credit (PTC), which provides a credit of 2.2 cents per kilowatt-hour of energy produced in a wind farm or solar-utility project, for the first 10 years of operation. That money has driven rising investment in renewable energy over the past several years. IHS Emerging Energy Research estimates that the PTC — which has been in place since 2005 — has supported an average of 5.6 gigawatts of annual growth in wind energy, which has helped the industry reach more than 43 gigawatts of installed capacity.
That's been good for the climate as renewable energy displaces coal or natural gas, but it's also been good for American manufacturing. There are more than 400 facilities in 43 states producing parts for wind turbines, and today 60% of a turbine's value originates from the U.S., up from 25% before the PTC was enacted in 2005. "These are good manufacturing jobs," said John Purcell, the vice president of wind energy for Leeco Steel. "That's a great job to have in today's times."
But the PTC for wind is set to expire at the end of 2012. A study by Navigant Consulting — admittedly commissioned by the AWEA — predicts that if that happens, investment in the industry will drop from $15.6 billion in 2012 to $5.5 billion in 2013, while jobs will fall from 78,000 to 41,000. New wind installation would fall to 2 gigawatts from the 8 gigawatts of installation that is projected to occur if the PTC is renewed. It's little wonder that groups as disparate as the United Steelworkers and the National Association of Manufacturers have endorsed the renewal of the PTC. "Time is of the essence," says Terry Royer, president of Winergy Drive Systems.
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