Published on December 21st, 2012 | by Nicholas Brown1
A CEO’s Comments On Wind Tax Credit Longevity
I briefly interviewed Donn Pendergrass, the CEO of ATI Casting. ATI Casting is a firm headquartered in La Porte, Indiana that manufactures customer-specified gray and ductile iron castings, some of which are for wind turbines.
Mr. Pendergrass made some interesting comments about the state of the wind industry and the impact that the longevity of wind energy PTCs (production tax credits) have on it.
He said that the current 1 year PTC is too short because it takes years just to construct factories for wind turbines, and it takes a year even to construct a wind farm alone.
Due to the fact that many Republicans are against a production tax credit for wind energy, the tax credit expires and is renewed too frequently.
For something like this to work, it has to last 3-5 years, according to Mr. Pendergrass, who has seen some of his colleagues lose their jobs due to tax credit uncertainty.
Entrepreneurs need to be certain that the tax credits will be available when they need them, before they undertake manufacturing and wind farm construction endeavors, which are expensive and risky enough as they are. A long-enough tax credit provides them with the financial security necessary to complete their projects.
This is a good excuse to highlight the importance of linkage industries and the relationship between ATI Casting and its customers in the wind industry.
It is very common for industries to rely on each other for materials, and even consultation, inspection, etc. But just how much do they depend on each other?
To be brief: Tremendously.
The scope of this is much greater than most people will see because it isn’t terribly obvious. This also means that the scope of job losses caused by a wind industry collapse would be tremendous as well, because it isn’t only the wind industry that would be impacted.
Wind turbines comprise various electronic, iron, copper, aluminium, and composite parts.
Within the iron industry, there are iron mining organizations, as well as smelters and recycling firms.
The electronics alone are created by literally dozens of manufacturers. You would be surprised at how many people manufactured even one little television, for example.
You are likely to see parts from Fairchild Semiconductor, Siemens, Motorola, Intel, Toshiba, ST Microelectronics, Texas Instruments, and many more manufacturers on only one circuit board.
Imagine a wind turbine.
Apart from the numerous electronics manufacturers that are partly sustained by the wind industry’s purchases of electronics from them, the iron industry partially relies on them as well because wind turbines are largely constructed of steel, and steel is an iron product. A wind turbine also contains other elements to improve its resistance to rust and overall performance, such as carbon, tungsten, vanadium, manganese, and chromium.
Of course, there is an entire industry for every one of those materials. I have mentioned ten industries the wind industry helps to support, and that isn’t all of them.
The expiration of the PTC would likely cause job losses in all ten, since the wind industry purchases from them all in considerable amounts. Fewer purchases translate into shrunken revenue, and the laying off of employees.
Not extending the PTC would harm numerous industries, hundreds of companies, tens of thousands of US employees. It would be an obvious attack on a considerable number of hard-working Americans who are improving our world.
Photo Credit: qayaq