US wind tax credit likely to survive in emerging "cliff" deal

WASHINGTON Mon Dec 31, 2012 4:25pm EST

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WASHINGTON Dec 31 (Reuters) - A tax credit that provides incentives to produce wind energy, a financial lifeline for the wind power industry, will likely be extended if Congress approves a tentative deal between Senate Democrats and Republicans to avert the "fiscal cliff."

President Barack Obama said on Monday that a deal with Congress to stop a range of spending cuts and tax increases was "within sight," although not yet finalized.

According to the sources close to the 11th-hour negotiations, the deal would include a one-year extension for a tax credit to support the production of wind energy, which was set to expire at year-end without an extension by Congress.

The American Wind Energy Association, a lobbying group, had said 37,000 jobs would be lost in the first quarter of 2013 unless the federal tax credit is extended.

The fate of the credit, which has spurred the expansion of wind farms and helped boost wind turbine manufacturing, has been uncertain ever since it was enacted as part of the 1992 Energy Policy Act.

The measure has been extended four times and allowed to sunset three times, contributing to a boom-bust cycle for wind energy production, according to the Union of Concerned Scientists.

U.S. wind farms installed a record number of turbines in 2012 but uncertainty about the future of the tax credit has prompted recent layoffs at manufacturers like Vestas Wind Systems' operation in Colorado, Siemens in Iowa and Gamesa Wind Corp's facility in Pennsylvania.

Some wind energy companies have rushed to install wind turbines before the Dec. 31 deadline for the production tax credit.

"The president and many bipartisan members of Congress have been working all year to extend the wind tax credits, with support from clean energy advocates ranging from wind companies and the United Steelworkers to faith groups and environmental advocates," said Courtney Abrams, federal clean energy advocate for Environment America.

"But nothing has been voted on yet, and we urge Congress to act to protect the future of wind power and a cleaner environment," she added.

The House and Senate still need to approve any deal that emerges on spending and taxes before Monday's midnight deadline.

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