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We Couldn’t Agree More: Phasing Out the Production Tax Credit and Other Energy Subsidies

Thursday, November 14, 2013

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Senate Energy Committee Leadership spoke on the renewables production tax credit (PTC) after today’s hearing, as reported by POLITICO Pro’s Darius Dixon.1 Chairman Ron Wyden highlighted the inequity that would result if only the PTC were eliminated without considering broader tax reform. And Ranking Member Lisa Murkowski noted that we need a “glidepath out” – or a gradual phaseout – because “what does a one-year extension do [for] anybody?”

BPC expressed similar sentiments nine months earlier in our consensus report, America’s Energy Resurgence: Sustaining Success, Confronting Challenges. Specifically, we recommended:

As part of broad, comprehensive tax reform, Congress should review the full range of energy tax expenditures and develop a reasonable phase-out plan, such as 4 years, for those tax expenditures that constitute subsidies for mature fuels and technologies.

Congress should extend the renewable energy production tax credit, initially at its current level and develop a specific decline path to achieve a complete phase-out by the end of 2016.

Our rationale for this recommendation is not unlike Wyden and Murkowski’s. Phasing out the PTC would 1) align the incentive program with expected wind project cost reductions and revenue increases; 2) limit anomalous energy market operations; and 3) provide the opportunity for all energy sources and technologies to compete equally on their merits for public support.

BPC believes a phase-out of the renewables PTC must accompany a phase-out of all energy-specific tax expenditures to mature fuels and technologies to ensure a more competitive and level playing field. We will have to stay tuned to see if Congress takes up comprehensive tax reform in the next session.

1 Darius Dixon, “Wyden, Murkowski: Wind PTC should be dealt with in broader tax reform,” POLITICO Pro Energy Whiteboard, November 14, 2013. Available with a subscription at