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The Production Tax Credit: Just the Facts

By Robert Bradley Jr. -- October 9, 2012

“The infant industry argument is a smoke screen. The so-called infants never grow up.”

– Milton and Rose Friedman, Free to Choose (Harcourt Brace Jovanovich, 1979), p. 5.

The 20-year-old production tax credit (PTC) has not done its work yet, claims the American Wind Energy Association (AWEA). It should be extended …. and extended … and extended.

The credit, now worth about 2.2 cents per kWh, or 40 percent or more of the wholesale average price of power, was first enacted in the Energy Policy Act of 1992, and has been extended six times, sometimes retroactively to cover the entire period without lapse.

What are the key facts regarding this subsidy to qualifying renewable energies, primarily electricity generated from wind and solar? This summary by the Institute for Energy Research (of which I am CEO) provides much good information for the ongoing debate given that the PTC is set to expire at the end of this year.…