The debate over energy policy is national in scope, but the most important conversations are taking place in the states. Ohioans, for example, can take pride in the fact that the number of wind installations in the state jumped more than 950 percent in 2011 from the previous year, making Ohio No. 1 in the nation for wind expansion.
One reason for that spectacular growth is the fact that Ohio workers have the skills that wind energy manufacturing demands. Today, more than 4,000 people statewide are producing wind turbines and other components.
Cardinal Fastener is part of this vanguard. It began with a phone call in 2007. A fastener distributor supplying a local turbine manufacturer was dissatisfied with poor bolt quality and unreliable deliveries and wondered if Cardinal, a domestic manufacturer, could do better.
It could — and did. Before long, Cardinal became the world’s first fastener manufacturer to achieve wind industry certification for quality management and performance. Turbine manufacturers now rely on Cardinal as their supplier for domestically produced hardware, and the company was named the 2010 “Supplier of the Year” by the American Wind Energy Association.
This good-news story is being replicated across the country. U.S. wind power has doubled the past four years, to 50 gigawatts, sufficient to power 13 million homes and retire 44 coal power plants. Particularly exciting is the fact that since 2005, the percentage of U.S.-manufactured components in these wind installations has jumped from 25 percent to 60 percent, keeping more than 400 factories in 43 states humming.
A key driver of this phenomenal growth has been a federal policy called the wind production tax credit, which is critical for developers to finance new projects and sign power purchase agreements with utilities. Congress unfortunately has allowed the tax credit to expire multiple times, causing massive job losses, and it is up for renewal again by the end of this year.
If Congress fails to act this session, investment in wind projects would drop 65 percent, from $15.6 billion in 2012 to $5.5 billion in 2013, and the industry would have to lay off nearly half of its work force — some 37,000 people — next year, according to a December 2011 study by Navigant Consulting. That would mean thousands of Ohio jobs and millions of dollars in property taxes collected by localities could disappear.
Those who are calling for its demise ignore the fact that Congress historically has spent substantially more to encourage fossil fuels and nuclear power than renewables. A September 2009 study by the Environmental Law Institute found that between 2002 and 2008, the government gave fossil fuels $72.5 billion in subsidies and renewable energy only $12.2 billion.
Meanwhile, according to a September 2011 study by venture capital firm DBL Investors, the nuclear industry — which has never been economically viable without government support — benefited from an average of $3.5 billion in subsidies a year from 1947 to 1999 in today’s dollars. By contrast, the study found the new kid on the block — renewables — averaged just $370 million a year between 1994 and 2009.
Should the federal government continue to underwrite extremely profitable, mature industries at the expense of nurturing new, cleaner alternatives? The answer is a resounding no. On the other hand, should the government stick with a policy, the production tax credit, which is producing extraordinary public benefits, including jobs? The answer is an obvious yes. Even the National Association of Manufacturers and U.S. Chamber of Commerce agree.
Last month the Senate Finance Committee, by a lopsided 19-to-5 bipartisan tally, voted to extend the tax credit for one year. Congress should finish the job this fall and send an extension to the president to ensure that wind projects and the tens of thousands of jobs dependent on them go forward into next year.
John W. Grabner is president of Cardinal Fastener in Bedford Heights.