Amid the flurry of news leading up to the inauguration of President Trump, Treasury Secretary Nominee Steven Mnuchin said last week that he supports the existing phase-out of the Production Tax Credit (PTC) for wind energy.
Sen. Chuck Grassley (R-Iowa) questioned Mnuchin on his support for leaving the tax incentive as structured, while working on a broader tax reform proposal.
“As we discussed, Congress has effectively put in place transition rules for some alternative energy, including wind,” Grassley said. “The production tax credit is scheduled to phaseout over the next few years, ending in 2020. Based on our conversation, I believe we are in agreement that you would support the current phaseout as part of any tax reform proposal.”
“On this point, I absolutely agree with you,” said Mnuchin. “We do need to have phaseout rules when we change things. I support the phaseout of that as you suggested.”
Financial firm UBS said Mnuchin's comments were reassuring. “While this remains a very preliminary announcement, we think this suggests that the new administration is likely to leave the curent PTC phase-out schedule unchanged,” analysts wrote in a note to investors.
Mnuchin did not specifically address the Investment Tax Credit (ITC) for solar, but his position on the PTC is likely a positive for the solar industry. Both tax credits were passed as part of a large spending packing at the end of 2015. The ITC is currently scheduled to ramp down incrementally through 2021, and remain at 10 percent permanently beginning in 2022.
According to Katherine Hamilton, principal at 38 North Solutions, there continues to be support for the solar and wind incentives in Congress.
“I have heard from sources close to House and Senate leadership that they consider the PTC and ITC transitioned and are not inclined to re-litigate,” she said. “That said, it will be important for those who have been positively impacted by those credits — farmers, ranchers and small and large businesses, and homeowners — to continue to demonstrate the economic benefits of solar and wind to their bottom line.”
The solar and wind industries have seen record growth in recent years, thanks in large part to federal incentives. These industries now support hundreds of thousands of jobs and are poised to create thousands more under current tax policy. President Trump has made job creation in America a top priority on his agenda.