Energy

11.06.12

Mitt Romney's Iowa Problem

The Republican candidate's chances of winning the Hawkeye State may be blowing away. Dan Gross explains why.

President Obama ended his second presidential campaign in the state where his first presidential campaign gained its first crucial breath of wind. Four years later, it seems wind may be giving Obama a boost in Iowa.

Iowa is a swing state that Mitt Romney has contested but doesn't look to be winning. The RealClearPolitics poll aggregation gives Obama a 48.7 - 46.3 lead over Romney. Nate Silver's 538 projection gives President Obama an 84.3 percent chance of winning the Hawkeye State. And wind may have something to do with it. Why? Romney, along with many Congressional Republicans, has opposed the renewal of the longstanding wind energy production tax credit, which makes wind energy projects viable. And no state gets more economically from wind than Iowa does.

In August, I spoke with Rob Hach, founder and president of Anemometry Specialists, based in Alta, Iowa; he's a registered Republican and 2008 McCain voter who was attending the Democratic National Convention as an Obama supporter. His firm, which has 27 employees, conducts assessments on wind projects and wind resources to see where they are economically feasible. "In Iowa, there are thousands of people employed making wind turbines, blades.  There are a lot of farmers who have been able to enjoy the royalties. There are a lot of students going to school at community college to go to work on wind turbines," he said. "They are quite disappointed with Governor Romney's position on renewable."

Wind is a big business in Iowa. According to the Iowa Wind Energy Association, the state is the third largest for wind production, with 4,536 megawatts of capacity. Texas and California are first and second. When it comes to the percentage of electricity generated by wind, Iowa is far and away the leader in the U.S., with 20 percent. "As more of our new wind farms come online, I wouldn't be surprised to see it reach 25 percent in the next 6 months," said Harold Prior, executive director of the Iowa Wind Energy Association.

Putting up wind turbines creates a lot of good collateral economic activity. Wind turbines are very large and heavy, and hence difficult to ship over long distances. So areas that erect a lot of wind turbines tend to attract manufacturers and suppliers. The state's 2,800 turbines have brought hundreds of manufacturers and suppliers to Iowa, from which they export to other states and countries. The construction of wind farms is leading other investors to plow cash into constructing electricity distribution and transmission lines. Several thousand Iowa jobs rely on wind power. And each year, landowners collect more than $14 million in payments in exchange for allowing turbines to stand on their property.

Of course, the industry is only viable thanks to the 20-year-old production tax credit, which gives the owners of turbines a tax refund for every electron of electricity they generate in the turbines' first ten years of operation. But the Federal Renewable Electricity Production Tax Credit is in danger of sunsetting at the end of this year. As such, it is another one of the victims of the bizarre politicization of alternative energy.

George H.W. Bush signed the first production tax credit into law in 1992. In 2008, George W. Bush rhapsodized about the possibilities of solar.  "I really see a day in which each house can be a little electric generator of their own and feeding back excess power into the gird through the use of solar power," he said. But since the election of President Obama, Congressional Republicans have generally opposed efforts to back alternative energy. In part it's because there was a lot of green energy stuff in the stimulus, which virtually every Republican opposed. In part it's because a lot of big GOP donors are in the oil and coal industry, which rightly view renewable energy as a threat. And in part it's because  some alternative energy programs involved making large loan and investments in individual companies like Solyndra. To nobody's surprise, despite intense lobbying from the large companies involved, the Senate and the House have not agreed to extend the production tax credit.

Not surprisingly, in the early part of the campaign, Mitt Romney was forthright about his opposition to the production tax credit. In July, he said he favored letting it end.

The politicization of wind energy hasn't gone over well in Iowa. "Over 80 percent of Iowa voters are strongly supportive of the Iowa wind energy industry," said Harold Prior, executive director of the Iowa Wind Energy Association.  "In the Iowa legislature, it doesn't make a difference whether they are republican or democrat. Wind energy is a very non-partisan issue." Indeed, at the October 12, dedication of the 36 Megawatt Hawkeye Wind Farm, in Fayette County, Iowa, Sen. Chuck Grassley, a tough Republican critic gushed over the industry. He noted that he has supported wind production tax credit since 1992.  "In Iowa, the wind energy industry employs nearly 5,000 full-time workers, with a number of major wind manufacturing facilities. Iowa generates 20 percent of its electricity needs from wind, and wind energy powers the equivalent of a million homes," he noted. 

Wind is a big business in Iowa.

Meanwhile, because wind energy projects are planned months and years in advance, the gridlock over the tax production credit is already having a negative impact. Uncertainty over the TPC's future is inhibiting new investment.  and causing layoffs. A Siemens plant in Ford Madison, Iowa, laid off 407 workers this fall. Rob Hach says "Without the tax credit, we're going to have to cut half of our employees to stay solvent."

Over the past several weeks, on issue after issue, Romney has modulated his tone as he has tacked to the center. And of course, as he campaigned in Iowa in late October, he took a softer tone. "We will support nuclear and renewables but phase out subsidies once an industry is on its feet."

But like his other etch-a-sketch moderation efforts, it might be too little, too late. President Obama looks likely to win Iowa. Wind may not make the difference between a win and a loss for Obama. But his support of the rapidly growing industry - and Romney's opposition to it - certainly isn't hurting him.