Wind Energy Industry Will Be Affected by Recent Trade Decisions, Tax Policy

By on August 3, 2012
Posted In Renewables, Tax

On August 2, 2012, the U.S. Department of Commerce (DOC) published in the Federal Register its preliminary determinations in the antidumping (AD) investigations of Wind Towers from China and Vietnam.  DOC calculated preliminary AD margins for the Chinese mandatory and cooperative respondents ranging from 20.85 to 30.93 percent, while non-participating producers will face a margin of 72.69 percent.  Pursuant to its non-market economy (NME) AD calculation methodology, in which DOC estimates the costs of producing subject merchandise in China based on costs in a comparable "surrogate" market economy, DOC preliminarily selected the country recommended by the foreign producers—Ukraine—as the surrogate, finding that it provides the most specific information to value steel plate, the most significant input in the manufacture of wind towers.  For Vietnamese producers, DOC calculated preliminary AD margins ranging from 52.67 to 59.91 percent; India was selected as the surrogate country.

Importers of wind towers from China and Vietnam will be required to post cash deposits at the applicable rate calculated by DOC starting August 2, 2012.  DOC has postponed the deadline for the final determination in both cases, as well as in the companion countervailing duty case affecting imports from China only, for the maximum allowable statutory amount, i.e., until 135 days after publication of the preliminary determination notices, or December 17, 2012.

Meanwhile, legislative incentives may also have a great impact on the industry.  The wind industry has urged U.S. Congress to pass an extension of the production tax credit (PTC), which will expire at the end of this year.  There have been several proposals in Congress to extend the PTC to wind facilities that are placed in service after December 31, 2012.  Even though in years past the PTC and other provisions needing extensions to preserve the current tax treatment have often been extended in the waning moments of the Congress, it is more difficult than ever to predict whether such extensions will become law because of the impending election, the national debt debate and the current political environment.

For questions on the trade actions, contact David Levine or Raymond Paretzky.

For questions on the PTC, contact Martha Pugh.

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