The scheduled expiration of a production tax credit for the wind industry has taken center stage in the energy policy debate between President Obama and Republican presidential candidate Mitt Romney.

The credit, which allows taxpayers to claim 2.2 cents for every kilowatt hour of wind energy produced by a utility-scale wind farm, is due to expire on Dec. 31, 2012, a prospect that is already causing layoffs in the wind industry, according to its advocates.

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That’s fine with Governor Romney who says he would allow the credit to expire and end other renewable-energy subsidies in order to foster more competition between all forms of energy.

The Four Letter Word: “Jobs”

But President Obama is urging Congress to extend the credit, saying 37,000 jobs could be lost if it expires.

“We’re at a moment right now when homegrown energy, like wind energy, is creating new jobs all across Iowa and all across the country,” Obama said in speech in Iowa this week, a leading wind-producing state. “And guess what? Governor Romney said let’s get rid of tax credits for wind-energy production.”

Faced with the policy uncertainty, some makers of wind technology have already been laying off workers. They include 182 at Vestas, a leading manufacturer of wind turbines; and 167 workers who will lose their jobs at DMI in Tulsa, Oklahoma by November, according to data from the American Wind Energy Association.

“Unfortunately, the industry has begun letting workers go up and down our manufacturing supply chain,” said AWEA CEO Denise Bode.

On the same day that President Obama visited Iowa, the Department of Energy released a report saying wind power contributed almost a third of all new electric capacity last year, and accounted for $14 billion in new investment.

The industry employs 75,000 people, and about 70% of the equipment installed at U.S. wind farms is now American-made, up from 35% in 2005, the DOE said.

But the industry would face a “dramatic slowing” in 2013 if the PTC is allowed to expire, the DOE said in its Wind Technologies Market Report.

A spokeswoman for Romney said he supports concentrating alternative energy funding on basic research but does not favor supporting specific industries. “He does not believe we should be in the business of picking winners and losers or steering investment toward politically favored approaches,” she said.

Governor Romney’s opposition to the PTC is at odds with some fellow Republicans on the US Senate Finance Committee, who voted on August 2 to extend the credit until the end of 2013, as well as extending dozens of other tax incentives, in a 19-5 vote that PTC supporters say is a clear signal of bipartisan support for the measure.

The panel also approved a one-year extension of an investment tax credit for the offshore wind industry.

Republican support for the wind industry may be no surprise given recent donations from the industry, according to Federal Election Commission filings. The donations include $5,000 to Senator Chuck Grassley of Iowa, a leading supporter of extending the PTC.

Grassley said the extension would “level the playing” field for wind versus fossil fuels, and predicted the committee’s strong vote for the measure puts the PTC in a “strong position” for a vote of the full Senate this Fall.

Democrats have also benefited from donations by the AWEA’s political action committee. They include Senate Majority Leader Harry Reid who received $5,000 this year, according to FEC filings.