Governor Terry Branstad warns Iowa’s wind energy industry will be “severely damaged” if the federal tax credit for wind energy is allowed to expire at the end of 2012 — while a fellow Republican governor who’s seeking the presidency proposes an end to all tax breaks for energy-related companies.

GOP presidential hopeful Rick Perry has called for an end to all federal energy subsidies, including tax breaks for wind energy.

“For states to compete like that, I don’t have a problem in the world. I think that’s how our founding fathers saw the states, as laboratories of innovation. Let states, you know, compete however they think it’s best whether it’s with tax policy or regulatory structure or a legal system or whether it’s putting incentives in place for certain types of energy,” Perry said during an interview with Radio Iowa. “But the federal government should not be in the business of picking winners and losers, period.”

Texas is the number one state for wind energy production. Iowa is number two. Branstad said in a letter to leaders of the U.S. House and Senate that wind-related manufacturing is starting to slow in Iowa because there’s uncertainty about the federal tax break for the industry. Branstad’s calling on congress to act now to extend the wind energy tax break. Perry, meanwhile, said he has no “hard” deadline in mind for the repeal of energy subsidies. 

“I would remove all of those tax cuts and subsidies from the energy industry and let the marketplace choose those winners,” Perry said.

Tax breaks for ethanol and solar power are set to expire soon; ending many of the tax breaks for oil and gas would require congressional action. Oil and gas subsidies should be “phased out” according to Perry, but he’s not offering a timeline. Perry said he has no “hard date” in mind for the end of the ethanol subsidy either, but it should be “phased out over a reasonable period of time.”

“I feel very comfortable that Iowa farmers are going to be able to compete with anybody in the world,” Perry told Radio Iowa this week.

The Iowa Renewable Fuels Association has criticized Perry’s call for ending the federal requirement that a certain amount of ethanol be produced each year. The group charges that Perry’s energy plan is focused exclusively on oil and gas and would put “America’s domestic, renewable fuels at a severe disadvantage.”