Friday, December 28, 2012

Lets suck the air out of wind power subsidies

Ohio, IL wind farm
Writing for National Review Online today, John Fund says it's time to suck the air out of the wind power boondoggle.
President Obama likes to talk about making sure "the biggest corporations pay their fair share." Treasury secretary Tim Geithner calls for tax reform to close loopholes and subsidies. Budget hawks say federal spending must be curbed. Congress and federal environmental regulators claim they are doing everything they can to save endangered species. By doing nothing and waiting for December 31 to pass, all of those folks could strike a blow in support of each of these policies. All they have to do is let the federal production tax credit (PTC) for wind energy expire on schedule this coming Monday.

Begun 20 years ago to spur the construction of wind-energy facilities that could compete with conventional fossil-fuel power plants, the tax credit gives wind an advantage over all other energy producers. But it has mostly benefited conventional nuclear and fossil-fuel-fired electricity producers. The biggest user of the tax credit is Florida-based NextEra Energy, the nation's eighth-largest power producer. Through skillful manipulation of the credits, NextEra from 2005 to 2009 "paid just $88 million in taxes on earnings of nearly $7 billion," Businessweek reports. That's a tax rate of just 1.25 percent over that period, when the statutory rate is 35 percent.

Wind power has had two decades to prove itself with federal subsidies. Last year, wind power represented a third of all new electric-generating capacity, because taxpayers foot the bill for more than half of wind power’s cost. In addition, lobbyists for wind power have convinced 30 states to set mandates requiring that a certain percentage of electricity come from renewable sources — which guarantees the wind industry a market.

The subsidies directed toward wind dwarf the subsidies of other energy sectors. Robert Bryce, energy analyst for the Manhattan Institute and an NRO contributor, reports that subsidies to wind are “at least twelve times greater than those provided to the oil and gas sector and 6.5 times greater than those provided to the nuclear industry,” on a per-unit-of-energy-produced basis.
Technorati tags:

No comments: