The Heritage Foundation - Leadership for America

All eyes are on the Senate this week as politicians in both parties seek to wrap up work on an economic stimulus package. With a deal already reached between President Bush and House leaders, it’s up to the Senate to work through several additional provisions lawmakers would like added to the agreement.

Energy policy is one area of dispute. The Senate package includes a host of tax incentives to encourage the production and use of alternative energy sources like wind and solar power as well as the manufacture of energy efficient appliances and the construction of energy efficient homes.

The policy question to ask is this: If these alternative energy sources and energy saving gadgets are as good as claimed, then why do they need so many federal handouts to catch on? The answer, of course, is that they are not as good as claimed, and indeed the debate over the merits of these measures should be fully explored in separate legislation, and not as part of this bill.

The biggest provision is the extension of generous tax credits for electricity generated from politically correct wind power and other so-called renewable sources. Once upon a time, the industries producing alternative energy claimed that they would need such federal tax breaks for only a few years in order to get established, and then they would be able to compete with conventional energy. But decades later, they are still asking for government help, a tacit admission that after all those years (and all those tax dollars) alternative energy still can’t compete.

The reality of wind, which by now has to be considered a mature industry, is that it is expensive, even with big taxpayer subsidies. It is also unreliable; the wind doesn’t always blow, and electricity is something the public expects 24/7. Taxpayers should not be forced to prop up energy sources that are of no benefit to them.