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  • Solar Bankruptcies Mean It's Time to End Energy Subsidies, Not Increase Them

    Last week, Solyndra became the third solar company in recent weeks to go belly-up, but the Fremont-based solar manufacturer made the most noise—because it lost more than a half a billion dollars in taxpayer money. Solyndra received one of the first stimulus loan guarantees, a $535 million loan. During a visit to the plant last year, President Obama said, “Companies like Solyndra are leading the way toward a brighter and more prosperous future.” In 2010, Solyndra closed one of its facilities and canceled its initial public offering, and last week Solyndra filed for Chapter 11 bankruptcy and laid off all of its 1,100 workers.

    Solyndra exemplifies the government’s abysmal track record of picking winners and losers in the marketplace, and the solar company is not the only example of energy stimulus struggles. With a number of targeted energy tax credits set to expire at the end of this year or next, industry groups are lobbying hard for extensions. Especially given the U.S. fiscal situation, this is a time to end all energy subsidies—not to extend wasteful, market-distorting policies. When the government decides to favor a technology with subsidies, it’s a good bet that subsidy “winner” is a loser in the marketplace.

    Depending on who you talk to, the solar industry is either in trouble or the bankruptcies simply mean that some solar technologies will succeed while others will fail. Ken Zweibel, director of the Solar Institute at George Washington University, said, “It coincides with the fact that the industry is in trouble. There is a crisis in the solar manufacturing world; there’s no question about it. With three companies declaring bankruptcy in three weeks, there’s no question that they’re all under pressure.” Rhone Resch, president and CEO of the Solar Energy Industries Association, has a different view, saying, “What we are seeing in solar happens in every industry that is maturing and growing more competitive. You’re going to see winners emerge who find innovative ways to offer consumers the most competitively priced products.”

    Either way, there’s no justification for the subsidy.

    If an energy source is not economically competitive, then the government should not artificially prop up these technologies and energy sources to create a market that wouldn’t exist without the subsidy. And if producers do have an economically viable idea, then they shouldn’t need the handouts from Washington in the first place.

    The investment tax credit for the solar industry does not expire until the end of 2016, but the ability to convert the investment tax credit into a cash grant will no longer be available at the end of this year. The solar industry isn’t the only one worried about extending its preferential treatment. A 45 cent per gallon blenders tax credit for ethanol will expire this year, and the production tax credit for wind, biomass, hydro, and geothermal projects will run out at the end of 2012. One of the larger problems with targeted tax credits is that upon expiration, industry groups will lobby Members of Congress to extend them for another year or multiple years. Congress should specify that any tax credit set to expire December 31, 2011, or on December 31, 2012, cannot be extended and should be accompanied with an offsetting tax reduction.

    These are just a few provisions of the complicated web of energy tax policy woven over the past few decades by our federal government. It’s time to untangle that web, not add to it.

    Congress should set expedited sunset clauses for any energy tax expenditure not set to expire at the end of the 2012. Moreover, Congress should create a three-year window for all other tax credits that extend for multiple years or do not expire, and reduce the percentage by one-third after every year. Congress should then reduce other taxes by the amount of revenue that expediting the elimination of these unsound policies would raise.

    America is a broke country, and the last thing we need is to be spending taxpayer dollars on energy subsidies. Eliminating energy subsidies means the industries and companies that provide the most benefit to the consumer will be the ones that are successful.

    Posted in Featured [slideshow_deploy]

    9 Responses to Solar Bankruptcies Mean It's Time to End Energy Subsidies, Not Increase Them

    1. Papa says:

      Well, after 100 years or nearly 100 years one would think that someone would come to accept that the available technologies are not competitive or reliable energy sources.
      Even the ads about placing a windmill in the stormy North Sea admitting that the environment is very unfriendly and there is no mention about the cost of manufacture ($ millions), the cost of maintenance, the cost of delivery, the cost of replacement, half life expectancy……………and then they comment that it provides energy for 300 homes…………….hate to pay that electric bill (poor Devils). Oh yeah I forgot about the subsidies (and deficit investing model). Romantic huh! Stupid but romantic.

      You know if a country's government were allowed to subsidize enough of these they could bankrupt their country………cant happen?? ask Spain.

      How about that net zero energy called Ethanol. Another subsidized "Green" adventure. Unintended consequences? No Net energy gain but Ethanol now uses 40% of the corn crop in the US……….have any of these Green Lemmings gone to the grocery store lately or look at the gas pump and realize that their hard earned tax dollars are going to something that can't stand on its own and will be a delayed reaction Solyndra?

      Committing the same behavior and expecting a different result is insanity. Recycling Socialism, Progressive-ism, Communism under a different name and expecting that failure will not be duplicated (because we are just so nice and smart and good intentioned) is also i _ _ _ _ _ _ y. Human nature, natural law
      call it what you will all of this social engineering is doomed to fail at the expense of the country and all of what the Ruling Class calls "useful idiots". Guess they are right or more citizens would do their homework and see this for what it is. Just ask Sal Alinsky if there are questions.

    2. Bobbie says:

      common sense, no brainer. what's fair is distorted by obama. stop all energy subsidies! Let the better businesses win maybe all will remain depending on the market. The true sense of competition.

      this administration creates the means to claim crisis for outrageous tax money called "thievery" to justify the expense of the avoidable ends. Proper research by the administration helping themselves to tax payers money, would have indicated this wasn't a winner. Energy independence is in America, if only the unconstitutionality of government wasn't holding America back!!!

    3. Jeff, Illinois says:

      Oh . . Please . . !!! Stop the black or white thinking . . !! Yeah let's stop funding any innovation. Instead let's just keep subsidizing the oil industry . . So tiring . . !! . . Oh by the way does anyone know Bruce Bartlett . . Check him out . . He was in Reagan's administration . . and now openly talks about how there's no evidence that government regulation has stifled economic growth . . He goes on to say that we actually have less regulation thant we did some many years ago . .

      • Bobbie says:

        anyone with a loss of brain cells would say government regulation can't stifle the economy. Maybe less today of what was under regulation then, but this president is putting time and money into common sense that needs no time and money, going out of his way to call them regulations. Open your eyes a little wider!

    4. Lloyd Scallan says:

      Does anyone really think that Obama will "end energy subsidies? Not a chance! By "hook or crook", Obama will not stop. He is an unbending ideologue that cannot and will not change or veer away from his agenda.

    5. Richard A says:

      T; Boone Pickens was singing the praises of "green" energy in the form of wind farms. To his credit he spent
      $ 1.5 billion of his own money building a massive array in west Texas (although I'm sure he secured a pretty substantial tax write-off) that has yet to put one watt of power onto the national grid. Pickens is remarkably quiet these days when "green" energy is discussed.
      A similar boondoggle has been created in western Florida by Florida Power and Light, a solar power plant producing, supposedly, 45 megawatts of power. Come to find out the capacity factor due to weather anomalies such as night-time, and clouds is reduced to less than 19%, hardly the 45 megawatt behemoth the propagandists of "green" energy were broadcasting. $150 million of somebody's money went into that nearly useless endeavor.

    6. TimAZ says:

      There is another element that hasn't been mentioned that drives subsidies. That is, how much of these subsidies are converted into subsidies that are returned to the political party that handed out the tax dollars in the first place? I'm talking about money laundering tax payer dollars for a small return in the form of campaign contributions. No profit is required for an individual to skim off campaign contributions from the back end of subsidies. This is a process that is easily repeated as needed until of course you run out of other peoples money. Yes sometimes campaign contributions are made to induce govt. subsidies with the promise of sharing a small portion of the subsidies in the future through campaign contributions. The problem with this arrangement is that the politicians are forced to trust the company to deliver the contributions. How often has there really been honor among thieves? Had enough yet?

    7. D. Murrin says:

      Stop all energy Subsidies, Fossil Fuels and Renewable energies. This cessation includes tangential subsidies to energy including: transportation, shipping, exploration, Brownfield programs and Military Actions (other than keeping the sea lanes open..) 12 dollars for a gallon of gas would follow shortly thereafter. That would fuel conservation and innovation in new technologies. The Renewable energy sector would lead the way. A paradigm shift reminiscent to the industrial revolution would ensue, generating colossal growth in the manufacturing and tech industries. Electric vehicles, Wind Turbine components and a myriad of other tangible demands would create the next boom economy, Skeptics who think this is a bridge too far need only look to our history. Thomas Edison struggled to get the Light Bulb funded for production. Banks and Venture Capitalists scoffed at Edison’s proposal pointing out the absurdity of every home in America having electric wires led to them….

    8. Bobbie says:

      Obama subsidize innovation? how stupid! This isn't innovation! Anyone given subsidies for innovation always pays it back! Never under Obama, as he freely spends our money on foreseeable failures and bad investments and innovation that will NEVER BE PAID BACK! BAN OBAMA (government) FROM INVESTING IN (his/government)SPECIAL INTERESTS WITH AMERICA'S MONEY!!!!!

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