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  • Wind PTC: There's No Free Lunch

    Real men wear pink. Real women wear fur. And real market-based policy doesn’t include special interest subsidies.

    Sadly, lots of legislation fails the real free market test. So it is with one of Washington’s favorite energy sources du jour: energy production tax credits (PTC). Sadly, anti-market policies like the expansion of the wind energy production tax credit continue to get support in Congress.

    The Obama Administration is rightly criticized for the stunning waste of taxpayer dollars under programs that spawned the likes of Solyndra. But wasting taxpayer dollars on different but similar programs—claiming that these subsidies really are necessary to create jobs or prevent layoffs—simply creates a “subsidies for me but not for thee” mentality in Washington.

    The double standard needs to stop, and so do the subsidies for all energy sources. Policymakers either choose to ignore the fact that there’s no free lunch entirely, or they choose to ignore it when the handout benefits his or her district or state. But here’s the simple reality: Taxpayer-funded programs do not create jobs; they shift them from one sector of the economy to another. The opportunity cost of government spending is the lost labor and capital extracted from other sectors of the economy to artificially support the politically preferred ones.

    And wind energy production tax credits certainly fall into that category. Earlier this year, the governors of Kansas and Iowa—two states that stand to benefit from the extension of the wind PTC—sent a letter to the House and Senate stressing that “the leading wind project developers and manufactures are canceling their plans for 2013 and wind development will grind to a halt due to the uncertainty of a PTC extension.… A recent report completed by Navigant finds that an expiration of the PTC would lead to a nearly fifty percent decrease in the number of wind energy jobs.”

    If Navigant’s numbers are accurate, it means two things: First, the subsidy has been artificially propping up jobs in the industry and has shifted labor and capital away from other, more productive sectors of the economy. Secondly, wind can compete without subsidies, since the entire industry isn’t going to disappear.

    Renewable energy production tax credits have received support from Democrats, Republicans, and industry groups, but that doesn’t make it good policy. The PTC creates a system where an industry’s success depends more on its connections in Washington than on its ability to provide a product that adds value in one way or another.

    Profits and losses are good for determining whether a product adds value. Some energy consumers may be willing to pay a premium to purchase wind energy, but they—not taxpayers—should pay that premium.

    The only way to break up such an inefficient and inherently unfair system of picking winners and losers is to remove the government’s intervention into the economy. Removing the targeted tax credits for all energy sources and broadly lowering the tax rate, as legislation by Representative Mike Pompeo (R–KS) and Senator Jim DeMint (R–SC) does, would create a more market-based energy economy that benefits economically viable producers and, ultimately, consumers by producing energy reliably and affordably.

    Posted in Energy [slideshow_deploy]

    12 Responses to Wind PTC: There's No Free Lunch

    1. blained13 says:

      Government will always be in the way, think of the advances that have been made getting all types of fuels from the ground. That never would have come from Government, right now the alternatives are too expensive for everyone to be using. We will need different energy sources someday, right now we must deal with the ones we have.

    2. Laurie Davis says:

      “subsidies for me but not for thee”

    3. bullswin says:

      Wind energy, a great idea if market based and not subsidized, is paying customers to take the power in the evening (that is a negative price) because they still get a "tax credit" paid for by u and i. This pushes other power producers (coal) off the grid in the evening however these plants are not designed to ramp up and down so their short and long term costs go up which is also paid for by u and i. This dirty little secret is little known outside the power industry. Time to stop picking winner and losers and let the market work

    4. Leon The Electrician says:

      We should stop trying to make sense of Obama's Energy Policy. It isn't about actually creating energy or actually cleaning up the environment. If wind power were the real answer they would stop wind power too. Remember what they did with Natural Gas and Clean Coal? Honestly, these Progressives want One World Government and America (and the American Economy) is standing in the way. It really is that simple. I was astonished to realize that China bought up the Rare Earth mines while America did not. If they actually were serious about Solar Energy you would think they would have invested in Rare Earths. Nope! It proved to me the Green Idiots were never serious about Energy. Think! We have paid billions of dollars for an Energy Policy that is worth nothing! What we have is a "No Energy" Policy, and we could have got that one for free. Defund and Abolish all those crazy Departments, Energy, Education, EPA, Homeland Security, and more! Why? They do the exact opposite of what Americans need!

    5. Jon Goldstein says:

      There is no political will on Capitol Hill to remove all government incentives for all energy sources, especially fossil fuels. Before arguing that Congressman Pompeo’s legislation aims to do just that, take a closer look.

      The Pompeo bill would actually keep tens of billions of dollars in benefits for oil and gas while pretending be “energy-neutral,” as shown by a Wood MacKenzie study for the American Petroleum Institute. The two oil and gas subsidies that Pompeo is claiming to “cut” are not currently being used, so cutting them would save the taxpayer no money.

      Congress should focus on proposals that will help create jobs and get our economy moving again, as well as creating clean, homegrown energy which we need more of.

      Extending tax relief for wind power would continue to grow the new manufacturing sector that now employs 30,000 Americans, en route to employing 500,000 overall in wind energy by 2030 as a study by the Bush administration predicted.

      As Karl Rove said earlier this month in endorsing an extension of the Production Tax Credit, it makes no attempt to pick “winners and losers” in the energy market, but simply rewards results.

    6. Stirling says:

      With all the "hot air" blowing arround in Washington, D.C, why can't we just move all the Windmills to D.C. I'm sure that could power the country for years to come, and save the taxpayer billions of dollars in the process. The rest of the country then can go back to free market solutions that actually work.

    7. Bobbie says:

      These people defy common sense, exaggerate non sense, make not a bit of sense and waste endless amounts of time and money doing it. Tax increases, tax exemptions, tax credits, tax deductions, tax here not there dump more everywhere, makes it evident government took over the control free and independent Americans had! Government ignorance and abuse of authority has destroyed thousands of acres of land with these inefficient, ineffective, unfeasible, impractical wind mills, (love to have a home-size one in my own back yard?) Solar panels just as inefficient and unpredictable destroys building foundations. What do these two have in common that oil industries don't? foreseeable damage and expense. The more government the more inferior the people. The more complications outside ones control not within ones reach (government,) fulfills ones livelihood depriving ones own. Get America(ns) out of this unruly man made hell.

    8. Michael says:

      Jon Goldstein's post above is far more convincing than this petty article. Besides all the soundbites, semantics, and hypocrisy (Who is paying this author? Are we supposed to believe coal has no connections in Washington?), the thing that angers me most is that the article conveniently ignores any questions about pollution affecting public health. Since the author seems to care only about money and not the environment, let me point out that taking care of fetuses that have been exposed to mercury contamination sure sounds expensive.

    9. Jimmy says:

      I must sound like a broken record…But, where is the call to eliminate the Price Anderson cap on nuclear accident insurance…the government should not pick winners and losers, right?? Where is the Heritage Foundations weekly call to eliminate Price Anderson?

    10. PAR says:

      Coal causes ~200-300 billion a year in health costs (look it up) If that were added to the cost of it on the market, wind would win hands down. Why wont people who love the free market allow all of the information to be factored into the price? That is worse than a subsidy because its dishonest.

    11. Florida Jim says:

      Chris Horner has several books on the global warming and green job scam where he details who are the winners, who are the losers[taxpayers] and who are the beneficiaries of the politicians."Red Hot Lies" being only one of them.

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