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  • Time to Remove the Taxpayer Trough from Wind Producers

    The meal provided by the taxpayer is over.

    When pigs finish eating the slop that a farmer put in the trough, they’ll hang around the trough waiting for more food, but the farmer doesn’t cave. That meal is over, and the farmer promised no more food than what he put in the trough. Congress needs to do the same with respect to the wind production tax credit (PTC).

    A common complaint from the wind industry is that there’s no business certainty. While there may be uncertainty as to whether politicians cave and extend the PTC another year or two, the wind industry cannot make such a claim. They knew the expiration was coming for years. As determined by the American Recovery and Reinvestment Act of 2009, eligibility for the wind PTC is no longer available beginning January 1, 2013. Wind generation installed before that date will receive the PTC for a decade.

    These dates have been known for a long time now. If the wind industry atrophies because of the PTC’s expiration, it’s a clear indicator that the market was oversupplied as a result of the subsidy and was propping up uncompetitive technologies, which isn’t all too surprising.

    When the government subsidizes an industry or a product, you’re bound to get more of it. When the wind PTC has been allowed to expire before, turbine installations decreased dramatically. In fact, the American Wind Energy Association uses this as a reason to extend the tax credit, arguing, “The wind industry is facing the recurrence of the boom-bust cycle it has seen in previous years when the PTC was allowed to expire. In the years following expiration, installations dropped between 73 and 93%, with corresponding job losses.”

    The fact that the industry experiences significant declines is not a good reason to continue to subsidize it; it’s a clear indication that wind is largely dependent on the government’s dime. The part of the wind industry that doesn’t depend on the PTC will be the more robust, competitive part.

    Furthermore, the subsidy is far from free and is a net economic drag, not a jobs creator. Those taxpayer dollars that support the wind PTC (12 billion of them, according to the Senate Finance Committee), as well as the labor and capital investments, could have gone to more productive use and thus shifted production to a technology that’s politically preferred.

    The cement used and people hired to build windmills cannot simultaneously be used to make sidewalks, and the government should not be using taxpayer dollars to steer those investments—they are much better determined by the private sector.

    Congress should remove all energy subsidies, not just those for wind, and broadly lower tax rates to prevent tax increases. Energy companies should rely on innovation and efficiency—not American taxpayers—to thrive in a system of free enterprise.

    Posted in Featured [slideshow_deploy]

    7 Responses to Time to Remove the Taxpayer Trough from Wind Producers

    1. Tom Kulaga says:

      If all subsidies were handled this way, we would have no public transportation systems. Even Portland Oregon's mass transit system, the so-called gold standard in the US, is dependent on money flowing in from somewhere other than user fees.

      • Bobbie says:

        Business ethics in the private sector doesn't commence if it can't pay for itself. Why should anything commence by government subsidies? If mass transit needs more than user fees it's a plain setup perpetrated by the government on society. All the government took over so far amounts to trouble. When there's trouble in private transit matters are corrected as private business takes accountability. The government members clearly disdain accountability getting ready for the crisis they manufacture on America directly the result of their unconstitutional aspirations.

    2. Gary says:

      The sad part about the fools who bought into this fiasco is that the wealth squandered on overpriced windmills and the extreme high cost of a ( free HA HA),energy source will never end. Every one ignores the fact that another stable source capable of producing an equal amount of power must be kept on line and ready to go all of the time because wind is a variable source and output goes up and down with wind speed. Redundancy multiplies the cost of electricity and will only sink more business activity. It will also result in more people starving and freezing to death in the colder parts of our country.

    3. pete says:

      So we subsidize the use of wind, geothermal, ethanol etc and the rest of the third world does not. Then our products cost more than other countries and we become uncompetitive. This is a road to poverty unless you are part of the legislative corrupt elite in washington. Why is the washington DC growing faster than any other area in country in wealth. The government is stealing us blind.

    4. Bill says:

      End all federal subsidies, grants, loans, tax credits, etc. They are there to benefit political friends and use taxpayer money to fund the politicians' campaigns. If this is done along with ending income tax "loopholes" then DC and its environs will shrink down to its proper small size and government will return to how the Founders envisioned it–controlled by the people.

    5. Paula says:

      I find it outrageous that this administration keeps cutting our military budget while there is so much unrest in the world. Hmm…Isn't it written "somewhere" that government's 1st priority is to provide for the common defense??? Instead, they take more & more money from the working people & hand it out to the slugs!! These "green" companies are scamming this administration. There is money to be made in phoney solar companies. How many have taken our tax dollars & then closed up shop??? Billions of $!!!

    6. David Ward says:

      Every energy technology is supported by the federal government. Wind energy is no exception, nor should it be.

      The Government Accountability Office (GAO) estimated federal tax incentives for electricity between Fiscal Year 2002 and 2007, concluding that: “Tax expenditures largely go to fossil fuels: about $13.7 billion was provided to fossil fuels and $2.8 billion to renewables.”

      What’s more, some energy incentives, like the depletion allowance for oil and gas, are permanent in the tax code and have been in place since the 1920s. In fact, U.S. government subsidies for oil, natural gas and coal totaled over $500 billion from 1950 to 2006, according to a study prepared by the economic consulting firm MISI for the Nuclear Energy Institute. If the wind energy Production Tax Credit (PTC) is allowed to expire, that would make wind the only energy source not to receive any energy incentives.

      The PTC enjoys broad support from a diverse group of business and political leaders. A network representing 240 local Chambers of Commerce from 47 states has stated that allowing the PTC to expire at the end of 2012 would hurt local economies, send jobs and capital elsewhere, and risk ceding America’s clean energy leadership to our global competitors.?

      And a November 17, 2011 letter from 370 companies and organizations, including the National Association of Manufacturers and the American Farm Bureau Federation, to Congressional Leadership stated: “It is urgent that we avoid the looming tax increase on wind energy, as investments are stalling now and will continue to stall, with corresponding job losses, until a bill to extend the PTC is passed.”
      Voters in this year’s elections endorsed candidates who support an “all-of-the-above” energy policy that includes solar, wind, biofuels, natural gas, oil and coal. Outspoken GOP supporters of the PTC were reelected, including Reps. Dean Reichert (R-WA), Steve King (R-IA) and Tom Latham (R-IA), and Sen. Dean Heller (R-NV).

      Opponents of the PTC are finding themselves in an increasingly lonely political position. They should stop railing against the wind.

      David Ward, American Wind Energy Association

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