The Senate Finance Committee gathered this week to discuss whether the time has finally come to cut the umbilical cord of tax incentives from the mollycoddled alternative energy industry. This may sound childish, but many of the witnesses pushing for an extension of expiring tax incentives for renewable energy characterized their allegedly up-and-coming market in such terms. Venture capitalist Will Coleman for Mohr Davidow Ventures maintained that despite alternative energy’s “rapid growth,” such as in wind, “it is still in its infancy.” Paul Soanes, President and CEO of Renewable Biofuels, testified: “The industry is like a child that needs some nurturing.” The question then becomes: will a renewed tax extension fund a future pride-and-joy of profit or a prodigal embarrassment (I.e. Solyndra).
Multiple testimonies that lauded the progress of alternative industries like wind, solar, and ethanol as job creators and strong global competitors were belied by an overwhelming sense of immediacy. Coleman insisted that without continued subsidies, “We may in fact cripple America’s ability to compete.” Soanes urged, “Congress needs to act now to extend the PTC (production tax credit).” Martha Wyrsch, President of Vestas-American Wind Technoloy warned, “If the PTC is not extended immediately, we will have to make tough choices…Our future is in jeopardy.”
It turns out that government funding can only be the wind beneath your wings for so long. How long, you ask? Don’t ask me—or any of the witnesses. The question of when these industries would be able to stand without the tax-credit crutch was reiterated several times by members such as Chairman Jeff Bingaman (D-NM) and Sen. John Cornyn (R-TX); a direct answer could not be given. Coleman stated ,“We need enough certainty to move the industry up and give investors certainty.” Martha Wyrsch, President of Vestas-American Wind Technology, urged, “We’re so close. There’s an opportunity… it would be a mistake to stop.” The most veracious answer was given by energy tax policy specialist Molly Sherlock: “It is a difficult distinction to make as to when they are mature.”
Should the American taxpayer really have to fund an industry whose puberty cycle seems never-ending in the hopes that it may, one day, hit its much anticipated growth spurt? The only way to see if any industry (including the fossil fuel industry) can rise to the occasion is to let it compete independently, taking risks within the free-market. Sen. Mike Pompeo (R-KS) recently introduced bill that enforces this development: The Energy Freedom and Economic Prosperity Act (H.R. 3308) would abolish all energy tax subsidies and use the resulting savings to lower the federal corporate income tax rate. This piece of legislation establishes a level the playing field, leaves taxpayers off the hook, while enabling the true success stories to emerge in the marketplace.