“Remove Big Wind’s training wheels” and let the production tax credit (PTC) expire, argues University of Lousiana State University Professor David Dismukes in a report published by the American Energy Alliance (AEA), a grassroots free-market research and advocacy group.
Wind energy lobbyists and their congressional allies are pushing for a one-year extension of the PTC, first enacted in 1992. The Joint Committee on Taxation estimates the one-year extension would increase the cumulative federal deficit by $12.2 billion over the next 10 years. Wind industry lobbyists warn that not renewing the PTC would kill jobs. One could reply that jobs dependent on market-rigging tax breaks impose a net loss on the economy and should not be created in the first place.
The AEA report, however, does not take this tack. Rather, the report argues that wind doesn’t need the PTC because it is already competitive and will become more so as efficiencies improve. For example, the report cites a Breakthrough Institute estimate that unsubsidized wind costs $60 to $90/MWh, which “compares favorably with new combined cycle natural gas generation, at around $52 to $72/MWh,” making wind generation “likely already competitive with natural gas in areas that have high wind speeds.”
I’m not persuaded because, as explained in other posts, a megawatt of unpredictable, unreliable wind capacity has less value than a megawatt of predictable, reliable natural gas or coal capacity. Nonetheless, the AEA report presents several criticisms of the PTC that strike me as spot on, three of which are discussed below. [click to continue…]
Media mogul and climate alarmist Ted Turner addressed the American Wind Energy Association’s annual gala this week. The highlight of his speech, as reported by the Huffington Post, was when he told the audience, “Let’s go out and kick their asses. That’s what they need, a good ass-kicking.” The antecedent of “their” and “they” was the coal industry.
Turner’s machismo seems to have been lost on the wind folks. The day after Turner called for an ‘ass-kicking,’ AWEA representatives held a conference call with reporters, in order to publicize their plea for an early extension by the Congress of the Production Tax Credit, the lifeblood subsidy of the wind industry. Without this ultra-generous taxpayer give-away, there would be no wind industry in America, because there isn’t a utility in the country that would pay full cost for intermittent, expensive energy.
Needless to say, Ted Turner’s tough talk comports poorly with the AWEA’s begging for a handout.
I just finished watching the Sunday morning political talkies, and the second biggest ad buy of the day was in support of H.R. 1380, the NAT GAS Act, legislation that was produced by billionaire T. Boone Pickens to benefit the natural gas industry. T. Boone Pickens is a major player in the natural gas industry, so he basically made H.R. 1380 to make himself richer. That’s why this blog has referred to H.R. 1380 variously as the “Pickens Your Pocket Boondoggle Bill,” and the “T. Boone Pickens Earmark Plan.”
The advertisements I saw left me troubled. They indicated that T. Boone Pickens is less tone deaf, and therefore potentially more successful, than the last time he tried to get the Congress to enact legislation that he wrote to further enrich himself.
That was the 2008 “Pickens Plan,” and it was even bigger rip-off than H.R. 1380. The “Pickens Plan” was a simple four-step strategy: (1) subsidize wind produced by T. Boone; (2) subsidize transmission towers to deliver T. Boone’s wind power to cities; (3) force Americans to buy wind power produced by T. Boone; (4) force American motorists to fill their cars with T. Boone’s “leftover” natural gas, the stuff that was displaced by T. Boone’s wind power.
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According to the Industrial Wind Action Group, wind farms degrade the performance of 39 percent of radar stations operated by the Departments of Defense and Homeland Security.
Maryland
Offshore wind energy is so expensive that even the Democratic-controlled State Legislature is balking at the price tag of Maryland Governor Martin O’Malley’s (D) proposed “Maryland Offshore Wind Energy Act.” The legislation would force the state’s investor owned utilities to minimum 20-year contracts for 400 megawatts to 600 megawatts of offshore wind power. Governor O’Malley’s office estimates that the legislation would cost ratepayers about $1.50 a month, but this projection is based on unrealistically optimistic assumptions. Independent analyses peg the costs at up to $9.00 a month. The disparity in estimates has elicited a negative response from O’Malley’s own party in the legislature: the Washington Post reported this week that two Democratic lawmakers key to the bill’s prospects have suggested they need more time to vet the legislation than is left in this year’s session.
Kentucky
By a bipartisan vote of 28 to 10, the Kentucky State Senate last week passed a resolution exempting the coal industry from EPA regulation, according to the AP. The non-binding resolution, which was introduced by Sen. Brandon Smith (R), is now before the House of Representatives.
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The Wyoming House and Senate have passed the nation’s first tax on wind energy and sent the bill to Governor Dave Freudenthal. The Democratic Governor proposed the new tax to the Republican-dominated legislature last month and so is almost certain to sign the bill into law.
The new excise tax of one dollar per megawatt hour will begin in 2012 and will apply to windmills that have been generating electricity for three years or more. Revenues are to be split 60-40 between counties and the State.
Amusingly, Denise Bode, CEO of the American Wind Energy Association, complained about the proposed tax on the grounds that it would discourage wind power production: “It is very disturbing to hear that one of the great States for resources wants to tax the industry and discourage the development of jobs in their State.” She did not mention that Wyoming already taxes oil, natural gas, and coal production, which is why it doesn’t levy a personal income tax. Nor did she mention that wind power receives huge subsidies from federal taxpayers. The Department of Energy’s Energy Information Agency estimated in 2008 that wind receives $23.37 in federal subsidies per megawatt hour. So Wyoming has quite a ways to go before it captures the entire federal subsidy.
It will be interesting to watch how quickly other States follow Wyoming’s example.
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