The number of days until the election can now be counted on both hands. Regardless of the outcome, we know one issue will be buried under the fiscal-cliff news—where it hopes to fly under the radar. This one issue? The extension of the Production Tax Credit (PTC) for wind energy—which is bound to be present in lame-duck session negotiations, as it is currently scheduled to expire on December 31.
Using taxpayer dollars, the PTC supposedly “makes wind power more competitive with other sources of electricity”—though wind energy is still more expensive than traditionally fueled electricity and raises the costs for both residential and industrial users.
Throughout the year, the American Wind Energy Association (AWEA) has been working valiantly, but unsuccessfully, to get the PTC extended. They are now down to the wire and are getting panicked—sending military veterans to meet with staffers of GOP members who are believed to be “persuadable,” and even calling on pension fund managers to put pressure on House and Senate leadership. Their only hope for salvation is the lame-duck session.
Should Romney win, the lame-duck pressure will be even stronger as he has stood in opposition to the PTC extension. In a Romney White House, wind energy will need to be viable without taxpayer subsidy or borrowing from China. After twenty years, it should be, but as we’ve seen, it isn’t.
By contrast, President Obama is proud of his “investments” in wind energy. In April 2011, before Pennsylvania wind-turbine manufacturer Gamesa started layoffs, he gave a speech at the Fairless Hills plant in which he announced: “I want the United States to be the leading manufacturer of wind power. I want it made right here in the U.S. of A.” Throughout the campaign season, “President Obama has traveled to wind-heavy swing states like Iowa to tout his support for the subsidy.”
Gamesa is just one of several wind turbine manufacturers who’ve announced layoffs because of the impending PTC expiration. Others include Clipper Wind in Iowa and Vestas in Colorado. All blame the “uncertainty of the PTC.” Orders for new turbines have “screeched to a halt.”
Stories of closures and lay-offs make a very weak case for the PTC’s extension, as none of those tell the net-jobs picture. Many independent studies have concluded that wind development is a net jobs loser, but AWEA isn’t mentioning that detail, and is hoping that “persuadable” Republicans won’t notice that reality. Layoffs in the wind industry pale in comparison to those faced as a result of the Obama Administration’s harsh regulations impacting coal mining and coal-fueled power.
Dramatic stories of closures and lay-offs make a compelling case for the PTC’s extension and pressure “persuadable” Republicans to give in—and the AWEA is counting on it. While most of us are watching polling data, the AWEA is applying pressure.
No one wants to be the meanie who puts people out of work—especially in this economy. But, especially in this economy, the real costs must be considered.
A new report, Subsidizing Big Wind: The Real Costs to Taxpayers, has just been released. Subsidizing Big Wind points out that the PTC “is only one of the subsidies given to the wind industry.” In it, Robert Bryce analyzes all the subsidies the wind industry enjoys: direct subsidies, subsidies in the form of mandates, subsidizing wind-energy jobs, and subsidizing wind companies by exempting them from prosecution. The report shows that “no other part of the energy industry receives such preferential treatment.”
Direct subsidies
Supporters of renewable energy love to cite the so-called subsidies, or tax-preferences, given to the fossil fuel industry. However, a dollar-to-dollar comparison doesn’t give a true picture. As addressed in Subsidizing Big Wind, there are several different ways to make an honest comparison between liquid fuels and electricity; a per BTU basis or barrels of oil equivalent —both look at the actual amount of energy produced.
Using Energy Information Administration’s BTU data, Bryce concludes that, “on a raw, per-unit-of-energy-produced basis, subsidies to the wind sector are more than 200 times greater than those given to the oil and gas sector.” Another way to look at it is “using data from the BP Statistical Review of World Energy and the Congressional Budget Office (CBO)”—which is a “barrels of oil equivalent per day” model. The BP/CBO view shows the “wind sector is getting subsidies about 12 times greater than the amount of tax preferences provided to the oil and gas sector.”
Subsidizing Big Wind also does an apples-to-apples comparison with nuclear power. Using the “barrels of oil equivalent per day,” the wind-energy sector is getting about 6.5 times as much in subsidies as the nuclear sector.
Subsidies in the form of mandates
“Twenty-nine states and the District of Columbia are subject to mandates for renewable-electricity production, which is affecting the cost of electricity for about 220 million Americans.” In addition to more expensive electricity, these mandates, usually called a Renewable Portfolio Standard, make “the addition or upgrade of 11,400 miles of transmission lines” requisite—a cost that will be borne by the end users at $4-5 per month for the average residential customer.
While traditional energy sources may get some favorable tax treatment, “there are no requirements at the federal level or the state level for consumers to use coal, oil, or natural gas.” Bryce states: “There is no reason that the wind-energy sector should be entitled to both direct subsidies and the indirect subsidies that come in the form of mandates.”
Subsidizing wind-energy jobs
Here we are with the jobs claim. “The evidence shows that whatever jobs are created by the wind sector come at a significant cost to taxpayers, and those costs are, again, an indirect subsidy.” Subsidizing Big Wind looks at several different case studies. One gives us a $329,000 per-job cost. A Texas report puts each wind-related job at a $1.6 million cost to the state taxpayer. At the Shepherds Flat wind project in Oregon, each job costs taxpayers $14 million. “Wind-related jobs are simply too expensive to be sustainable.”
Subsidizing wind companies by exempting them from prosecution
We’ve all heard stories of birds and bats being killed by wind turbines—earning them the “giant bird Cuisinart” moniker. The birds being killed aren’t just sparrows or pigeons. They are eagles and raptors that “are protected by two of America’s oldest wildlife-protection laws: the Migratory Bird Treaty Act and the Eagle Protection Act.” While the wind industry isn’t prosecuted for the “unpermitted bird kills,” the oil industry gets hauled into court and is required to pay hefty fines for the deaths of a few ducks.
The bird deaths have become so dramatic, 91 environmental groups have signed a petition asking the US Fish and Wildlife Service to create regulations to better protect migratory birds. “Eric Glitzenstein, a Washington, D.C.–based lawyer, who represents several environmental groups on the bird-kill issue, said: ‘It’s absolutely clear that there’s been a mandate from the top’ echelons of the federal government not to prosecute the wind industry for violating wildlife laws.”
“Despite pressure from environmental groups, the Interior Department has indicated that it may issue permits to the wind industry that will guarantee that certain wind projects are exempt from the Migratory Bird Treaty Act and the Eagle Protection Act for up to 30 years. The Obama administration has delayed taking any final action on the permits until after the November 6 election.”
Following Romney’s debate remark about defunding Big Bird, Obama has made opposition to the killing of Big Bird a campaign issue. Yet, Obama’s support of the PTC is, in effect, a plan to fund bird murder—a plan “persuadable” Republicans are being pressured to support. They are being told that there will be no problematic political fallout from including the PTC in a package of other miscellaneous tax-extender items. The PTC extension could well get buried in an omnibus bill, filled with some other things most Republicans want.
Addressing the PTC payment phase out—as written in the current legislation, David Kreutzer, Ph.D., writes: “What proponents of a PTC extension really seem to want is a perpetual series of extensions to provide an immortal tax benefit.”
Right now, the PTC extension is being pitched to the House Ways and Means Committee (as a predecessor to coming to a vote for the whole House). Calls from constituents, especially to Ways and Means Committee members, can alert them that there is problematic political fallout if they move the extension forward. Will you pick up the phone (202-224-3121) and tell them that the real cost of wind energy subsidies is too high?
Don’t let the threat of killing Big Bird obfuscate the bigger issue of murdering real birds, of hundreds of thousands—if not millions—of dollars per job, of mandates that are raising energy costs, and of obscene subsidies for an energy source that couldn’t make it in the free market. Tell your congressional representatives to say, “No,” to the PTC extension—regardless of the package in which it is hidden. (For more info see PTCFacts.Info.)
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