Congress Debates Fate of Wind Power Tax Credit

Published September 17, 2012

Congress is considering letting production tax credit subsidies for wind power expire at the end of the year, triggering a fierce battle on Capitol Hill over subsidies for a power source that cannot provide competitively priced electricity.

Decades of Subsidies

The Renewable Electricity Production Tax Credit (REPTC), also known as the Production Tax Credit (PTC), provides energy companies a tax credit for each kilowatt-hour of wind power produced. Wind power companies argue Congress should make the subsidy permanent or extend it for several years. Consumer watchdogs counter that the wind power industry has yet to show any promise of providing affordable power despite decades of subsidies.  

Congress enacted the production tax credits in 1992, adding to preexisting wind power subsidies. 

“The wind power industry has continually promised that it would be competitive in the marketplace with just a little more money in just a few more years, yet year after year as budget time comes up the industry claims that it will collapse if subsidies don’t continue,” said H. Sterling Burnett, a senior fellow at the National Center for Policy Analysis. “On this latter point, the wind industry is correct; it will collapse without subsidies, and so it should. Indeed, every time subsidies are even threated, companies begin to lay off workers and close production lines in anticipation of just such a collapse in government-created demand.

“To the extent that the wind industry argues that other forms of energy also receive subsidies, the answer is to cut off all subsidies to every energy source and let them compete on a level playing field,” Burnett added.

Environmental Toll

Conservationists regularly object to proposed wind power projects, noting the U.S. Fish and Wildlife Service reports wind turbines already kill 440,000 birds each year, including bald eagles, California condors, and other protected species.

These bird deaths occur even though wind power produces only about 2 percent of U.S. electricity. Also, wind turbines annually kill tens of thousands of bats, which play a key role in keeping insect populations in check.

Industrial Profiteering

“Two decades is long enough for the production tax credit,” said Amy Oliver Cooke, director of the energy policy center for the Independence Institute in Denver, Colorado. “Wind energy needs to stand on its own because right now the only people benefitting are corporate wind profiteers and big green philanthropies that irresponsibly promote alternative fuel fantasies and a world free from traditional fossil fuels. Those who want wind energy should pay for it, not ratepayers.

“Wind is neither efficient nor economical, and Colorado would know because we have one of the country’s highest mandates—30 percent by 2020,” Cooke explained. 

As wind power generates an ever-growing share of electricity in Colorado, electricity costs have grown accordingly. Cooke notes residential electricity prices in Colorado have risen 50 percent in recent years, while national electricity prices during the past three years are the highest on record despite a dramatic decline in the price of natural gas fuel.

“On the practical side, available wind is never near load centers—where the people actually live—and transmission costs from remote areas often exceed the price tag of the wind project itself,” Cooke observed.

“Perverse tax incentives such as the production tax credit serve only as an encouragement for Colorado’s green fantasies and wind profiteers,” she added.

Gennady Stolyarov, editor-in-chief of the The Rational Argumentator, calls the subsidies corporate welfare.

“Direct payments to politically favored businesses—be they wind, oil, or any other kind—constitute corporate welfare and redistribution of wealth from some segments of the economy to others,” he said. “Which energy sources prosper and which do not should depend on cost efficiencies, competition, and consumer demand, not political privileges. This means that any genuine subsidies for any forms of energy—be they ‘traditional’ or ‘alternative’—should be eliminated and replaced with across-the-board tax cuts for all businesses and individuals.”

“I do not oppose wind power per se, if it can be competitive in a free market by offering reliable energy at affordable prices. But like every other source of energy, wind energy should stand on its own in the free marketplace,” Stolyarov explained. 

Kenneth Artz ([email protected]) writes from Dallas, Texas.