Pyle: Let’s Put An End to Wind Welfare

This week, AEA President Tom Pyle penned an op-ed in The Hill decrying the wind industry’s dependence on taxpayer-funded corporate welfare. Below is the text of the op-ed:

Does wind lobby care more about keeping word or handouts?
By Thomas Pyle

As the 2016 presidential race takes shape, here’s an idea Republican and Democratic contenders alike can get behind: let’s put an end to corporate welfare.

Unfortunately, right out of the gate, many of the candidates have chosen to pander to special interests rather than stand up for American families. At the recent Iowa Agriculture Summit, for instance, none of the Republican contenders save Ted Cruz (R-Texas) called for an immediate end to the federal ethanol mandate.

On corporate welfare, the energy space is fertile ground for reform. A good place to start is with the wind Production Tax Credit (PTC), a lucrative subsidy that has bilked taxpayers for billions over decades. The most recent one-year extension is estimated to cost taxpayers $6.4 billion.

The best solution is to simply let the PTC remain expired. But in an effort to find compromise, Reps. Kenny Marchant (R-Texas) and Mike Pompeo (R-Kan.) have introduced legislation to phase out the PTC in a series of steps over the next decade. Their bill tightens eligibility requirements for new projects, ends an inflation adjustment provision—saving taxpayers about 35 percent—and repeals the underlying statute so subsidies will stop flowing no later than the end of 2025.

Two years ago, lobbyists at the American Wind Energy Association (AWEA) claimed to support a PTC phase out. As Congress teetered on the fiscal cliff, AWEA cried uncle, conceding the industry didn’t need the PTC “to become fully cost-competitive.”

The wind lobby has since changed its tune. This week, AWEA blasted out an email calling on wind supporters to “urge opposition” because the bill “threatens to create a repeat of the cycle of job losses, factory closures, and major decreases in the amount of new wind power available to our families.”

AWEA has it backwards. By pushing for repeated one-year PTC renewals, AWEA owns the wind industry’s boom and bust cycles. The Marchant-Pompeo bill, by contrast, offers reasonable reforms that provide certainty to wind producers while protecting the long-term interests of taxpayers.

The only question is whether the wind industry will meet Congress half way.

A solution couldn’t come soon enough. As history shows, wind welfare is a bad deal for taxpayers.

Consider new data from the Energy Information Administration (EIA). In 2013, wind received almost $6 billion in federal electricity-related subsidies (including the PTC). That’s almost twice as much as coal, natural gas, and nuclear received combined. The only difference: while those three sources supply 86 percent of the electricity Americans use, wind produces just 4.5 percent despite receiving twice as much largesse.

And while all energy subsidies distort markets and harm consumers, wind subsidies have come at an especially high cost. Over the last six decades, subsidies for wind and solar alone have cost taxpayers $13.77 per million British thermal units of energy produced, compared to just 39 cents for oil, 34 cents for nuclear, 12 cents for natural gas, and 10 cents for coal.

To make matters worse, Americans actually pay for subsidized wind twice: first in their taxes, then on their utility bills. Subsidies divert resources away from projects that make the most economic sense and toward those who have the best political connections. These market distortions lead to higher energy prices for all of us.

Just look at Spain and Germany. Both countries impose subsidies and mandates for wind and solar. Electric rates are three times higher in those countries than in the U.S. and carbon dioxide emissions are actually rising—defeating the supposed purpose of mandating renewables.

Europe’s failed green energy experiment should serve as a cautionary tale on the false promise of corporate welfare. Wind lobbyists often claim that the PTC is only “temporary” and that renewables will soon be cost competitive with conventional fuels. They’ve been telling this tall tale since Congress first enacted the PTC in 1992.

The American people have had enough. A recent poll found that the public believes wind subsidies have passed their expiration date. By embracing the approach advanced by Marchant and Pompeo, wind lobbyists can prove they care more about keeping their word than protecting their government handouts.

Click here to see the original op-ed. 

###