Panicked Wind Energy Industry Offers A Compromise On Subsidies

GE-2_5MW-Wind-Turbine

In the past, subsidies for the fledgling “green energy” industry were justified by suggesting that these were emerging technologies on the cusp of revolutionizing the way we get power. The problem? Well, wind and solar and biofuels have been the “energy of tomorrow” for a couple of decades now, and they’re still so dependent on the government that ending the subsidies would be devastating for the industry.

The wind power industry, specifically, has argued again and again that the expiration of the production tax credit for wind power generation would devastate their industry. They seem to be losing that debate, though, as expiration of the PTC seems likely. But the wind industry is changing their tune now. Instead of asking for a 100% renewal of the subsidy, they want a gradual (very gradual) phase-out.

Wind energy companies have urged Congress for months to extend the so-called production tax credit, which is set to expire this month. The break shaves as much as a third of the costs to generate wind power, and industry advocates contend its loss could cost thousands of jobs. Under the proposal, the credit’s value would fall gradually over the six years.

The credit’s “continued availability for a reasonable period of time will allow the industry to invest in the cost- saving technologies required to finish the job,” the Washington, D.C.-based trade group said in the letter.

The association’s plan would keep 100 percent of the current credit of 2.2 cents a kilowatt-hour for projects started in 2013. The credit would fall to 90 percent for projects completed in 2014, 80 percent in 2015, 70 percent in 2016 and 60 percent in 2017 and 2018, the credit’s final year

That would actually be an even more generous development for the wind industry given that, in the past, the PTC was only being renewed for a year or two at a time. This would be a six year renewal that would have the taxpayers still sharing out a majority of the tax credit the better part of a decade from now.

Whether or not Congress will fall for it remains to be seen, but let’s be clear that these situations where the choice is between axing a subsidy and thousands of jobs or continuing to pay a subsidy that adds to an already enormous budget deficit is what happens when the government “invests” in the private sector.

Business ventures that need government investment are usually so marginal that they can’t attract private investment, which is clearly the case with wind power given that decades later the industry still can’t stand on its own two feet. Business ventures that work, that produce goods and services people need/want at prices they can afford, don’t need government investment.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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