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Wind Industry Starts to Panic as Tax Credits Come to an End

By MasterResource | Mon, 13 February 2012 23:56 | 8

If you haven’t heard from the American Wind Energy Association (AWEA), you probably will.

Ominous, scary ads are running nationwide warning of the crushing blow to American jobs if Congress fails to extend the Production Tax Credit (‘PTC’), the 20-year ‘temporary’ subsidy most credited for market growth in the wind sector. The PTC is due to expire at the end of this year.

Most of the ads target particular House members who, so far, have resisted the industry’s demands for their PTC earmark. The pressure is particularly heated right now as Congress negotiates the payroll tax holiday bill, which is viewed by many as the last best chance to attach an extension of the PTC before November’s presidential election.

AWEA is also leaning on its friends to do its bidding. Politicos from wind-friendly states like Iowa, and Kansas have written letters to members of the Congressional conference committee that’s now hashing out the tax bill. The letters repeat the same tired talking points about jobs.

Jobs Fallacy

It’s embarrassing to see these politicians blindly repeat what they’ve been told with no apparent understanding of the costs and impacts of pro-wind policies. Government (taxpayers) do not create jobs on net. Resources taken from the private sector reduced demand and thus (unseen) jobs to create the seen (wind) jobs.

But higher energy costs and misallocated resources in the process make us all poorer. Henry Hazlitt refuted ‘green jobs’ decades before the term was invented in Economics in One Lesson via his explanation of seen-versus-unseen jobs.

A Ballooned Subsidy

Do you think Senator Harkin or Governor Brownback realize that since the PTC was adopted in 1992, its annual cost has ballooned from $5 million a year in 1998 to over $1 billion annually today. Or that this open-ended subsidy of 2.2¢/kWh in after-tax income represents a pre-tax value of approximately 3.7¢/kWh? In many regions of the country the PTC equals, or exceeds the wholesale price of power!

Even if the PTC were to sunset, taxpayers are still obligated to cover nearly $10 billion in tax credits for wind projects built in the last decade. This is in addition to the nearly $20 billion in debt already accrued for wind projects built under Section 1603.

Wind Installations Over the Years

Wind Jobs vs. Employment

Like AWEA’s ads, our windy politicos complain about the loss of jobs if big wind is not coddled further by the government. How would they respond if told that despite the billions in public funding since 2008, the wind sector lost 10,000 direct and indirect jobs, bringing the total to 75,000 jobs?

Or that States like Vermont have found that “above-market energy costs tied to renewables have the deleterious effects of reshuffling consumer spending and increasing the cost of production for Vermont businesses.” These increased costs reduce any positive employment impacts of renewable energy capital investment.

It takes only 0.1 jobs per megawatt to operate a wind plant. Most of the sector’s jobs are temporary construction positions with less than 20,000 involved in the manufacture of industrial parts that could be used in turbines.

If we accept that earmarks for the wind industry are still appropriate, the PTC is highly inefficient and should, at least, be updated to respond to current market conditions. For example, since it is uniform across the country the PTC supports poorly sited wind development in some areas while in other areas pays for projects that would have been built regardless of the credit.

The policy also ignores other crucial factors driving wind development in the U.S. including State mandates and energy prices. With more than half the states mandating renewable development, some policy experts question why projects receive benefits from both State renewable portfolio policies and the PTC. Good question.

Pushback to Wind Push

Finding politicians to mouth support for big wind is not hard. But the American public is not as easily manipulated. In a letter this week to the Las Vegas Review Journal, one reader responded to AWEA’s call to action by contacting Representative Joe Heck and asking him to “kill all the tax breaks and subsidies for wind, solar, and ethanol energy,” adding that “if they cannot stand alone without government help, they will have to reinvent their technology or go out of business.”

This weekend, a letter signed by over 200 ranchers and residents was sent to the Nevadan congressional delegation, asking them to vote NO on any further extensions of the PTC. Similar letters were sent from states across the U.S. representing two-thousand signers.

Conclusion

When Enron (the parent of Enron Wind Corp.) declared bankruptcy in 2001, the government said no to a bailout, and 4,000 workers were laid off in Houston, Texas, and elsewhere around the world. But on that day forward, economies became more efficient with skilled employees leaving failure to gain viable consumer-driven employment. Today, mirage “green” jobs can go to real jobs in the booming real energy industry.

The PTC is one earmark many Americans know about, and their opinion of it is remarkably consistent: The cost of the PTC is excessive, the benefits elusive and, frankly, big wind’s pitiful performance measured against industry promises makes this entitlement an easy one to sunset.

By. Lisa Linowes

This article was provided by MasterResource

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  • John Kilker on February 14 2012 said:
    Why should someone working for minimum wage have to pay for the high salaries of wind energy workers? If wind energy is feasable it should be able to make a profit on its own. We are paying higher electric rates now by forcing generators to pay higher prices for wind produced electricity. How much more do these parasites want from the people.
  • Dan Long on February 14 2012 said:
    Reality sucks. Even with the subsidy, wind energy products (or solar etc) are up to 3 times the cost of similar none alternative products. Even with the consumer tax credits the industry has raised prices. So instead of creating a volume based industry they have even further increased their margin. I'm not at all convinced that those companies haven't made profits. I'm more convinced that post climate-gate has put them into fleece while we can mode because the gig is up. (queue oil is bad music) Shame shame on the alternative energy shame shame....
  • Robert on February 15 2012 said:
    You oil addicts think you got everything figured out. The paltry billions you are talking about for wind PTC are dwarfed by the subsidies old carbon recieves from this nation. From 'grandfathered' schemes old John D got in place to nasty toxics to using our soldiers to guard oil supply, our old carbon addiction has cust us a kings ransom.

    Sure pull the Wind PTC and all the renewable credits, fine. Then send the old carbon gang a bill for our military and no more hidden tax crap for them either.

    Fair is fair
  • Dan Long on February 15 2012 said:
    Sorry Robert, but one one way to expose the industry is to get involved in the industry. I have first hand knowledge of the idiocy of the renewable energy scam. My attempts to activate a hybrid (wind/solar) system has cost over $40,000 to net less than 500WH, or as one distributor out it " welcome to the world of expensive hobbies".

    The more research I read of the whackos excited about lighting a 100 watt light bulb (at someone else's expense of course) or ignoring the fact that you'll never get your ROI before the system crashes or gets obsolete is just mind boggling. All the while blighting the landscape for nothing.

    And, by the way, when you make a comment, remember that you're addressing intelligent people so you'll have to lose your whatever speak and use English, I didn't understand a word of what you tried to say after "oil addicts"....
  • Robert on February 15 2012 said:
    Ok. I'll try to talk slower so you can understand.

    The discussion was about high level government subsidies for wind. I don't care for them myself, but the entrenched, traditional energy system (old carbon) already recieves massive hidden subsidies and it is not fair to point the finger at one and not the other. It is the pot calling the kettle black.

    Now if you are trying to infer that the industry is 'corrupt' because you screwed up your personal system that is quite a stretch. I have personally used wind, solar and biofuels for many years and have had issues, sure, but you can't move into the second generation until you understand the first. I have seen many try to buy 'indulgences' by installing a clean energy system and maintain their wasteful ways, that would be changing the engine in a hummer to be more efficient.

    Bottom line, the wind PTC is a paltry sum compared what this nation forks over to big banks and big oil in tax money.
  • dan Long on February 15 2012 said:
    Ok, I'll back up a space. No I didn't screw up a system, I'm a mechanical engineer, it's only practical in few places and Wisconsin is not one of them. Alternative energy is a niche industry, unlike petroleum. And it hasn't been panning out, one would think that 20 years of pampering would be enough to get to level two but there is no incentive.

    Next thing you'll tell me that the science of AGW is incontrovertible despite the fact that the Himalaya's haven't melted at all over the last ten years.....
  • Robert on February 15 2012 said:
    Oh yeah, that's right engineers never make mistakes. Sure Wisconsin has limited wind and solar resources, but has rich biomass potential. They are all clean energy sources. But there are hacks out there that will promise the world, every industry has them.

    The crumbs that have been thrown at renewables to appease the masses so polticos can kiss the green baby PALE IN COMPARISON to subsidies and hidden tax credits the old carbon gang has been getting for a century. It was their illegal collusion with the publicly subsidized railroads that gave Standard oil their first grip around our throat by 1879.

    Global warming is a bunch of crap dreamed up by those that would further control and bankrupt our nation. My commitment to sustainability has nothing to do with that fallacy, it has everything to do with my dependants.

    my issue was with the tone of the article that is obviously biased.
  • Dan Long on February 17 2012 said:
    Ah yes, Bio mass, That argument. So when we choose between limited food and fuel you choose fuel your choice is fuel. Then throw in burning natural products for humus to grow those grains and I can see your grasp on the big picture of farming. Particularly when tillable acreage is being eaten up by liberals and their irresponsible land usage. Frankly, all I hear is the prating of suburban part time greenie talk that is disconnected with reality.

    As far as dissing engineering, sorry, but you can't fake physics. What I have installed will, with a couple modifications, be sustainable in an EOTWAWKI environment, But that will be a totally new world...

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