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Wind Energy Subsidies Blown Away?

Yesterday was a monumental day in Congress for the wind industry – yes, wind blows every day but those who profit from collecting the energy created and converting it (albeit somewhat clumsily and inefficiently) to electricity had their day in Congress today. Their goal: maintaining the cherished Wind Production Tax Credit at a hearing of the Oversight and Government Reform Committee.

Yet a large group of conservative and pro-liberty organizations are urging Congress to dump this credit, with the Competitive Enterprise Institute as a leading voice. They co-wrote a letter last month calling on Congress to dump the subsidy, and followed up with further guidance today from CEI’s Myron Ebell:

Congress should not renew the Wind Production Tax Credit for another year and thereby upset the planned phase-out that was passed just last year.

The wind energy lobbyists spend more time seeking handouts than in trying to make their product competitive. The tax credit amounts to the worst kind of cronyism, costing taxpayers billions, foisting mandates on states and driving up electricity rates for consumers and manufacturers.

The Joint Committee on Taxation estimated extending the tax credit would cost taxpayers 6.1 billion over the next decade or $18.5 billion for a five year extension.

Over the course of the last several years, efforts in both Maryland and Delaware to harness the wind have fizzled out, most notably the lockdown of the much-ballyhooed Bluewater Wind project. And while Maryland is attempting to jumpstart that market with a public subsidy effective this fiscal year, it’s questionable whether anyone will attempt to build the turbines, even with the set-aside put in place.

Unfortunately, while the wind blows for free, the places where it blows the best tend to be difficult locations for infrastructure. Moreover, as we all know, those hot, humid days during the summer when we could use the cooling breeze rarely have enough wind to blow a scrap of paper around, let alone turn a turbine. It’s one of many good points made by Dr. Robert J. Michaels, a professor of economics at Cal State – Fullerton and Senior Fellow at the Institute for Energy Research.

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Surely some will counter with the fact that fossil fuel industries have their own set of tax benefits and these subsidies for wind energy are simply a matter of leveling the playing field. But consider the number of jobs in these fossil fuel industries everywhere in the process – everything from working at the point of extraction to transport to conversion into electricity. In many cases, these jobs are among the most lucrative in their respective fields despite the fact the raw material is relatively cheap compared to the cost of wind energy.  Furthermore, as Michaels notes in the video above, renewables enjoy, on on per megawatt hour basis, nearly 20 times the amount of subsidies as fossil fuels.

It’s also worth pointing out that the “market” for wind energy is a relatively artificial one thanks to those states which have a carveout for a renewable energy portfolio, including Maryland. Generally, since neither the cost-effectiveness nor the necessary infrastructure is in place, the laws simply serve as another form of taxation of already-beleaguered utility companies because non-compliance carries a monetary cost. On the other hand, no one is saying that any proportion of our electricity has to come from coal or natural gas nor is it necessary because the market price dictates the direction utilities prefer to go.

With any luck, the production tax credits will become a thing of the past at the end of the year. Like zombies, they were resurrected from the dead at the end of last year thanks to a Congressional deal but maybe this year their time will run out.

In discussing this issue with a fellow Watchdog Wire contributor, I learned something else worth pointing out on a local level.

Clean Currents is a Maryland-based company which is best described as a broker for both on and offshore wind energy.  Subscribers to their clean energy service receive electricity purportedly drawn from renewable or clean energy sources, with 13,000 residential and business customers scattered around Maryland, the District of Columbia, and Pennsylvania.

One marketing gimmick the company employs, is the Green Neighborhood Challenge, which is aimed at school and community groups, with the promise of donating $30 per new customer in order to “support a green project.” But as this observer noted during a Clean Currents presentation at their child’s elementary school PTA meeting, “of course the Clean Currents rep never mentioned the federal (production tax credit) or generous state subsidies they get so their higher cost product can compete.” Add to that the free advertising courtesy of Maryland taxpayers and it shouldn’t be surprising that Clean Currents is among those wind energy rent seekers lobbying both the Maryland General Assembly and Congress for corporate welfare.

Crossposted from monoblogue, with additional content.

Michael Swartz

Michael Swartz began his writing career with his home website, monoblogue. Since that modest beginning his words have been found on websites such as Red Maryland, Examiner.com, PJ Media, and now here on Watchdog Wire. He's also appeared in newspapers as a former syndicated columnist for Liberty Features Syndicate, and wrote his first book, called So We May Breathe Free: Avoiding Ineptocracy (2012).

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