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Opinion

5 Reasons Why We Shouldn’t Keep Subsidizing Wind And Solar Energy

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From – dailysignal.com – By Katie Tubb

Proponents of wind and solar energy subsides argue that they are necessary for any number of reasons, such as business certainty, to stimulate the economy, to preserve jobs, to combat global warming, to compete internationally, and the like.

But in the long run, subsidies actually hurt the very industries they’re supposed to help by disincentivizing innovation and making U.S. companies less competitive at home and abroad. The real irony, if not tragedy, is that a free market is far more likely to yield the growth and innovation that subsidy supporters claim to want. Each year, when Congress tries to extend, re-extend, or retroactively extend targeted tax credits for renewable energy, Congress hurts long-term innovation and growth.

Currently, Congress is using the omnibus spending bill or tax extenders package as a vehicle to do this once again. Some in Congress are revisiting the idea of extending the wind and renewable production tax credit (PTC) and the solar investment tax credit (ITC). In fact, the tax extenders bill extends the wind and renewable energy PTC to include projects that begin construction by Jan. 1, 2017.

But here are a few reasons why these carve-outs need to be permanently ended.

  1. The wind and solar industries will be fine without subsidies.

Camilo Patrignani, the CEO of solar energy company Greenwood Energy, has laid out a case for eliminating the solar investment tax credit, noting that solar power is getting more affordable and that “we must empower developers to be competitive without subsidies.”

The title of an article by American Wind Energy Association (a strong proponent of the wind and renewable production tax credit) unwittingly said as much: “Industry grows as policy uncertainty threatens future gains,” despite the wind and renewable production tax credit having been expired for almost a year now.

Further, according to the Department of Commerce:

The United States is home to a thriving renewable energy industry, with globally competitive firms in all technology subsectors…just under $700 billion will be invested in the U.S. renewable energy sector during the next two decades with investment opportunities cascading across the industry’s deep and multi-faceted supply chain.

  1. Extend it just one more time? Not likely.

Proponents of energy subsides argue that an extension or a measured phase-out is necessary for “the policy certainty needed to continue scaling up and creating benefits” and to avoid a “policy cliff.” Using this argument, the wind and renewable production tax credit has been around since 1992 and renewed nine times. Congress has let it expire five times—that’s five opportunities to permanently eliminate a bad policy.

The solar investment tax credit as it’s known today was created in 2005 and extended for eight years in 2008. In other words, the solar industry has known for eight years that an expiration date was coming.

While some lobbyists will ask for another extension, what most are really asking for is that the “PTC/ITC … be extended as soon as possible for as long as possible,” according to the American Wind Energy Association.

Real certainty comes by getting rid of the subsidy altogether.

  1. Any extension would be expensive.

Industry pleas for “just one more year” may sound innocuous, if not reasonable, but that’s not the case.

Last year, Congress retroactively extended the wind and renewable production tax credit to cover projects built by the close of 2014, diverting 6.4 billion tax dollars over the next ten years. A two-year extension would divert an estimated $13.3 billion, according to the Joint Committee on Taxation, and a ten-year extension would divert an estimated $28.4 billion, according to the Congressional Budget Office. A ten-year extension of both the PTC and ITC would divert $35.8 billion.

  1. The wind and renewable production tax credit will divert another $16.6 billion in taxes whether or not Congress extends it.

The wind and renewable production tax credit is paid out for 10 years to companies that began construction before Dec. 31, 2014. This means that regardless of what Congress does, the wind and renewable production tax credit is guaranteed to divert at least 16.6 billion tax dollars from 2014 to 2018, according to the Joint Committee on Taxation. A full $13.8 billion of that is from wind energy alone.

  1. Energy subsidies have nothing to do with global warming.

President Barack Obama has touted policies attempting to increase solar and wind power as important to his global warming policy. But according to the National Academy of Science, eliminating the tax credits would increase greenhouse gas emissions by 0.3 percent. In fact, if the president were truly concerned about environmental impacts, he might consider that a very efficient wind farm would need 260 times the amount of land to produce the same amount of electricity as a typical nuclear power plant, which has virtually no emissions.

 

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Russ donnelly

The reason we have these credits is that they are a poltically preferable substitute for a better policy.the better policy would be to actually pay for the external health costs and climate costs of fossil fuels.($.15 and $.09 per kWh for fossil fuel generation, and $3.50 additional for gasoline).pay these costs directly as opposed to paying for it in insurance cost and income tax.then see if you need tax credits for renewables and ev cars.

Paul Kenyon

And about that nuclear power plant: the electricity it produces is not the same as the energy produced by a wind energy facility. Nuclear power (as with other traditional energy conversion electrical generation) produces reliable, available-on-demand, high quality electricity, the kind modern economies need. Go to the Dominican Republic, as I did as a Peace Corps volunteer for example, to experience what living with unreliable, intermittent and variable electricity is like. Variable and unplannably intermittent electrical energy generation is not the same as electricity produced by that nuclear plant. They are not equivalent and this also needs to be considered. There are more than 5 reasons to dump these, expensive, parasitic (they need traditional generators, usually gas plants today, as “followers,” which forces those followers to run less efficiently than if they ran without having to fill in for wind and PV solar,) junk-energy-producing electrical energy sources.

Joan C

I am not finding exception to the statements that the fossil fuel companies, provide jobs and necessary services, what I am disputing is that with profits as large as they are why do they need subsidized.

Jerry

Instead of subsidizing the businesses, They should offer the money to citizens that want to buy Solar or wind systems for use in personal,homeowner consumption (not to resell power).Tax Credits don’t help as much because you have to wait till Mid year (following) to get the credit that is NOT that noticeable, and a lot of homeowners would install the systems, if they could have a one time bonus payment towards the initial cost of the equipment (which is costly). My local power in the Blue Ridge Mtns., goes out periodically, and it would be very helpful if I could be self sufficient from an electricity supplier. I can’t afford the initial equipment cost but would be able to bear the system maintenance cost if I could get 50% subsidy towards the initial purchase price. Every year new recipients could benefit from the financial aid which aids business growth, ecology,… Read more »

Joel Wischkaemper

Regulated electrical energy is the backbone of industry in all industrialized nations. All of the industrialized nations cannot survive without it. Regulated electrical energy is the crux of the problem of electrical energy from renewable sources: the supply of power must be constant and unvarying. Wind and clouds constantly change the power produced in the green resources, and that can damage heavy electrical equipment in a factory very quickly. In to many places, it just doesn’t work, and in our country.. it has to work. There is a nuclear power plant that isn’t to far from becoming a major source of power for the United States, China, Russia and Europe and it solves all the problems of variable energy sources while being very close to a ‘green’ power sources. http://www.world-nuclear.org/info/current-and-future-generation/thorium/ https://www.youtube.com/watch?v=uK367T7h6ZY It is a superb device, and factually, it is safer than natural gas, or oil electrical production processes. Coal,… Read more »

Joan C

Question why then is it that the government has for years subsidized the oil industry? Wouldn’t the same arguments of stifling and destroying innovation apply? The oil industry also continually reports profits in the billions, and yet year after year the government extends their subsidies. That is certainly expensive!

Ralph

Why did Enron get prosecuted, but not Solendra? HA HA HA HA HA!!!!

Rosech

First of all, the ROI (Return on Investment) of windmills is pitiful but with Obama supporting you, you get money. Plus, they are ugly as sin and ruin a view on hills! With solar, now the electric companies are not willing to take back the excess they pay a pittance for a little take back. Solar is overrated and way too expensive and never, ever lease it if you want to sell your property because buyers are not interested in taking over your lease. Boondoggles supposed by a boondoggle administration and Congress and Supreme Court. Trump in 2016 to clean out the vermin!

Steve m

I have yet to see a full life cycle analysis of the environmental impact of solar photovoltaic. They use harmful chemicals and heavy metals to produce them, not to mention what to do with them when they outlive their life. How do we dispose of them considering the harmful elements they contain? Will they become like the heavily touted flourescent light bulb where you need a hazmat team to come clean up if one breaks due to mercury contamination? Remember how heavily subsidized these were when they were being pushed so hard? Government interference messes everything up. Free market can take care of itself, thank you very much.

polarhawk

Out front – I have yet to be convinced one thing – man generated CO2 (only a small percent of an already trace atmosphere gas), by burning hydrocarbons, is responsible for any ‘changes’ in climate worldwide. I do see how building cities effects the micro-climate of the city, i.e. the city’s climate heats in relation to the covering of the natural ground with concrete and steel as the city expands. The smog that once was so visible over some cities, is proof man can ‘change’ the micro-climate. Thanks to technology the smog is so much less of a problem now. I believe burning hydrocarbons to heat water to generate electricity is not a wise use of this energy source. But, all energy sources have their problems when it comes to generation of the amount of electricity we use today. Oil/gas is necessary for our lives now, especially when it comes… Read more »

Tom Randall

I agree subsides need to be stopped. we have had enough stories of supposed GREEN companies falling after receiving subsidies.

Gail Baxter

It’s clear to me that renewaable sources are not yet affordable. We need to be open minded and think outside of the box. For example, my husband and I have an all electric house. We bought a radiant heater that we plug in. It brought our electric bill monthly to under 70 dollars for a three bedroom house. Also, nuclear power has some new developments. It used to be that billions of dollars were required to design each plant, however, the containment can be made so small now that they can be manufactured in one spot and shipped. The nuclear fuel required is about the size of an eraser at the end of your pencil. Providing disposal of those fuel pellets might be more possible now with space travel. You know, thinking outside the box is possible and that’s what Americans have been so good at. The bottom line here… Read more »

Ray

government subsidies should be eliminated… gov. loans are fine as they are to be repaid. free enterprise would make everyone’s life better . nuclear energy is as safe or more safe than most other means of generating power and in the long run possibly the cheapest method available , and research keeps making it even safer and cheaper. other industries are more dangerous but the fanatics don’t defend them .

Michael Spiegel

Even with all the tax incentives solar power is too cost prohibitive for my wife and I to install because we would dead before we realized any cost savings. They wanted almost $40k to put solar on our home which would have eliminated almost all of our electric bill. However, we would have to pay about $255 a month for twelve years to pay it off, our electric bill never gets beyond $200 a month. If they’re really serious about solar and getting people to do solar they to get the cost down to less than $18k for system for an average house. Besides for those tax incentives to work you have end up owing the govt at the end of the year.

Annette

I am neither liberal nor generally a Democrat, but I believe in renewable energy. I have seen a design for a new smaller windmill which could be used nearly anywhere- no more huge windmill fields. I live in a sunny place so solar is a viable option for us. Realistically, this country needs to widen its horizons on many ideas. I do not think we should subsidize indefinitely, but long term LOANS for innovation – make sense to me. At times it appears the hypocrisy is running rampant on both sides of nearly any idea you can name. When did we lose our ability to listen to one another and believe in compromise? Why does it appear that no matter the subject, we have to treat one another with no respect? It simply seems sad to me.

Betty

I live in a rural area, more than 15 miles from my post office. I get my electricity from a rural electric co-op. We have relied on the funds that got it started in the 1930’s, and have grown now to where we have our own generating plant and wind-farm and are now furnishing some power to the Metroplex area (Dallas and Ft. Worth). We also are building power lines where we can send power to other parts of the state. Where do you think these areas would be power-wise if we did not have the co-op funds? We have paid back our loans on time, and I think that we are actually ahead of time on paying these funds back, with interest! I am just one of the members of our little co-op and attend annual meetings so I will be informed as a member of the electric co-op… Read more »

cornguy

About wind energy, there can never be a payout long term on wind chargers without subsidies. Consider the initial cost of building the generators and the use of natural resources, but it’s good for the economy. Consider the cost of the huge foundations and construction of the towers, but it’s good for the economy. Consider the need for a bigger power grid subject to natural and man-made disaster, but it’s good for the economy. Consider the cost of disposing of the structures after the 20-40 years of useful life, what do we do then with the big pile of rubble. Will that be good for the economy. About solar, the same applies and it makes for a lot of economic activity, it’s good for the economy. About ethanol, we’ve been subsidizing that since the late 70’s. Just consider the economic sense of that. In many years we needed to subsidize… Read more »

Fred Campbell

I have (subsidized) solar panels.
On summer afternoons California forces PG&E to buy energy from me at 30 cents per KWH.
Meanwhile Diablo nuclear power plant (Morro Bay, CA) produces energy at under 5 cents per KWH.
The cost difference is, of course, made up by non-solar equipped rate payers. Go figure.

Chuck

All the libtards feeding at the government subsidy trough, the really good friends of al gore and obama, the crony capitalists, are all set for another $16 Billion in tax dollars to share while they laugh at middle class schmoes paying the soon to be huge electric and gas bills to go along with their “affordable health care premiums”. One bright spot is they will reduce their purchases of imported goods from “China” because they won’t have any money left…which also solves the obesity problem.

CG

Many people who are discussing renewable energy have not had any experience with it. I am not a particular fan of wind energy because of the use of a tremendous amount of land and hazards to wildlife and the environment.
However, I installed a solar water heater on my house when I built it in 1982. I would not have been able to do this without the tax incentives that were in place at the time. I have reduced my energy costs significantly with this system.
Renewable energy isn’t for everyone, but it certainly has worked for me.