March 8, 2012

Alexander calls for ending wind-energy subsidies

Written by Elizabeth Bewley, Gannett Washington Bureau, 7 March 2012

WASHINGTON – Republican Sen. Lamar Alexander is pushing his colleagues in Congress to blow away wind-energy subsidies this year.

In a speech at the conservative Heritage Foundation on Wednesday, Alexander said he wants Congress to “end the big-wind gravy train” by letting the production tax credit for electricity generated by wind and other renewable sources expire on Dec. 31.

He also wants to get rid of government subsidies for the oil and gas industry.

Alexander said he’s studying a proposal by Republican Rep. Mike Pompeo of Kansas that would end all energy tax subsidies, including the production tax credit, in exchange for lowering the corporate tax rate. Republican Sens. Jim DeMint of South Carolina and Mike Lee of Utah have proposed a similar measure.

Alexander also is working on legislation that would reroute the money from energy subsidies to pay down the national debt and fund clean-energy research and development.

The production tax credit gives renewable-energy producers – mostly wind companies – an income-tax break of 2.2 cents per kilowatt-hour of electricity they generate for the first 10 years of production. The credit has been kept alive through temporary extensions since it was first created in 1992.

The renewable-energy industry and advocacy groups are lobbying Congress to renew the credit this year. They say it’s helped create jobs, clean the air, and lower the cost of wind power by 90 percent.

Last month, President Barack Obama proposed making the tax credit permanent while eliminating breaks for the oil and gas industry.

Some senators are pushing to add an amendment to a Senate highway bill that would renew the credit, Alexander said.

Alexander said the tax credit is expensive, subsidizes technology that produces “a relatively puny amount of electricity,” and sullies the landscape with massive turbines.

Wind companies are expected to save $6 billion through the production tax credit from 2009 to 2013, Alexander said, citing figures from the Joint Committee on Taxation. During that five-year window the industry is projected to receive an additional $8 billion in cash grants from the 2009 stimulus package, he said.

“The federal government borrows 40 cents of every dollar it spends. We can’t justify such a subsidy,” Alexander said.

He said wind energy is less reliable and less efficient than nuclear energy or natural gas – his fuels of choice – because turbines generate electricity only 30 to 40 percent of the time, on average. Alexander also said government subsidies have encouraged developers to build in regions where wind doesn’t blow enough, such as in East Tennessee, where the Tennessee Valley Authority built its Buffalo Mountain wind farm.

Nathanael Greene, director of renewable-energy policy at the Natural Resources Defense Council, said that while individual wind turbines don’t operate all the time, they function well as part of the larger electrical grid. And they generate electricity that’s comparable in price to coal, he added.

“It’s really more about how much does it cost us and how well is our grid connected,” he said. “Any individual turbine only operates 35 percent of time, but all the turbines across the country are operating much more often.”

Greene disagreed with Alexander’s argument that the nation can’t afford the subsidy.

“We just can’t afford not to be a leader on clean energy,” he said. “We need those jobs and we need the clean air that comes from it.”

Wind-power advocates say the country could get up to 20 percent of its power from wind without facing any reliability problems. In 2010, 2.3 percent of the country’s electricity came from wind, according to the American Wind Energy Association.

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