December 17, 2012
Minnesota, Opinions

Let wind subsidy elapse

Article by: KIM CROCKETT and PETER NELSON | December 16, 2012 | www.startribune.com

The federal government’s very generous wind-power subsidy is set to expire at year’s end. It’s no surprise that the special interests feeding at this subsidy trough are putting pressure on Congress to extend it.

Recently, Aaron Peterson and Ken Bradley wrote a commentary (“Clean energy future is at risk in Washington,” Nov. 28) urging extension, aiming their argument squarely at U.S. Rep. Erik Paulsen of Minnesota. They painted the extension as bipartisan, pro-jobs and pro-environment. To top it off, they wrote, our children’s future depends on it. Really?

The authors talk about the need to set aside partisanship, yet they resort to ad hominem attacks on the Tea Party movement and on energy companies that fuel millions of American jobs. Someone truly interested in bipartisanship would be working toward alternatives to accomplish shared goals.

But as with most special interests, Peterson (representing juwi Wind, with $1 billion-plus in government-subsidized revenue) and Bradley (representing activists at Environment Minnesota) represent an uncompromising position: Extend the subsidy, period.

There are far more cost-effective ways than the wind subsidy to reduce CO2 emissions. The Energy Information Administration estimates that extending the subsidy (and a handful of other renewable subsidies) would reduce United States CO2 emissions by only 0.6 percent from 2010 to 2035.

If the goal is a bipartisan deal on the so-called fiscal cliff, Democrats should be quick to use the wind-subsidy extension as a bargaining chip. Giving in on the wind subsidy should be only slightly more painful for Democrats than it was for them to give in and agree to end the ethanol subsidy last year.

As with ethanol, the wind industry does not need the subsidy to carry on. Enacted in 1992, the subsidy was supposed to be a short-term stimulus to an “infant industry” – but wind is clearly no longer an infant.

Since 2006, U.S. wind generating capacity grew fivefold. This growth was driven largely by state renewable-energy mandates, not by the federal subsidy. Much as with ethanol mandates, these state renewable-energy mandates create a guaranteed market for wind, which will continue with or without the subsidy.

At some point, Democrats need to give in on this “green jobs” pitch. Extending the subsidy is a jobs-killer. Government doesn’t pick winners and losers well, yet the wind subsidy certainly picks a winner. In doing so, it also picks losers (and many more losers than winners) by transferring billions of dollars away from more-effective job producers.

We’ve already seen jobs affected in Minnesota. The combination of the wind subsidy and Minnesota’s renewable-energy standard inspired a few Minnesota utilities to add more wind than needed. Minnkota Power, for instance, now provides more than 30 percent of its electricity through wind, well above the 25 percent mandate set by Minnesota law.

All that wind has contributed to substantial rate increases over the past few years, and they hit northwestern Minnesota businesses at exactly the wrong time. It certainly puts jobs at risk in the region, including those at major employers like Polaris and Marvin Windows.

Germany offers a warning to anyone thinking that government can promote jobs by picking winners in the energy industry. Rising energy prices are now being blamed for German job losses in heavy industry. And as the newspaper Der Spiegel reports, “There is no sign yet of the green economic miracle that the federal government promised would accompany Germany’s new energy strategy.”

Finally, we’re told we need to subsidize wind farms to protect the environment.

We have great news about the environment: The Minnesota Environmental Quality Board just released its “Minnesota Environment and Energy Report Card,” which finds that “our air is healthy to breathe.”

And that’s thanks to the fact that emissions from burning coal and other fuels for electricity aren’t nearly as dirty as they used to be. According to the report, “reductions in air pollution emissions from coal-fired power plants and industry smokestacks have been dramatic.”

Kim Crockett is chief operating officer and general counsel, and Peter Nelson is director of public policy, at the Center of the American Experiment.