Recently Capitol Hill was inundated with wind energy advocates eager to make their case to extend the Production Tax Credit (PTC). At the same time, the Metro station near the Congressional offices was overtaken by the “wind week” ad campaign sponsored by the Sierra Club urging Congress to approve the tax credit extension. But, as America edges closer to the fiscal cliff and the debate over revenue increases and entitlement reform heats up, extending the PTC would not only make for poor policy, it would complicate our fiscal mess further.
Originally, the federal wind PTC was passed to jump-start the wind industry and provide wind energy producers with a subsidy of $22 per megawatt hour of electricity generated. Extended several times, the PTC is finally set to expire come December 31, saving taxpayers over $12 billion a year. Costly and ineffective, this tax credit has proved a failed attempt at promoting clean energy.
In addition to the direct cost to taxpayers, there is an outstanding obligation of approximately $10 billion for projects built during the past decade. Under the renewable energy bailout of 2011, there could be an additional $20 billion liability due to eligible wind projects—another burden taxpayers will bear.
According to Larry Bell, a Forbes contributor, in many parts of the country the PTC actually exceeds the wholesale price of power. If that isn’t troubling enough, the non-partisan Joint Committee on Taxation concluded that between 2009–2013 industry developers lost near $14 billion in revenue.
Last month the American Wind Energy Association (AWEA), with the help of a bipartisan trio of governors in states that benefit heavily from the subsidy, held an event endorsing the tax credit. According to financial disclosures, AWEA has spent well over $3 million during the past two years influencing lawmakers.
Efforts from AWEA, the Sierra Club and other well-funded groups have garnered fantastic returns for green activists, but unfortunately, average Americans are stuck with the bill. The PTC is just another example of a “feel good” policy with a hefty price tag—one that America can’t afford.
Sadly, common sense and sound fiscal policy rarely come together in Washington. Taxpayers still haven’t gotten their money’s worth from the original twenty-year-old bill.
In these desperate times, as our nation falls deeper into debt and the political establishment is afraid to make the tough decisions, allowing the PTC to expire seems like a no-brainer. Pouring more money into a hopeless industry is as productive as burning dollar bills as fuel.
In light of the exaggerated claims of job creation and the unrealistic potential of wind energy, it’s very clear that taxpayers got sold a bag of hot air. Let’s not buy another one.
Jason Stverak is the President of the Franklin Center for Government and Public Integrity
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