Failed Policy: The federal government has spent some $100 billion in taxpayer subsidies on green energy since 2006. Now we are seeing the flimsy and declining returns on that investment.
The wind industry saw its growth tumble by 92% last year, according to a new report from the American Wind Energy Association (AWEA), and that’s off of a very low base to begin with.
Big Wind blames the decline in output on uncertainty over the future of a federal wind industry tax credit – an absurdly generous subsidy of 2.3 cents per kilowatt hour produced.
This handout is what keeps those giant turbines twirling. These subsidies have been thrown at the renewable energy industry for more than a decade and always with the promise by AWEA that profitability is right around the corner. Sure it is.
The reality is that the wind industry is to energy production what Amtrak is to intercity transportation – a perpetual tax-dollar burning machine.
The wind industry has admitted that without the taxpayer handouts, its form of energy can’t compete. In other words, in a free market system for energy, wind is, well, winded.
One reason for the dismal state of affairs for wind is the shale oil and gas revolution. In six years the price of natural gas in the U.S. has plummeted to $4 a gallon from $12. None of the brilliant central planners in Washington ever saw that coming.
The fatal conceit of government planners is to believe they can see the future better than private entrepreneurs and investors.
The green energy lobby counters that oil and gas get subsidies, so why not bestow favors on renewables? But a report by the Institute for Energy Research based on Congressional Research Service data indicates that, based on per kilowatt of electricity produced, wind and solar receive more than 10 times the subsidy that fossil fuel producers do. (See chart).
And if oil and gas are subsidized, better to also get rid of those handouts instead of creating an energy subsidy arms race that taxpayers always lose.
The entire rationale for renewable energy subsidies was to reduce carbon emissions, but natural gas is achieving that at a fraction of the cost. The U.S. has reduced its carbon emissions in recent years primarily as a result of the shift toward natural gas for electric power.
It’s not a stretch to believe the real motivation behind the big push for another round of “temporary” wind subsidies is to line the pockets of major Democratic campaign donors who have bet the farm on renewable energy.
Now those investments are going bust, so the CEOs are rushing to President Obama and Senate Majority Leader Harry Reid to be financially rescued. And these are the people who say that Republicans are in the game of pay to play.
The solution here is simple. Let the market work in energy. That means government has to stop picking industry winners and losers – if only because it has such a dreadful track record. How many more hundreds of millions of dollars does Uncle Sam have to lose on a Solyndra or a Fisker to figure this out?
Killing the wind tax credit would be a first step to tax reform and create a level playing field in energy policy – two things taxpayers have been awaiting for decades.
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