Why the wind energy tax credit must go
Dusty Springfield sang a great pop song in the late 1960s about “the windmills of your mind.” As I see our government throw hard-earned tax dollars into wind power, chasing an energy source that is one of the most expensive and least efficient forms of energy, I think about that song. Does wind energy have any real viability, or is it just a mirage in our minds?
Over the past 20 years, the federal government has spent more than $20 billion on a tax credit for wind producers. Today wind accounts for less than one percent of our nation’s energy. Wind proponents keep saying that subsidies are needed for only a little while longer; that true independence from taxpayer handouts is just around the corner. But no one can point to a tangible plan or timeline for weaning the wind industry from the federal treasury.
The dirty little secret is that even if the current wind production tax credit ends on Dec. 31, projects already in the pipeline will enjoy another 10 years of subsidies.
President Barack Obama likes to point out that wind energy production has doubled in the past three years as proof that his energy policies are working. What he doesn’t tell you is that he has increased federal subsidies to wind energy ten-fold during that same period. This year’s subsidy amounts to $1.6 billion.
Compared with federal subsidies for other forms of energy, wind is a costly investment. For every megawatt hour of wind energy generated, the taxpayer paid $56, compared to 64 cents for coal-fired and natural gas-fired generation, according to a recent analysis by the American Energy Alliance. As pointed out in a recent Wall Street Journal editorial, these subsidy comparisons don’t even consider that the coal, oil, and natural gas industries paid more than $10 billion of taxes in 2009, while wind and solar are net drains on the Treasury.
Propping up wind energy is costly for consumers as well. Many states now mandate that public utility companies get a certain amount of their energy from renewable sources. Because renewable sources such as wind and solar are inherently less efficient, they cost more to produce. That extra cost is passed on to ratepayers in their monthly utility bills. At a time of high unemployment and high gasoline prices, America’s struggling families and small businesses simply cannot afford to pay more for their utilities.
If we were to reform the federal tax code to eliminate the loopholes, carve-outs and subsidies and create a fairer, flatter tax system, this would prevent the government from picking winners and losers. The U.S. now has the highest corporate tax rate of any industrialized country. Bringing our rate down from 35 percent to about 25 percent would do more to create jobs in the economy than just about anything else we could do.
Like Republican presidential nominee Mitt Romney, I believe it’s time for a new approach to ensure America’s energy security. Romney would allow the wind production tax credit to expire, end the stimulus boondoggles, and create an economy in which all energy sources compete on their merits. Wind energy will thrive wherever it is economically competitive, and wherever private sector investors believe it will bring a good return on their investment dollars.
To be clear, my Republican colleagues and I in the House support wind and other alternative energies that are not drains on the budget. In fact, we passed my bill, Streamlining Permitting of American Energy Act of 2012 (H.R. 4383) in the House earlier this year as part of a larger energy bill aimed at making it easier to access wind energy on federal lands. I have also cosponsored the Cutting Red Tape to Facilitate Renewable Energy Act (H.R. 2170) to help speed up the permitting process for renewable energy.
We cannot continue throwing money into the wind chasing an inefficient energy source. If wind power hasn’t been able to stand on its own by now, it almost certainly never will. It is time to cut the taxpayer umbilical cord. Above all, we must have a new energy plan and a fairer tax plan that will create jobs and restore our economy. For that we need a new leader in the White House, not a president who succumbs to fantasies.