The Las Vegas Review-Journal editorial board attacked the “Democratic Senate” for giving “tax breaks for pet businesses,” including green energy producers. However, many Republicans support giving the wind industry the type of economic certainty that the oil industry has enjoyed for decades -- a position the Review-Journal has previously defended.
Las Vegas Review-Journal Attacked Tax Credit For Wind Energy Producers
Las Vegas Review-Journal: “Democratic Senate” Is Giving “Tax Breaks For Pet Businesses, Including Bio-Diesel And Wind Energy Producers.” From an editorial in the Las Vegas Review Journal entitled “Wind energy, NASCAR, and plug-in golf carts.”
In fact, the Democratic Senate's tax-writing panel last week busied itself reviving dozens of tax breaks for pet businesses, including bio-diesel and wind energy producers.
The cost of the $200 billion-plus package debated by the Senate Finance Committee Thursday (granting tax exemptions is thought of as “costing” the government money, in Washington parlance) grew by more than $50 billion in the day following its release on Wednesday, as senators added back the tax credit for wind production and a tax break for builders of NASCAR tracks and other motorsports facilities. [Las Vegas Review Journal, 8/6/12]
The Las Vegas Review-Journal Previously Defended Tax Credits And Deductions For Oil Companies. A September 2011 Las Vegas Review-Journal editorial suggested oil tax credits should be maintained because they create jobs and compared paying taxes to slavery:
In fact, everything critics describe as “subsidies” to Big Oil are tax deductions or tax credits for costs incurred -- deductions they can take on their tax returns. No one in the government is mailing any subsidy checks to the oil companies. “Scored” over 10 years, those deductions and credits are usually cited as adding up to $44 billion, including depletion allowances -- not $100 billion -- notes Stephen Comstock, a tax attorney with the American Petroleum Institute.
Should we eliminate loopholes, creating a simpler tax code? Sure. How about the mortgage interest deduction? That's a loophole.
Paul Driessen, a geologist and attorney, is author of “Eco-Imperialism: Green Power, Black Death.” He addresses the “Big Oil subsidy” disinformation campaign.
“Every American manufacturing company gets tax deductions that help it create jobs and strengthen our economy -- whether it produces newspapers, furniture, cars or fuel,” Mr. Driessen writes online. “Oil industry tax deductions cover costs incurred in exploration, drilling, production, transportation and refining. They aren't subsidies or special tax breaks. ... Between 1981 and 2008, the largest consolidated oil companies ('Big Oil') alone paid $1.95 trillion in severance, property, excise, sales and corporate income taxes, the Tax Foundation reports.”
Let's be clear: Tax credits and deductions are not subsidies. The late Mr. Rothbard may have said it best:
“An exemption from taxation or any other burden is not equivalent to a subsidy. There is a key difference. ... In the former case, the grantee is participating in the acquisition of loot; in the latter, he escapes payment of tribute to the looters. To blame him for escaping is equivalent to blaming the slave for fleeing his master.” [Las Vegas Review-Journal, 9/11/11]
Oil Industry Has Long Benefitted From Permanent Tax Breaks, While Wind Is Left Hanging Each Year
CBO: U.S. Has Long Subsidized Oil And Gas With Permanent Tax Breaks. A Congressional Budget Office issue brief on federal financial support for energy development noted that “Under current law, most of the tax preferences for energy efficiency and renewable energy will expire, but preferences for fossil fuels are permanent.” CBO further explained:
Tax preferences for energy were first established in 1916, and until 2005 they were primarily intended to stimulate domestic production of oil and natural gas. Beginning in 2006, the cost of energy-related tax preferences grew substantially, and an increasing share was aimed at encouraging energy efficiency and energy produced from renewable sources, such as wind and the sun, which generally cause less environmental damage than would result from producing and consuming fossil fuels. Provisions aimed at energy efficiency and renewable energy accounted for 78 percent of the budgetary cost of federal energy-related tax preferences in 2011. However, four of those provisions, including the one with the greatest budgetary impact, expired at the end of calendar year 2011. Only four major tax preferences are permanent, three of which are directed toward fossil fuels and one of which is directed toward nuclear energy.
[Congressional Budget Office, March 2012]
Annual Uncertainty Over Wind Energy Tax Credit, Despite Clear Success, Has Hurt The Industry. From a letter by over 350 coalition members including the National Association of Manufacturers, the American Farm Bureau Federation, and the Edison Electric Institute:
Equipped with the PTC, the wind energy industry has contributed impressively to U.S. economic development. Since 2005, the wind industry has spurred more than $60 billion of investment. Today, over 400 facilities across 43 states manufacture for the wind energy industry. US wind turbine manufacturing has grown 12-fold - 60% of a wind turbine's value is now produced here in America, as compared to 25% prior to 2005. Further, costs have been reduced over 90% since 1980, recently driven by a surge in game changing technological advances. In the last four years, wind energy has provided 35% of all new U.S. power capacity.
Yet despite its clear success, the PTC has been allowed to expire frequently and is again set to expire at the end of 2012. Now is not the time to increase taxes on wind energy. The PTC should be extended for at least another four years so that American know-how can keep producing domestic clean energy. [National Association of Manufacturers, 11/17/11]
Production Tax Credit Helps Makes Wind Power Competitive With Natural Gas. From Beyond Boom & Bust: Putting Clean Tech On A Path To Subsidy Independence, a report by scholars at the Breakthrough Institute, the Brookings Institution and the World Resources Institute:
At present, the federal PTC [Production Tax Credit] for wind power production brings the levelized cost of electricity from new wind power projects down to an estimated range of $33-65 per megawatt-hour (MWh), depending on the quality of wind resource.
At these prices wind power is broadly competitive with new gasfired generation (with levelized costs as low as $52 at likely gas prices, see Box 1), supporting robust market expansion.
However, the PTC is scheduled to expire at the end of 2012, creating significant market uncertainty and prompting manufacturers of wind turbine components to prepare for layoffs and substantial market contraction. [Brookings Institution, April 2012]
Many Republicans Support Extending The Tax Credit For At Least A Year. Reuters reported that while Republican presidential candidate Mitt Romney opposes the wind energy tax credit, many Republicans back it:
The Senate Finance legislation just approved in committee deals with a group of provisions known as the “tax extenders” because they expire annually and are typically extended.
These include amending the alternative minimum tax (AMT), expanding the research and development tax break and provisions such as tax breaks for mass transit and teachers.
A $12 billion production tax credit for wind energy was added back into the Senate Finance legislation after being omitted from an earlier draft.
The credit divides Republicans. Some call it corporate welfare; others from states with energy interests back it.
Democratic President Barack Obama has urged Congress to renew the wind credit, but Republican presidential candidate Mitt Romney favors letting it expire, a campaign spokesman said this week, which irked some Republicans. [Reuters, 8/2/12, via the Chicago Tribune]
Jobs Will Be Lost Without Extension Of Production Tax Credit
AWEA: 37,000 Jobs Could Be Lost If The PTC Does Not Get Extended. From a press release by the American Wind Energy Association:
The PTC drives up to $20 billion a year of private investment into U.S. wind farms, creating demand that allows U.S. manufacturing to compete in a global market. According to Navigant Consulting, 37,000 jobs will be lost by early 2013 if Congress lets the PTC expire at the end of 2012. [American Wind Energy Association, 8/2/12]
Largest Wind Turbine Manufacturer Would Have To Cut Over A Thousand U.S. Jobs Without PTC. From Reuters:
Vestas, the world's biggest wind turbine manufacturer, has repeatedly warned that failure to extend the Production Tax Credit (PTC), due to expire at the end of this year, could lead to a collapse of the U.S. wind turbine market and force it to cut 1,600 U.S. jobs. [Reuters, 8/3/12]
CRS: When PTC Previously Lapsed, Wind Installations In The United States “Slowed Or Collapsed.” From a September 2011 Congressional Research Service report:
The PTC, the main policy tool in the deployment of U.S. wind power, was first adopted during the administration of President George H.W. Bush as part of the Energy Policy Act of 1992 (P.L.102-486). It has been a significant driver of the recent growth of the U.S. wind industry. In each of the years during which the PTC lapsed (2000, 2002, and 2004), meaning that it expired prior to being renewed, the level of additional deployed wind capacity slowed or collapsed when compared to the previous year's total: 93% in 2000, 73% in 2002, and 77% in 2004. [Congressional Research Service, 9/23/11]
The following chart from the World Resources Institute shows how the industry was affected when the PTC was allowed to expire in 1999, 2001 and 2003. WRI calls for more stable and predictable policies including feed-in tariffs, renewable energy standards or a price on carbon.
[World Resources Institute, 9/2/10]
- CRS: Wind Power Incentives “Have Been Much Larger In Several Foreign Countries.” Noting that federal policies in the U.S. “have been instrumental in the development of a domestically-based wind power sector,” the Congressional Research Service added:
Worldwide the wind power industry is driven by various types of government support, which range from tax credits to incentive policies like feed-in tariffs. These incentives have been much larger in several foreign countries than in the United States, which has helped to spur the manufacturing of wind turbines in Europe and Asia.
The expansion of U.S. wind power generation will depend, at least in part, on government policy decisions. If state and federal governments continue to support wind generation, manufacturing of wind generating equipment in the United States is likely to increase. The production costs of U.S. plants that make turbine components appear to be competitive with those in other countries, and the difficulty and expense of transporting very bulky products over long distances serves as an obstacle to import competition. [Congressional Research Service, 9/23/11]
Nevada Specifically Would Benefit From Wind Energy
DOE: If Nevada Installed 1000 MW Of Development, It Would See $1.1 Billion In Economic Benefits. From a Department of Energy report during the Bush administration:
The U.S. Department of Energy's Wind Powering America Program is committed to educating state-level policy makers and other stakeholders about the economic, CO2 emissions, and water conservation impacts of wind power. This analysis highlights the expected impacts of 1000 MW of wind power in Nevada. Although construction and operation of 1000 MW of wind power is a significant effort, six states have already reached the 1000-MW mark. We forecast the cumulative economic benefits from 1000 MW of development in Nevada to be $1.1 billion, annual CO2 reductions are estimated at 2.3 million tons, and annual water savings are 944 million gallons.
[Department of Energy, October 2008]
Wind Energy In Nevada Could Provide Nearly 60 Percent Of The State's Current Electricity Needs. From the American Wind Energy Association:
Wind projects in queue: 3,913 MW
State wind resource: 7,247 MW (at 80 meters)
According to a resource assessment from the National Renewable Energy Lab, Nevada's wind resource could provide nearly 60 percent of the state's current electricity needs. [American Wind Energy Assocation, May 2011]
- One Project In Searchlight, Nevada Alone Would Have The Capacity To Power More Than 90,000 Households. From the Bureau of Land Management:
Searchlight Wind is proposing to develop an approximately 370 megawatt (MW) wind energy facility consisting of up to 140 wind turbine generators. Located on 24,383 acres of public land near Searchlight, Nevada (see map on page 3), the facility would have the capacity to generate enough electricity for more than 90,000 households. [Bureau of Land Management, June 2009]
DOE: “Developing Wind Power In Nevada Will Result In CO2 Emissions Reductions And Water Savings.” From the Department of Energy:
In 2004, the average Nevada resident emitted approximately 12.7 tons of CO2 from electricity consumption. As a state, Nevada ranked 15th in electricity sector per capita CO2emissions. CO2 emissions are increasingly important factors as state and federal government consider policies regarding climate change while drought in the Southeast has underscored the relevance of freshwater supply issues throughout the United States.
Developing wind power in Nevada will result in CO2 emissions reductions and water savings. Choosing to build wind projects results in CO2 reductions from decreased natural gas consumption. In addition, both fossil- and nuclear-based electricity generation consume large amounts of water. Wind power reduces our reliance on increasingly vital freshwater resources.
[Department of Energy, October 2008]