Wind Production Tax Credit is Corporate Welfare

Natl Center For Public Policy Research | December 11, 2012 

Congress Should Shut Off the Wind Subsidy America Can’t Afford and the Industry Doesn’t Even Need, Energy Expert Says


Washington, DC -
┬áThe Production Tax Credit (PTC) should be allowed to expire not only because it will cost taxpayers billions of dollars that they can’t afford, but because the wind energy industry doesn’t need it. That’s a conclusion of Dr. Bonner Cohen, Senior Fellow of The National Center for Public Policy Research, in a just-released analysis of the program, “The Production Tax Credit: Corporate Welfare at its Worst.”

“What began as a temporary helping hand to enable wind power to compete with traditional sources of energy has become a permanent fixture of the wind industry’s business model,” says Dr. Cohen. “The Production Tax Credit (PTC) has faced expiration six times since it was enacted in 1992, only to be extended by Congress under pressure from the wind industry. The PTC is scheduled, once again, to expire at the end of 2012. But even then, this multi-billion-dollar subsidy will not phase out for fully another ten years, costing taxpayers another $12.2 billion.”

Dr. Cohen argues that Congress should let this subsidy phase out and gives a number of reasons why, including:

1) The wind industry does not need the PTC in order to survive. Cohen argues that a significant market for wind energy is all but guaranteed, given that 29 states have already established Renewable Portfolio Standards (RPS) mandating that a certain percentage of their states’ energy come from renewable sources.

2) The PTC places an unacceptable burden on wind-poor states and states with no renewable-energy mandates. He notes, for example, that under PTC 80% of the country is forced to subsidize wind energy concentrated in the other 20% of the country.

3) The PTC undermines and distorts price signals in the wholesale electricity market by giving wind producers an incentive to sell electricity at a loss to earn enormous tax subsidies.

4) Wind is, and always will be, an intermittent and unreliable source of energy.

5) With a $16 trillion and rising debt, the United States cannot afford to continue propping up a non-competitive, unreliable source of energy.
“The wind industry is saying, in effect, that it can’t get along without what has become an eternal subsidy. That’s a revealing vote of no confidence by the industry in its own future,” Cohen said. “A country that is $16 trillion in debt has no business throwing taxpayer money at a non-competitive and unreliable source of energy. Congress should end it and end it now.”

Dr. Cohen’s paper is a must-read for supporters of free markets and fair play and anyone interested in energy costs directly tied to policy decisions made in Washington, DC.

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than 4% from foundations, and less than 2% from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors. In 2012, zero percent of its contributions have come from the fossil fuel or extractive energy industries or related foundations.

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