Congress Should End the Tax Credit for Production of Wind Energy

Strategic Insights -

As tax day approaches, New Yorkers are facing a stark reality about the high cost of "clean energy." Despite receiving at least $227.4 million in annual subsidies, the wind energy industry has failed to provide a reliable source of electricity, instead harming New York families and enriching multinational corporations. The Production Tax Credit, a massive tax subsidy, gives wind producers 2.3 cents for every kilowatt-hour of electricity produced, with an estimated cost of $6.4 billion over the next decade.

Key Takeaways:

  • The Production Tax Credit costs taxpayers an estimated $6.4 billion over the next decade, with a total of at least $227.4 million annually in subsidies for wind energy.
  • Wind energy reaps huge subsidies to produce relatively little energy, with wind supplying only 4.5 percent of electricity despite receiving twice as much in government handouts as coal, natural gas, and nuclear combined.
  • Over the last 60 years, subsidies for wind and solar alone have cost taxpayers $13.77 per million British thermal units of energy produced, compared to just 39 cents for oil, 34 cents for nuclear, 12 cents for natural gas, and 10 cents for coal.
  • Wind lobbyists claim their industry creates jobs, but in reality, wind is a net job loser, with subsidies diverting investment away from projects that make economic sense and toward those with the best connections.
  • Spain's experience with green energy subsidies is a warning, with each new "green job" destroying 2.2 jobs in the rest of the economy, a finding that has been ignored by President Obama and the administration.
  • Wind energy production is inherently unreliable, with output dictated by the weather and often lowest when electricity demand is highest, straining the electric grid and increasing the likelihood of blackouts.
  • Wind lobbyists claim that the Production Tax Credit will expire soon, but they have been making this promise for over two decades, and it's time for the industry to prove it can compete without subsidies.

Statistics:

  • $227.4 million: annual subsidies for wind energy in New York
  • $6.4 billion: estimated cost of the Production Tax Credit over the next decade
  • 4.5 percent: percentage of electricity supplied by wind
  • 86 percent: percentage of electricity produced by coal, natural gas, and nuclear combined
  • 2.3 cents: subsidy rate per kilowatt-hour of electricity produced for wind energy
  • 60 years: duration of subsidies for wind and solar alone
  • $13.77: cost per million British thermal units of energy produced by wind and solar
  • 2.2: jobs destroyed in the rest of the economy for each new "green job" created in Spain
  • 20+ years: duration of promises from wind lobbyists that the Production Tax Credit will expire soon

Sources:

  • "Another Voice: Congress should end the tax credit for production of wind energy" by Thomas Pyle, http://www.buffalonews.com/opinion/another-voice/another-voice-congress-should-end-the-tax-credit-for-production-of-wind-energy-20150414