Fact check: Arkansas Project’s Horton off base on wind’s tax incentive

The Arkansas Project’s Nic Horton has an opinion column at Watchdog.org, attacking Arkansas Gov. Mike Beebe (D) and his support for the federal wind energy Production Tax Credit (PTC).  Here are some facts Mr. Horton neglected to mention:

The PTC is an effective tool to allow developers to raise private capital in the marketplace and bring renewable energy projects to completion. Furthermore, the PTC applies only to actual electricity produced from utility-scale wind turbines. A wind project developer does not receive the credit until the wind turbine actually generates power. Because the PTC is a business tax credit, funding is based solely on project performance, not evaluation by government officials.

A recent Congressional Budget Office (CBO) report points out the fact that traditional energy sources enjoy an enormous advantage with regard to subsidies: “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… [Today] Only four major energy tax preferences are permanent: three are for fossil fuels and one is for nuclear energy.”

That’s an 89-year head start.

Consider another recent report, “What Would Jefferson Do?” from DBL Investors, which found that “[C]urrent renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. For example: … the federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each [subsidy’s] life, and it was more than 10 times greater for nuclear.”

Given this history, the fact that oil and gas have received more than 75 times the total cumulative dollar amount of federal subsidies that renewables have ($446.96 billion vs. $5.93 billion, see below) is not surprising.

In other words, if you zoom in and look at the federal support for all energy sources in their infancy, renewables actually receive far less support than did fossil fuels or nuclear energy at a similar point in their development. In fact, oil and gas subsidies were far greater than the more modest federal support renewable sources of energy receive today, even when those oil and gas supports were at historic lows during the Great Depression.

The wind industry is simply interested in leveling the playing field.

But past history – however influential it may have been – doesn’t seem to matter to many critics.   A common argument is that the government should cut all energy subsidies, fossil fuel and renewable alike, and let the technologies duke it out in a “free market”. Well, that might not be so bad, if it were at all realistic. Jimmy Glotfelty, Executive Vice President of External Affairs with Clean Line Energy Partners and registered Republican, wrote this in a letter to the Washington Times (“Selective use of energy subsidies is unfair,” November 2011):

“The wind business could thrive in a truly free market. That would require the elimination of federal loan guarantees and Price-Anderson Act insurance limits for commercial nuclear reactors, the elimination of investment tax credits for coal plants and the elimination of subsidies that support research-and-development programs to improve the efficiency of combustion turbines. It is unlikely that will ever happen and we will ever get to a free market in the electric-power system. Politicians and state regulators will never let electric prices rise and fall as a free market would dictate.”

What Mr. Glotfelty knows – and Governor Beebe for that matter – is that the low long-term costs of wind power are actually very well aligned to encourage competition in a truly free market. Until that happens, however, removing support for true infant industries like wind (as opposed to the long-term support for century-old energy production methods) would actually hinder competition and ultimately contribute to a false sense of market freedom.

Mr. Horton expresses a common frustration with Washington, but unfortunately misses the mark by attacking a useful source of clean, inexpensive and successful all-American energy. Wind power is growing rapidly – 35% annually on average since 2007 – and the cost is dropping. The Production Tax Credit for wind power has fostered $60 billion in private investment since 2005—clearly, it is a successful business tax credit helping to attract investors in the booming American wind energy sector.

As Governor Chris Christie said, “The wind power movement is providing us with a unique opportunity to advance energy as industry. By doing so, we have the ability to leverage our tremendous resources with ground-breaking technologies, allowing New Jersey to increase its use of renewable energy sources while advancing an industry that will lead to long-term job creation.”

I couldn’t have said it better myself.

Related articles:

Fact check: Heartland's Kaminsky misguided on wind incentives, April 19, 2012
Fact check: Hayward discussion of subsidies falls short, March 20, 2012
Fact check: WSJ slips up on subsidies
, March 14, 2012
Friday fact check: Fox features faux facts from fossil fuels folks
, March 9, 2012
Fact check: Heritage, AEI off base on wind incentives, growth
, March 8, 2012
Fact check: Globalwarming.org ignores energy incentive history
, December 19, 2011
Fact check: Loris stumbles on subsidies
, December 13, 2011
Schwarzenegger calls for level energy playing field
, December 6, 2011
Fact check: Pompeo and Labrador miss mark with subsidy bill
, December 1, 2011
Fact check: Chesser misinforms on wind incentives
, October 19, 2011
New report gives best 'apples to apples' picture to date of federal support for all energy sources
, September 23, 2011
Wind incentives: Leveling the playing field,
August 17, 2011


Stay informed

Take Action

Subscribe to the American Clean Power blog and receive the latest renewable energy news, policy updates, and opportunities to get involved.