September 24 2012
Wind and coal energy policy is hitting the headlines as politicians battle back and forth pre-election about who is really doing the most to bring down energy prices and boost the economy. The Wind Energy Tax Credit is set to expire at the end of the year, and in response, Senator Ron Wyden posted an opinion piece in Politico decrying the upcoming de-investment in an industry that has received substantial federal funding over the past 4 years as a devastating blow to job creation.
Yet has the taxpayer funded investment really paid off? Let’s look at the facts.
Among the three fiscal years 2007-2010, wind subsidies increased 10 fold. During the same time, wind production increased 175 percent. The Institute for Energy Research reports that to obtain such an increase, the taxpayer “paid $56 [for every megawatt hour of wind energy], compared to 64 cents for coal-fired and natural gas-fired generation.” In other words, investing in wind energy comes at a significant cost to taxpayers, much of which was funded by the stimulus.
In total, the tax credit which is set to expire has given wind companies a $1 billion per year tax break. Yet even with this significant leg up, wind only made up 2.9% of U.S. energy production last year.
Wyden argues ending the tax credit will result in a reduction of 37,000 jobs in the wind industry, yet have wind subsidies effectively created jobs for Americans? The Institute for Energy Research explains that the whole push for green job creation has fallen rather short:
In 2008, Presidential Candidate Obama promised to create 5 million green energy jobs over 10 years by investing in solar, wind and other renewable energy sources. Yet by 2010, according to the White House, only 225,000 green jobs had resulted from the stimulus program although his 2009 economic-stimulus plan spent a record $90 billion on clean energy.
It’s worth noting that the President has claimed that the wind industry supports 75,000, 37,000 of which are jeopardized by the sun setting of the tax credit. That’s a pretty troubling window into just how depended the industry is on government favors and an unlevelled playing field.
Furthermore, while the administration decries the loss of wind energy jobs, the EPA has pursued aggressive new regulations targeting the coal industry, which the United Mine Workers of America claim leads to the loss of 50,000 jobs and indirectly 250,000 jobs. Somehow the Obama Administration is unmoved by concern for these jobs.
Senator Wyden has a point that oil companies reap massive tax subsidies that give them an unfair advantage in the energy market. Yet it makes little sense to fix this imbalance by instituting further subsidies for specific energy sectors and not others. Instead, removing excessive subsidies for both oil and wind—and any other corporate entity out there that’s getting special government favors--would level the free-market playing field in a manner that addresses both inequity and our fiscal crisis.