Let the Wind Production Tax Credit Expire

The Wayne County Taxpayers Association has been asked to join a coalition to support the expiration of the wind production tax credit and our board has decided to participate.

First established by the Energy Policy Act of 1992, the federal production tax credit (PTC) was intended to be a temporary measure to jump start renewable energy. Since its establishment nearly 20 years ago, the PTC has expired three times and been extended on five occasions – most recently in 2009 as part of the American Recovery & Reinvestment Act (ARRA). Most extensions have been for a period of one or two years, and several extensions have amended the list of qualifying facilities. Under current law, the credit will expire on Dec. 31, 2012.

Taxpayers have paid $20 billion so far . . .

In the past 20 years, taxpayers have paid more than $20 billion in tax subsidies to support the wind industry.

Even if Congress allows the wind production tax credit (PTC) to expire this year, American taxpayers remain on the hook to pay nearly $10 billion for existing wind projects.

The PTC’s costs are increasing, but wind jobs are not.

The subsidy cost continues to increase. According to EIA, as recently as FY2007, the PTC cost the government $426 million compared to $1.5 billion in 2010.  In FY 2010 alone, wind producers received $4.9 billion in subsidies from the federal government.  

Even with the PTC and wind generation additions, the wind industry lost 10,000 jobs between 2009 and 2010 – a 12% drop – and employment stagnated between 2010 and 2011. The wind PTC is not creating more jobs, but it is costing taxpayers more money each year. 

American taxpayers will pay billions more if the PTC is extended.

Extending the PTC just one year would cost taxpayers an additional   $12.1 billion. Subsidizing non-market driven wind jobs eliminates jobs elsewhere in the economy.

What does the American taxpayer get for those billions?

In 2010, wind companies received 42% of all government energy subsidies, but provided only 2.3% of the electricity generated.

The PTC rewards wind projects for every kilowatt-hour of electricity they generate, not for providing electricity inexpensively or when needed or devising cheaper ways to operate.

Since 1995, shortly after the PTC was first established, wind power has grown from 0.09% to 2.9% in 2011 of total U.S. electricity production; EIA projects it will only grow to 11% by 2035.

How much does wind really cost?

Electricity from wind by itself is more costly to produce (offshore more so than onshore) than, for

example, electricity from nuclear energy. The additional costs are passed on to households through electricity rates.

The levelized costs of energy for wind, reflecting the absence of the PTC after 2012, are close to competitive with combined-cycle natural gas in areas with good wind resources, and become more competitive by 2014 with only modest improvements

The Production Tax Credit Distorts Markets and Hinders the Operation and Development of Other Forms of Generation.

The maintenance of perpetual subsidies is not a sustainable solution to the new challenges facing the US clean tech industry. In the worst cases, maintaining lucrative, blunt subsidies over prolonged periods can even create a dis-incentive for firms to innovate or can support ‘dead end’ technologies that have no viable path to long-term competitiveness.