A Clear Contrast on Wind Subsidies

Phil Kerpen

8/5/2012 12:01:00 AM - Phil Kerpen

President Obama and Governor Romney are worlds apart on energy, with Obama favoring severe restrictions on fossil fuel development and a "doubling down" (Obama is fond of this gambling terminology) on failed solar and wind subsidies. Romney would get government out of the way and unleash the ingenuity of the American free market system to develop our energy resources without the heavy hand of government tipping the scales.

Nowhere has that heavy hand cost us more than the enormous subsidies for industrial wind turbines known at the Production Tax Credit (PTC), which has been backed by a sophisticated industry lobbying strategy the dangles out the possibility of the technology being able to stand on its merits soon. That "soon" has been just over the horizon every year for more than 20 years since these "temporary" subsidies were started.

It's one thing to give campaign speeches about supporting a free-market energy policy, which Republican candidates of all stripes have been good at for a long time. It's another to actually take on a powerful special interest on a specific taxpayer rip-off like the PTC. So kudos to Romney, whose campaign said he "will allow the wind credit to expire, end the stimulus boondoggles and create a level playing field on which all sources of energy can compete on their merits."

This is a significant departure from business-as-usual in the Republican Party. All the subsidy money flowing to wind developers fills the coffers of their bipartisan lobbying operation, and it shows. President Bush supported the PTC. Karl Rove defended the PTC even this year at an American Wind Energy Association (AWEA) convention where he was joined on stage by Obama spokesman Robert Gibbs. Glen Bolger conducted a poll for AWEA to show Romney's position would hurt him in Iowa.

In this case, Romney is right and the bipartisan establishment is wrong. Wind subsidies are a disaster.

David Kreutzer of the Heritage Foundation explains how the PTC works: "the wholesale prices of electricity in the different U.S. markets average from less than three cents per kilowatt hour (kW-h) to about 4.5 cents per kW-h. The PTC provides a subsidy of 2.2 cents per kW-h to wind energy producers. So this PTC subsidy is equivalent to 50 percent to 70 percent of the wholesale price of electricity."

So taxpayers pick up more than half the cost for wind power - and even then many wind projects are struggling. It will never work, at any cost, because the concept of large-scale industrial wind power is based on bad science.

Physicist and environmental activist John Droz Jr. is probably the leading advocate of ending the PTC because of his thorough analysis of the science of wind power. Droz points out: "There is no real environmental benefit as: a) wind is an unpredictable commodity. b) Output from any group of wind projects can and will go to zero on many occasions. c) Energy generated from industrial wind power cannot be economically stored."

Unfortunately, Chairman Max Baucus of Montana moved a so-called tax extenders bill through the Senate Finance Committee last week that actually makes the PTC even more expensive. And two Republicans, Charles Grassley of Iowa and Pat Roberts of Kansas, opposed even a modest cut in the size of the PTC.

As this fight moves forward to the Senate floor and to the House, Republicans should follow Mitt Romney's principled leadership and oppose any additional wind subsidies. It's time to cut our losses, not to double down.