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The federal government has been subsidizing the wind industry for almost two decades under the Production Tax Credit (PTC). Despite costing taxpayers over $1billion annually and providing for less than 3 percent of total electricity generation in the country, the president insists on extending the program indefinitely.
The PTC is set to expire by the end of this year and alternative-energy proponents in Congress are attempting to renew the program. Even if the PTC does expire, taxpayers are still on the hook for nearly $10 billion in tax credits for previous, qualifying projects. Although the vast majority of Americans want a cleaner and healthier environment, wind is simply not a feasible way to get there. The cost/benefit analysis of wind energy must be considered.
Can handing out billions of tax credits to the wind industry be justified given the amount of electricity generated? Total subsidies for wind, including the PTC, totaled $5 billion in 2010 alone, according to the American Energy Alliance. Not only does the PTC fail the cost/benefit analysis, it does so unfairly.
According to Lisa Linowes of masterresource.org, “The PTC disproportionately benefits ratepayers in States with renewable mandates by distributing the high cost of wind to taxpayers at large.” She goes on to say that, “In fact, it (PTC) is nothing more than a cost imposed on all taxpayers in order to accommodate development of a politically well-connected, high-priced, low-value resource that cannot meet our electric capacity needs.”
Dr. M. Ragheb, in his report on the economics of wind energy, highlights the fact that half of all the country’s wind power capacity is stored in two states- California and Texas. Other States where the wind industry is prominent includes Iowa and Illinois. The wind industry would be hit particularly hard in these four States if the PTC was allowed to expire.
But does the benefit of these four states justify a federal tax credit program paid for by taxpayers in all fifty states? Kevin Borgia, head of the Illinois Wind Energy Coalition, admits that without the tax credit, the market for wind power generation will grind to a halt.
It’s time for our federal government to end programs that only benefit a small number of states. If each individual state wants to create its own wind energy program, that is ok. What’s not ok is the federal government forcing taxpayers across the nation to fund a program that for the most part, benefits them in no immediate way. This is especially the case when the PTC is aiding an industry that provides less than 3 percent of electricity generated in the country.