Fact check: Free Beacon's Stiles blasts wind incentive, gives others a pass
Andrew Stiles had a recent column in the Washington Free Beacon criticizing the federal wind energy Production Tax Credit (PTC), but strangely ignoring incentives for other energy sources. For the record, a few facts Mr. Stiles fails to mention:
Wind's incentive is not a handout--it's provided in the form of a federal tax credit. Unless you assume that all the money people and companies earn in the private sector belongs to the government, a tax reduction is different from government subsidies or loan guarantees. A tax credit leaves more money in private hands, creating private investment and privately financed jobs. The PTC has helped the wind power industry attract $60 billion in private investment since 2005—clearly, it is a successful business tax credit helping to encourage investment in what has been a booming American wind energy sector.
The net cost of the PTC to taxpayers is zero. Investing in wind power only rewards results, and doesn’t cost taxpayers a dime when federal, state, and local taxes paid by the wind industry are counted.
Because the PTC is a business tax credit, funding is based solely on project performance, not evaluation by government officials. 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.
Federal tax incentives have helped all of our domestic energy industries to grow and produce the energy that our economy needs to function and prosper. For new energy technologies to gain a foothold in the marketplace so that the U.S. can diversify its energy portfolio and reduce its vulnerability to fuel price shocks, some degree of initial support is needed.
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.
Renewable energy incentives are less costly than those provided to other energy sources. Given those facts, the key question is: are renewable energy incentives out of line with those that have previously supported other energy industries? One particularly informative study by DBL Investors says no: "[T]he federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each [incentive’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 incentives that renewables have ($446.96 billion vs. $5.93 billion, according to the DBL report) is not surprising.
In other words, if you 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 incentives 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.
Mr. Stiles 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 its cost is dropping. The Production Tax Credit is a success, and should be continued.
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