Congress should ignore calls to extend expired wind subsidies

Even though the main federal handout for wind energy expired at the end of 2013, Congress is still engaged in debate over whether to extend it. Legislation that renews tax breaks that recently expired is currently working its way through both chambers of Congress, and lobbyists for Big Wind are working overtime to ensure that the wind production tax credit (PTC) is included. Lawmakers should resist these calls from special interests.

American taxpayers and ratepayers have seen little return on their forced investment in wind energy over the past 20 years. Wind power consistently breaks its promises of long-term job creation, economic activity, and affordability. Swayed by special interests in the wind energy industry, they focus on the hopeful prospect of a thriving wind industry while overlooking the real problems that arise from subsidizing it.

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Supporters claim that tax breaks for green energies will encourage innovation, but they overlook the consistent problems with using federal incentives to encourage green energy. These boondoggles routinely fail in practice.  If the private sector is not willing to jump in, is a sign that the energy technology is not economically viable. It simply doesn't make sense for the government to focus taxpayer dollars on energy technologies that have such a low ROI and distort the energy market, while overlooking the energy technologies that the country will rely on.

Despite its poor performance, wind gets an enormous amount of subsidy for very little production, compared to other sources of electricity. Of the total federal financial support for electric power went to wind in 2010, 42 percent went to wind power, even though it generates less than 3 percent of our electricity.

Even though the production tax credit (PTC) expired this past December, eligible wind energy producers can receive $23 in subsidy for each megawatt hour of electricity that they produce. Extending this tax credit for one year would cost $12 billion over the next decade. Given Washington’s spending problem, it simply doesn’t make sense to give so much subsidy to such a narrowly-targeted special interest.

Remarkably, some of the most vocal proponents for extending the PTC are Republicans, the purported party of fiscal restraint and level playing fields. Iowa Republican Sen. Chuck Grassley has been a consistent proponent for extending wind subsidies. This past week in the Senate Finance Committee, Grassley was the member who offered the amendment to add the PTC extension to the underlying bill. And Gov. Sam Brownback (R), despite having made the tax code broader and lower in Kansas, consistently leads the Governors’ Wind Energy Coalition in calling on Congress to extend the tax credit.

With the PTC extension currently included in the underlying bill in the Senate, it’s up to House of Representatives to stop this handout for the wind energy industry from resurrection.

It’s encouraging to see that House Ways and Means Committee Chairman Camp (R-Mich.) did not include an extension of the PTC in tax reform discussion draft he introduced earlier this year. He actually goes even further, in the package proposing to reduce the credit for current beneficiaries to 15 cents per megawatt hour of subsidy until 2024.

Hopefully Chairman Camp will continue his leadership in opposing this misguided handout as his committee considers its version of tax extenders legislation over this summer. AFP calls on the members of the House Ways and Means Committee to be bolder than their counterparts on the Senate Finance Committee in standing up to special interests in the wind energy industry.

If elected officials were truly serious about fostering an environment for the economy to create stable, long-lasting jobs, then they should be enacting policies that lower the overall tax burden—not sending more subsidies to an industry that can’t make in the marketplace without receiving billions in subsidies for decades. Expired wind subsidies should stay expired.

Harbin Hanson is national issues campaign manager for Americans for Prosperity, a conservative advocacy group.