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Clean Power AEA lobbies agains wind tax credit

Published on October 22nd, 2012 | by Tina Casey

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New Campaign Against “Toxic” Wind Tax Credit Could Backfire

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October 22nd, 2012 by
 
A lobbying group called the American Energy Alliance (AEA) has reportedly unleashed a campaign to make the wind tax credit too “toxic” to win the support of Republican legislators. That’s a pretty tall order considering that wind power has a broad constituency that cuts clear across party lines. About 81 percent of Congressional districts with the best wind capacity are currently represented by Republican legislators, and wind farms are an economic success story for rural communities, where there is generally more support for Republican legislators. So, how exactly does AEA expect to make a rational case against extending the wind tax credit?

AEA lobbies agains wind tax credit

The Halloween Case Against the Wind Tax Credit

Short answer: it doesn’t. Judging from a recent editorial by AEA president Thomas Pyle, AEA’s strategy is not so much an argument against the wind tax credit as it is an exercise in fragging any Republican legislator who supports wind power.

First up on the chopping block is Senator Chuck Grassely (R-Iowa), one of the wind tax credit’s earliest and strongest supporters. As Pyle describes it:

“The Production Tax Credit (PTC) for wind energy is fast becoming the zombie of taxpayer nightmares.  Every time you think this special interest giveaway is dead, Sen. Chuck Grassley, R-Iowa, and his alliance of subsidy-hunting policymakers conduct a legislative séance and conjure it from the great beyond.”

Other than advancing the idea that any Republican who supports the wind tax credit is a witch, Pyle’s editorial does not present an actual argument. He only points out that wind and coal have both been used to generate electricity for more than a century, leading him to conclude that by this time “you would think that wind would be ready to stand on its own without special favors from the federal government.”

Since Pyle makes coal disappear from the equation, he can ignore coal’s long history of federal subsidies or the near $350 billion in externalized costs borne by taxpayers in public health costs caused by coal burning. What’s left is a sleight-of-hand enabling the reader to assume that wind mooches off the federal dime while coal stands on its own.

Anti-Wind, Anti-Heartland

AEA might have been able to steamroll this logical fail into a lobbying victory just a few years ago, but it’s quite a different matter now that rural communities have gotten a taste of wind power’s benefits (come to think of it, presidential candidate Mitt Romney might want to reconsider his position with Election Day 2012 looming ahead; when last heard from, Romney opposed extending the wind tax credit).

In 2010, CleanTechnica profiled one rural Missouri community that was already reaping the benefits of wind power with new income for farmers and new revenue for local governments, despite the continued fallout from the 2008 financial crisis.

The wind industry has seen tremendous growth since then and for an update of the impact of wind power on rural communities you can go to Nebraska’s KearnyHub.com, which recently profiled the Broken Bow wind project, part of which has just been completed in Custer County. Here are some of KearnyHub.com’s key points:

- The 14,000-acre wind farm will provide average annual tax revenues of approximately $600,000 over the next 25 years in property taxes and state income taxes.

- Local landowners will be paid an average of $540,000 per year in lease royalties.

- The wind farm will provide seven permanent jobs in the Broken Bow area.

- During its peak construction, the Broken Bow LLC project employed approximately 100 people.

- The project contributed approximately $5.6 million to the state in sales tax revenues.

As for any future benefits, KearnyHub.com ruefully notes that “the Custer County project could be the last or next to last wind farm built in Nebraska for a while, given uncertainty about the future of a federal tax credit for electricity produced from large-scale wind turbines.”

Image (cropped): Toxic chemicals by healthserviceglasses (some rights reserved)

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About the Author

Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.



  • http://www.facebook.com/mac.mcdougal.5 Mac McDougal

    For more on the benefits of wind power and its adoption by inherently conservative societies, see the abstract of Elizabeth Kolbert’s “New Yorker” article “The Island in the Wind” here:
    http://www.newyorker.com/reporting/2008/07/07/080707fa_fact_kolbert

    • http://www.facebook.com/people/Thomas-Stacy/1768627213 Thomas Stacy

      For more on why Mac and CleanTechnica are wearing rose colored glasses, see this study about the economic effects of renewable electricity in Spain: http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf

      • Bob_Wallace

        Other economists have looked at Mariana’s study and found it faulty.

        The official government statistics for jobs created was 188,000 while Mariana claimed only 50,000.

  • http://www.facebook.com/people/Thomas-Stacy/1768627213 Thomas Stacy

    Tina, the toxicity of wind tax credits are economic. Wind investment, 65%+ taxpayer funded according to White House staff,

    http://media.oregonlive.com/politics_impact/other/Summers_renewable_energy_memo%5B1%5D.pdf

    do not forestall capital investment in conventional plants due to the extremely low probability wind will always be blowing at times of peak demand. The entire cost of wind energy must therefore match the cost of “variable O&M including fuel” in the EIA levelized cost of electricity sources analysis.

    http://www.eia.gov/oiaf/aeo/electricity_generation.html

    Wind misses that mark by $0.06/kWH to $0.12/kWH depending on wind plant siting choices and other factors and will continue to do so until the industry can access winds that blow consistently 24/7/365 and at a competitive cost – a tall order, indeed.

    Conservatives, if not all Republicans, recognize that spending taxpayer dollars to increase those same taxpayers’ energy costs and hampering competitiveness across the entire manufacturing sector is just not consistent with their basic ideology. Certainly this gives pause many liberals, too, who may believe private-public partnerships are often symbiotic, but have a difficult task in showing how wind subsidies evidence that belief.

    • Bob_Wallace

      Thomas, I’m going to assume that you are intentionally attempting to mislead people. You can actually composes a sentence, so I’m holding you to a higher level than some who post garbage.

      Wind turbines produce the cheapest new electricity. And, along with solar, the cleanest electricity.

      It does not matter that wind is variable, it’s cheap. With adequate storage and dispatchable generation we can use the input when the wind is blowing and fill in with other sources and lower our overall cost of electricity.

      The EIA numbers you use for 2011 are not EIA’s numbers in 2012. The median price of wind is $0.05/kWh. The median price of natural gas is $0.06/kWh and expected to rise next year.

      http://en.openei.org/apps/TCDB/

      The median price of hydro is lower, but that is for already built dams, not new construction. The same holds for nuclear and coal. In addition, coal costs another ~$0.15/kWh which is paid by taxpayers and through health insurance premiums to treat the health problems caused by coal emissions.

      We have enough dispatchable generation and storage to allow us to add multiple times as much wind and solar generation to our grids. Additionally we are closing coal plants and replacing much of their output with dispatchable gas.

      Conservatives, especially Republicans, have allowed extreme political beliefs to make them blind to reality. Conservatives have created their own reality just as the groups we call “cults”. Conservatives are not making decisions based on numbers but making decisions based on ideology and then trying to cook up some numbers to support those bogus positions.

      The tax dollars we have invested in wind has brought the price down from 30 to 5 cents over 30 years. A 6x reduction.

      The tax dollars we have invested in solar has brought the price down from over $50/watt to under $1/wall. A greater than 100x reduction.

      We’ve spent taxpayer dollars supporting fossil fuels for 100 years and their prices keep going up.

      A real conservative wouldn’t throw good money after bad by continuing to subsidize fossil fuel. Neither would they refuse to assist technologies which promise to get us off of imported oil. They would be helping the emerging electric vehicle market and helping increase the installation of clean, American generated energy.

      • http://www.facebook.com/people/Thomas-Stacy/1768627213 Thomas Stacy

        Mr. Wallace, you have highlighted a very important aspect of wind energy that begs further disclosure. You say “It doesn’t matter that wind in intermittent – it’s cheap.”

        Very well. Let;s examine this contention through an apt analogy..

        Let’s say you like a banana with your breakfast. You want to consume cheap bananas instead of expensive bananas just for the sake of their cheapness. Great. We are all cheap and greedy and that drives economic competitiveness and economic efficiency. So you are after bananas for your breakfasts, and like your claim about wind, you want to buy cheap.

        You find a very cheap source of bananas and contract with their supplier for 365 of them to cover your breakfast fruit needs over the coming year. You sign and shake on the deal and then wait for the deliveries.

        But they don’t come every day. In fact, sometimes no bananas arrive for several weeks, and at other times, you receive a delivery of 50 bananas at a time.

        Uh oh! Bananas are perishable. You forgot the importance of delivery timing and frequency when you negotiated the contract for 365 bananas. Unfortunately for you, perishability and the importance of timely delivery have a strong positive correlation.

        So you end up throwing away or giving away bananas sometimes, and having to buy bananas at the corner store at other times. The deal turns out to have not been such a good deal after all, and you are embarrassed to have neglected to negotiate the delivery timing in the cheap banana contract.

        Meanwhile, the small corner grocery store near you must keep buying bananas to supply your occasional and sporadic demand for them. They sell less bananas in a year but still have the same overhead cost of offering bananas – and their spoilage rate even goes up due to your uneven and unpredictable demand – which results from the unpredictable supply of them from the “cheap bananas” supplier.

        Your intermittent banana supply also turns out to hurt the corner grocer in several ways, just mentioned.

        It is the same for wind – only worse. Electricity is infinitely perishable – every 1/60th of a second 24/7/365 electricity is a “use it or lose it” commodity. NOW how important is the ability to control delivery timing? Infinitely important.

        Please note the DOE EIA has now separated intermittent sources from dispatchable sources in their levelized cost of electricity sources table, warning that “comparing intermittents with dispatchables on price should done with caution.

        No, sir. I am not trying to mislead anyone. I am trying to educate people about the truth – that there is no such thing as “energy” alone as a valuable commodity. It’s value is tied to its controllable availability over time, and especially at times of greatest demand. This availability on human command is known in the electricity business as “capacity value.”

        Since wind has negligible capacity value, its value becomes tied to the capacity value of other sources – namely coal, gas and nuclear plants. Wind may cause them to burn less fuel, but since it cannot replace the plants and their ability to produce exactly when needed, the “cost of wind energy” is not complete at all. The capacity providers indeed lose fuel efficiency and annual sales at the hand of wind’s fickle delivery timing, but MUST remain open – never able to shut down permanently and be replaced by wind plants.

        I encourage you to do more homework on the matter and then decide again if you believe I am trying to mislead people. Thank you.

        • Bob_Wallace

          Here’s where your analogy breaks down….

          When I contract for that cheap banana per day the supplier has to set their price at a level for which they can deliver. If they have access to a whole bunch of very cheap bananas spread out over the year but not available every single day then they have to make arrangements to fill in on those other days.

          That is exactly what the grid does. It buys the cheapest power it can. It starts with the very cheapest, takes all that source can furnish, and then turns to the next cheapest source. It keeps buying, accepting higher prices, until its needs are met. On hot days when demand is high the price of those last bits of electricity can be extremely expensive. And then, because its how the market works, every provider gets just as much as the most expensive supplier. Merit order pricing.

          Bring on cheap supply like wind and there’s no need to buy from the most expensive suppliers. Money is saved.

          The grid is constantly dealing with changing supply and demand. We have enough dispatchable generation and storage to allow us to generate 25% to 35% (depending on which grid) of our electricity with wind and solar. Those numbers are actually somewhat higher because we have replaced a bunch of coal with dispatchable natural gas since that 2009 study was completed.

          Your argument that since wind does not always produce does not hold water. Nuclear plants do not produce all the time, on average they are down 10% of the time. Coal plants are down 15% of the time. If “on 100% of the time” is your criterion for having value then nuclear, coal, hydro, and everything else fails.

    • http://cleantechnica.com/ Zachary Shahan

      Aside from what Bob just wrote, Republicans across the country actually ARE supportive of wind energy. Just not on the federal level. States and counties that are strongly Republican have dominated in wind power installations and governmental support. The head of the American Wind Energy Association is actually a Republican.

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