Clean Power

Published on December 6th, 2013 | by Silvio Marcacci


Which States Win And Which States Lose On The Production Tax Credit?

December 6th, 2013 by  

Members of Congress from Texas, Iowa, North Dakota, and Oklahoma might want to consider any opposition they have for extending the wind industry’s Production Tax Credit (PTC).

It may seem ironic, considering Republican-led opposition to the incentive, but these four states earned hundreds of millions more in revenue from the PTC in 2012 than they paid into it through taxes, according to a new study from the Institute for Energy Research (IER).

While IER’s thesis that tax credits designed to boost renewables are unfair won’t win any favor among wind energy advocates, the report is worth a look to see exactly who’s winning and losing when it comes to the PTC equation.

2012 PTC revenue by state

2012 PTC revenue by state map via Institute for Energy Research

A Complicated Formula With Clear Winners 

IER compiled their findings by subtracting wind generation levels in 2002 from wind generation in 2012, removing generation that was ineligible for the PTC, then multiplying actual kilowatt-hours (KWh) of power production from eligible wind farms by the PTC’s 2.2-2.3 KWh incentive. That figure was then compared to federal taxes paid by each state and each state’s wind power subsidies. Considering 2012 was a record-setting year for new wind installation, it seems like a good starting point.

It’s may be a complicated formula, but the results seem legit. Texas was by far the biggest PTC “net taker,” pulling in $394.5 million more in wind subsides than it paid into the tax system. That’s not too surprising considering the state set new records while producing more than 29 million megawatt-hours (MWh) of wind power in 2012 and is by far the national leader in installed wind capacity with 12.2 gigawatts (GW) installed capacity as of the end of 2012.

Iowa, North Dakota, and Oklahoma also made out well, with each state obtaining a net gain of more than $100 million from the PTC. IER credits their success, as well as that of Texas, to favorable wind energy potential and government policy. Those same trends are apparent across the top ten net taker states, which combined to receive more than 72% of all PTC incentives in 2012.


Wind turbines on farmland image via CleanTechnica

Surprising Production Tax Credit Losers

But as always, when there are winners, there are also losers. IER reports that 30 states and the District of Columbia paid more to support the PTC than they received in subsidies. 11 states and D.C. had no wind production and received zero subsidies.

Results like these likely lead to the assumption that the states with no wind production would be the largest “net payers” but the top five aren’t necessarily who you’d expect. California and New York are the two largest net payers, running PTC deficits of $195 million and $162 million respectively. Florida, New Jersey, and Ohio round out the top five and all paid more than $100 million than they received.

California and New York’s rankings are surprising considering they respectively had 5.5GW and 1.6GW installed capacity at the end of 2012 and respectively earned $134 million and $65 million in PTC subsidies in 2012, but IER attributes the discrepancy to their higher relative tax burden compared to other states.

What If These Findings Aren’t Actually Bad News?

Ultimately, IER’s analysis will be read one of two ways: Either as an indictment of the PTC as a wasteful subsidy, or as a clear measure of the value installing wind energy has on a state’s economy.

Considering IER doesn’t consider the value of green jobs, new tax revenue, or added manufacturing needed to support the growth of wind energy across America; nor the overwhelming subsidies paid to fossil fuels, the free-falling costs of new wind, or the climate and environmental benefits of reducing emissions, count me firmly among the latter. Hopefully we’ll be able to say the same thing about Congress.

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About the Author

Silvio is Principal at Marcacci Communications, a full-service clean energy and climate policy public relations company based in Oakland, CA.

  • climatehawk3

    a third accurate way to read the IER’s findings-up to now PTC transfers have gone to where the onshore wind resources exist,rather than where federal tax dollars come from.One could easily fix the map by placing turbines according to where the federal tax dollars come from-one wonders-a turbine for every block of Manhattan?Perhaps this principle could be applied across the entire federal budget.New Jersey would be pleased,Kentucky not so much.

    • Bob_Wallace

      That makes about zero sense.

      Wind turbines need to be installed where the wind blows.

      Blue states sending money to red states? That’s just how it works. The states that complain the most about big government and federal taxes are generally the “takers”.

      But the big issue is getting fossil fuels off our grid. Climate change is hurting everyone whether they’re contributing their fair share to the solutions or not.

      • climatehawk3

        That was my point.obviously one sites turbines where the wind exists,vs where the federal tax dollars come from.and new jersey/kentucky dustup?per capita each takes~ same $-but new jersey sends three times the federal taxes in.urban educated regions earn more.? Is do R.Paul/C.Christie even acknowledge this.

        • Bob_Wallace

          That’s pretty impossible to read.

  • climatehawk3

    As soon as you begin to talk about “taker” states based upon federal taxes paid by state it becomes meaningless-unless you also want to begin discussing why the blue,densely populated,highly educated,richer states donate their federal taxes to the red,less populated,less educated,poorer states.this map is only a rhetorical device for the anti-ptc to use,and a clumsy one at that.look at the northeast.conn. gives while maine takes.duh.fairfield county in conn.alone likely sends five times the federal taxes that the entire state of maine sends.and so far,whose wind farms are contracted to supply which state?yet all of the donor states-all the blue,densely populated ,with cities sitting on the atlantic,states should be shouting for a five year ptc,so that they can develop offshore wind farms and liberate themselves from the cross of oil (fossil fuels)that they have subsidized for years from the likes of texas.

    • Bob_Wallace

      That post is pretty much unreadable.

  • Matt

    I believe some of that wind manufacturing ended up in Ohio so.

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