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Free-Market Coalition Supports Fuel Economy Reform, Fairness for American Drivers

WASHINGTON – This afternoon the American Energy Alliance and ten co-signing organizations sent a letter to Transportation Secretary Elaine Chao and EPA Administrator Scott Pruitt expressing support for the joint effort to reform the Corporate Average Fuel Economy program in favor of lower costs and consumer choice.

“The entire mandate is a relic of the narrative of scarcity. The surge in American energy production has rendered it moot.  Moreover, it should be clear to everyone that decisions about what kinds of cars people buy and drive should be made by the consumers themselves, not bureaucrats in Sacramento,” said AEA President Thomas Pyle.

The text of the letter can be read below:

Dear Secretary Chao and Administrator Pruitt:

We are writing to thank you for your principled leadership on numerous issues, but most especially on federal fuel mandates, including the Corporate Average Fuel Economy (CAFE) standards program.

As you know, the CAFE program is riven with problems. While we believe repealing the entire program is appropriate and warranted, we are pleased that the Department of Transportation (DOT) and the Environmental Protection Agency (EPA), under your leadership, are taking meaningful steps to reduce the burden and irrationality of this outdated and unnecessarily complicated mandate.

As your agencies examine the mandate and its next steps, we encourage you and your team to remain focused on the fundamental problems with the program.

Cost to consumers. According to the National Auto Dealers Association, the existing mandates would cause the price of an average vehicle to increase by $3,000 in 2025. Research from The Heritage Foundation concluded that repealing the CAFE mandate would save 2025 car buyers at least $7,200 per vehicle. Additionally, we understand that the DOT may have modeling that indicates that drivers may never recover the costs imposed by the next sequence of mandates. These significant increases in the average price of a vehicle are a hidden regressive tax on American families, pricing millions of consumers entirely out of the new car market, especially the poor.

Consumer choice. Automakers are now being forced to design vehicles not for what consumers want but for what regulators want. The fundamental question associated with this mandate is clear:  who should decide what cars and trucks  consumers should buy, consumers themselves or unelected bureaucrats in Sacramento?

Inefficiency. As originally created, Congress authorized one regulator, the National Highway Traffic Safety Administration (NHTSA), to carry out the program. Today, three different regulators — NHTSA, EPA, and the California Air Resources Board (CARB) — are responsible for implementing the federal mandate under three different laws using three different standards. It is arguable that the EPA and CARB programs should not exist at all, as the EPA program is duplicative of the CAFE program, and the CARB program is preempted under federal law, which was ignored by the previous Administration.

It’s a relic. What started as a mandate in the mid-1970’s to reduce foreign imports of oil was changed by the previous Administration to an environmental mandate. Its foundational assumption — that oil is becoming scarce and needs to be rationed by the government action — has proved false. The entire mandate is a relic of the narrative of scarcity. The surge in American energy production has rendered it moot.

As a productive first step towards genuine reform of this program, we hope you will protect and enhance consumer choice to the maximum extent possible. Additionally, any actions taken as part of this mandate need to ensure that costs to consumers are minimized. Finally, we hope you will restore the program to its original legal regime as laid out by Congress.

Thank you again for your leadership on this issue. We stand ready to help you and your team in any way.


Thomas Pyle, American Energy Alliance

Michael Needham, Heritage Action

Phil Kerpen, American Commitment

Rick Manning, Americans for Limited Government

Brent Wm. Gardner, Americans for Prosperity

Myron Ebell, Competitive Enterprise Institute

Mike Stenhouse, Rhode Island Center for Freedom and Prosperity

Dan Peterson, James Madison Institute

Paul Gessing, Rio Grande Foundation

Adam Brandon, FreedomWorks

David T. Stevenson, Caesar Rodney Institute

Grover Norquist, Americans for Tax Reform

For a PDF of the letter click here.

For more information about the CAFE mandate, click here.

Get the Facts on IRS Guidance for the Wind PTC


Available for download: Wind PTC IRS Fact Sheet.

For a more in-depth discussion of this important issue, read The Ever-Expanding Wind PTC at the website of the Institute for Energy Research.

The State of American Energy Is Strong

WASHINGTON – American Energy Alliance President Thomas J. Pyle has issued the following statement in response to President Trump’s State of the Union Address delivered Tuesday, January 30, 2018:

“Tonight, President Trump declared an end to the war on American energy. As promised, his administration has put American families ahead of the special interests in the “keep it in the ground” movement. This past year, his administration has begun to dismantle the failed energy policies of the previous administration and unleashed America’s natural gas, coal, and oil producers from crippling federal regulations.

“The victories for American energy this past year include the approval of the Keystone and Dakota Access pipelines, the bold decision to withdraw the U.S. from the harmful Paris Climate Agreement, the rescinding of the EPA’s Clean Power Plan, and the Department of the Interior’s plan to provide full access to our taxpayer-owned offshore resources for energy production.

“While much has been accomplished, we still have more to do to free our energy markets and empower consumers and businesses to make their own energy choices. A good place to start is by reviewing and re-writing the IRS guidance for the Production Tax Credit (PTC). Though Congress has slated the credit for phase-out, lenient guidance written by the Obama Administration allows the wind industry to exploit the credit at the expense of the American people for the next decade and a half.

“The PTC is but one way in which the war on American energy is far from vanquished. Year one of the Trump presidency has been a success, but we cannot rest until there is a level the playing field for all energy sources.”

Subsidies for Me, but Not for Thee

The Department of Energy’s proposed grid resiliency rulemaking was the wrong solution for a genuine problem. The Federal Energy Regulatory Commission rightly voted to terminate the rulemaking, instead requesting information from grid operators and the public about how to address the undervaluation of coal and nuclear power generation in electricity markets. But before we move forward with that discussion, something must be noted: the wind and solar companies and their lobbying arms that loudly opposed the proposal are rank hypocrites. The spectacle of two industries built on federal subsidies and state mandates feigning outrage at the mere suggestion that someone else might also get government favors cannot pass unremarked.

“We worry today’s proposal would upend competitive markets that save consumers billions of dollars a year. The best way to guarantee a resilient and reliable electric grid is through market-based compensation for performance, not guaranteed payments for some, based on a government-prescribed definition.”

The criticism above is quite correct. It sounds like it must have come from a free market think tank, right? Wrong. Those are the words of Amy Farrell of the American Wind Energy Association (AWEA), the trade association for the U.S. wind industry. No guaranteed payments for some based on a government-prescribed definition, huh? So exactly how does AWEA define the Production Tax Credit (PTC), a tax credit that goes to a government-prescribed list of favored generators (overwhelmingly wind)? The PTC provides a direct subsidy for every kilowatt-hour of electricity generation from those favored sources. Sounds like “guaranteed payments for some” to us.

AWEA’s position against the DOE proposal might give the impression that they have seen the light of competitive markets and don’t want their subsidies anymore. They might even tell you that they agreed to the deal to phase out the PTC, nevermind that they were forced into it by pressure and the “phase out” means they still will be getting subsidies for at least more than a decade. But their hysterical reaction to a Senate version of the tax bill that passed last year gives the lie to that. The renewables industry went DEFCON1 when they realized that a provision of the bill intended to prevent tax avoidance could reduce the value of their government subsidies. So, while simultaneously fighting the DOE resiliency rulemaking based on its potential to “upend competitive markets,” that same renewables lobby scrambled to protect their gravy train in the final version of the tax bill. It seems that what we have here from AWEA is an example of subsidies for me, but not for thee.

The coal and nuclear industries are right to feel aggrieved. Federal subsidies distort electricity markets. The renewables industry likes to talk about how much generation they have been installing in recent years, but those installations have not been additive economic contributions. U.S. electricity demand has been flat for a decade. New wind and solar generation is not meeting additional demand, but rather it is cannibalizing from existing generation, a parasite on the grid mainly harming coal and nuclear generators. In a normal market, no one would be investing billions in unneeded generation, but tax credits like the PTC and its solar cousin the Investment Tax Credit (ITC) make it profitable to throw up wind and solar generating facilities as rapidly as possible regardless of market conditions.

The coal and nuclear industries are right: the federal government skews markets against them and in favor of wind and solar. But the answer is not to expand subsidies to coal and nuclear, the answer is to remove the existing subsidies and favoritism that skew the markets. AWEA says they oppose “guaranteed payments for some.” As long as that “some” doesn’t include them.

Key Vote: Oppose Grassley Amendment #1835

The American Energy Alliance urges all Senators to oppose Grassley amendment #1835 to the Hatch substitute for HR 1 the Tax Cuts and Jobs Act. This amendment seeks to protect the users of complex international tax structures from being touched by reforms included in the Hatch Substitute, a provision known as the Base Erosion Anti-Abuse Tax (BEAT).

The BEAT provision targets asset stripping where large companies use international subsidiaries to game the system to reduce their tax liability. The BEAT provision seeks to crack down on this maneuver by imposing a minimum tax on entities employing these complex tax equity financing mechanisms. Senator Grassley’s amendment would protect these tax avoiding maneuvers and should be opposed.

Senator Grassley’s amendment to protect the large, sophisticated multinational companies that use these tax gimmicks would leave middle class taxpayers bearing more of the tax burden. The Senate should not be in the business of protecting these tax games just because it provides cheap financing for energy companies that Sen. Grassley happens to favor.

The AEA urges all members to support free markets and affordable energy by voting NO on Amendment #1835.  Should a vote on this amendment occur, AEA will include it in its American Energy Scorecard.

No Carve-Outs for Politically-Favored Industries

WASHINGTON – This afternoon Thomas J. Pyle, President of the American Energy Alliance, sent a letter to Senate Majority Leader Mitch McConnell expressing the organization’s
opposition to special tax treatment for the wind and solar industries vis-à-vis the Base Erosion Anti-Abuse Tax provision in the Senate tax reform bill.

The text of the letter can be read below:

Dear Majority Leader McConnell,

I am writing to urge you to oppose an unfair carve-out for the wind and solar industries in the tax reform bill. The Base Erosion Anti-Abuse Tax (BEAT) provision is intended to promote a level playing field for businesses by addressing tax equity investment. Businesses within the wind and solar industries in no way merit preferential consideration.

Wind and solar companies have exploited American taxpayers for decades and the costs must be reckoned with. The wind energy Production Tax Credit (PTC) alone is set to cost us over $25 billion, according to the Congressional Research Service, between 2016 and 2020. Enough is enough.

The House tax reform bill included the reasonable reduction of the wind PTC from $24 per megawatt hour to $15 per megawatt hour, which would save taxpayers billions. Unfortunately, such a reduction is absent from the Senate bill. Nevertheless, the BEAT provision can mitigate this cost by discouraging tax profiteering.

Twenty-five years of preferential tax treatment is more than any industry deserves. Saying “no” to the wind and solar lobbies’ demands for a carve-out gives Americans a fairer deal.


Thomas J. Pyle
President, American Energy Alliance

AEA Endorses MINER Act

WASHINGTON – On Thursday, November 30, Thomas J. Pyle, President of the American Energy Alliance, sent a letter to Congressman Paul Gosar endorsing the Minnesota’s Economic Rights in the Superior National Forest Act (MINER Act). The MINER Act reflects AEA’s commitment to enabling the American people to access and develop all the natural resources at our disposal. Pyle’s letter can be read in full below:

Dear Chairman Gosar:

I write to you in support of H.R. 3905, the Minnesota’s Economic Rights in the Superior National Forest Act (MINER Act).

Put simply, the MINER Act would wrest power back from an overreaching executive branch and return it to the people. Proposals like the MINER Act are important for establishing a renewed respect for resource development across the country. As Congressman Emmer said earlier this month, “We can utilize the largest untapped copper-nickel deposit in the world for Americans, and in an environmentally sound way,”

The Obama administration’s midnight withdrawal application to restrict development within the Superior National Forest was an example of the federal government at its bureaucratic worst. Arbitrary withdrawals of this nature do nothing to provide us cleaner water or air, but have been shown time and again to harm local economies and put people out of work. Minnesotans deserve better and the MINER Act would move us in the right direction.



Thomas J. Pyle

President, American Energy Alliance

Alexander Pillories Wind PTC

Congress is at long last coming to grips with the failure that is the wind production tax credit (PTC). The bill passed by the House Thursday will cut the rate at which wind production is subsidized by about one-third and will allow the quarter-century-old program to finally end as scheduled in 2020.

Hurdles still remain on the Senate side of things and the fight is far from over. At least one senator, however, isn’t afraid to call out the wind PTC as the costly, cronyistic subsidy that it is. That senator is Lamar Alexander (R-Tenn). Senator Alexander took to the floor on Tuesday to decry the wasteful history of the PTC and enjoin his colleague to discontinue it by year’s end.


Alexander described the wind PTC as “at the top of the list” of wasteful spending that should be addressed in the tax reform debate. By eliminating the subsidy on December 31, 2017, rather than phasing it out, taxpayers will be saved $4 billion according to figures cited by Alexander on the floor.

As he pointed out, wind PTC advocates can no longer claim this is a short-term support for an infant industry. The PTC has been extended seven times, has cost us tens of billions of dollars, and yet wind still produces just one-twentieth of our electricity.

We commend Senator Alexander on his continued realist stance on the wind PTC and echo his closing remark:

“I’m here to challenge my colleagues to be willing to consider all energy subsidies for mature technologies–wind, solar, oil, gas–as candidates for elimination in a tax reform bill. Those dollars could be better spent to lower rates for taxpayers.”

Senator Alexander’s comments can be viewed here in the recording of Tuesday’s proceedings by jumping to the 7 hour, 28 minute mark.

To read AEA President Tom Pyle’s comments on the passing of the House tax bill and its wind PTC reductions click here.

To read the Institute for Energy Research’s 2014 white paper on the wind PTC click here.

Abandon Free Market Principles to Save Competitive Energy Markets?

At the unveiling of the George W. Bush Presidential Center, former President Bush admitted to going against his “free market instincts” when he bailed out the banks following the financial crisis. “History shows that the greater threat to prosperity is not too little government involvement, but too much,” he added.

We couldn’t agree more.

Abundant, affordable energy is the foundation of modern prosperity. One of the most pernicious things that the Obama administration did was to interfere with the availability of affordable energy, lavishing subsidies and regulatory support on any trendy, inefficient and expensive technology or energy source that could be branded as “renewable.” The Obama administration’s government distortions raised costs for consumers and destroyed jobs in industries that did not gain government favor in an attempt to “finally make clean energy the profitable kind of energy.” This picking of winners and losers is no way to manage competitive energy markets in a free society.

The American Energy Alliance has not been alone in recognizing the baleful effects of government favoritism. Many clear-eyed politicians have also understood the negative impacts of excessive government intervention in energy markets.

In 2011, then Governor Perry exhorted voters to elect him president so that he could “level the playing field for all energy producers, removing Obama’s practice of picking winners and losers.”

In 2014, 55 House Republicans inveighed against a government subsidy which “has not only cost taxpayers billions, but has caused significant price distortions in wholesale electricity markets.”

In 2015, Rep. Alex Mooney spoke it plainly: “The government shouldn’t pick the winners and losers. What I object to is the government interfering in the market.”

In 2016, leaning on his experience as a state utility regulator, Rep. Kevin Cramer explained that “when ratepayers are subsidizing with an additional cost because of a mandate, that’s different. That’s punishing the ratepayer.”

This past summer, Rep. Keith Rothfus reminded us “the federal government’s role isn’t to pick winners and losers.”

Just a few weeks ago, Senator Shelley Moore Capito indicted the Obama administration for issuing “heavy-handed regulations to pick winners and losers among energy industries.”

Many of the companies that were targeted for harm by the Obama administration likewise stood with us and these political leaders against federal government distortions in energy markets.

FirstEnergy, one of the largest investor-owned utilities in the country, saw things clearly, noting “measures that restrict customer shopping or subsidize one electric generator over another are throw-backs to monopoly regulation. Such efforts that pick ‘winners’ and ‘losers’ in the energy market would create obstacles to private investment in generation and increase prices for customers.”

Earlier this year, the CEO of Murray Energy, correctly noted that under the Obama administration there was not a level playing field “the government has been picking winners and losers.”

Exelon, largest utility in the Fortune 500, has made clear its preference for outcomes based on free markets, “rather than through the government picking technology winners and losers,” and proudly declared itself “anti-subsidy.”

We couldn’t have said it better ourselves.

On September 29th, the Trump administration Department of Energy released a notice of proposed rulemaking proposing a rule for action by the Federal Energy Regulatory Commission (FERC). This proposed rulemaking called for FERC to intervene in electricity markets to guarantee cost recovery for certain classes of electricity generation units. As we have stated before, we agree that baseload power generation is not adequately valued. We also believe that FERC can play a limited role in addressing this legitimate concern. The Perry proposal, in contrast, would: pick winners and losers, cause significant price distortions in wholesale electricity markets, constitute government interference in markets, punish ratepayers, create obstacles to private investment in generation, and increase prices for customers.

Today, we implore the politicians and companies who fought against the reckless energy policies of the Obama administration not to go against their previously stated free market instincts. EPA Administrator Scott Pruitt is working to undo a slew of unnecessary and burdensome federal regulations like the Clean Power Plan, which would have led to the federal takeover of the electricity grid. The House of Representatives is taking steps to rein in distortive subsidies like the wind Production Tax Credit.

Our focus should be on helping to unwind these distortive and destructive policies, not adding to an already broken system. Let’s heed the advice of President Bush and be on the right side of history by sticking with our free market instincts. In the end, everybody will be better off.

AEA Responds to GOP Tax Plan

WASHINGTON – Thomas J. Pyle, President of the American Energy Alliance, has issued the following statement on today’s release of the Tax Cuts and Jobs Act:

“This pro-growth tax reform plan is a breath of fresh air for American businesses and the American people. The immediate lowering of the corporate tax rate to 20 percent will free up capital to boost investments, jobs, and incomes and the termination of distortionary practices like the $7,500 electric vehicle tax credit will help restore market signals and save taxpayers money. The 2016 elections gave the president and this Congress a mandate to chart a better path for our economy and this plan reflects that.”

“While we’re pleased with many provisions and the overall blueprint, we would prefer to see—and will continue to argue for—a more thorough elimination of federal energy subsidies. A termination of the Investment Tax Credit and the Production Tax Credit is of the highest order of importance. With that said, this plan takes us in the right direction by maintaining the scheduled expiration of the Production Tax Credit for wind energy and phasing out the temporary credits for wind and solar established by the 2015 PATH Act.

“The subsidies that have been dished out by the federal government to the wind industry in particular are staggering. Our 2015 study found that the cumulative magnitude of federal subsidy allocations from the PTC, the ITC, and Section 1603 grants to the wind industry from 2005 to 2014 was at least $18.6 billion. The wind industry’s continued dependence on the federal government is an injustice to the taxpayers forced to foot the bill. The phase-out of these subsidies cannot come a moment too soon.

“The bottom line, despite its flaws, is that this plan is a positive overhaul of a broken tax system. The sizable tax reduction for corporations will bring new jobs and stronger earnings for American families and help us move more into line with America’s historically strong rates of economic growth.”