Nanny Bloomberg and Gov. Cuomo’s Plan to Turn Off the Lights

Last week, AEA President Thomas Pyle penned an op-ed in the New York Post entitled “Lights Out, New York.” In the piece, Pyle explains how former New York City Mayor Michael Bloomberg and current New York Governor Andrew Cuomo are turning off the lights on New York’s energy and economic future. Below is the text of the op-ed:

Lights Out, New York
By Thomas Pyle

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High electric bills. An undependable power supply. Withering jobs in an economy increasingly dragged down.

That seems to be New York’s energy future. And for that we have to thank state (and national) environmentalists — and compliant leaders here who are intent on moving “beyond” the current practical options for producing juice.

It’s a campaign, frankly, that defies sanity.

Take New York City’s former mayor, Mike Bloomberg. As mayor, “sustainability” was a major priority for him. And though he’s out of office, he’s still causing trouble.

Recently he pledged a personal contribution of $30 million to the Sierra Club’s “Beyond Coal” campaign. Before that, he pledged $50 million. The goal: to shut down half of all US coal plants by 2017 — which produce enough power for more than 134 million Americans — in a dubious effort to control the Earth’s temperature.

When the Potomac River Generating Station (a coal-fired power plant that supplied power to Washington, including the White House) closed in 2012, Bloomberg & Co. took credit, firing off a self-congratulatory press release that touted “a great step forward for the Beyond Coal campaign.”

Guess what? Last week, the lights went out. An outage cut off power to the White House, the State Department and some downtown areas. And though it’s impossible to know for sure, it well might be that the power failure could have been avoided if the Potomac plant were still running.

New York doesn’t rely heavily on coal, the nation’s most affordable, abundant and reliable energy source. But vanquishing coal is just one front in a larger anti-energy crusade. For example, while Bloom­berg wages his private war on coal, his environmentalist allies and state leaders are trying to move New York beyond natural gas and nuclear power, the state’s two largest sources of electricity.

In a shameful, drawn-out cave-in to pressure groups, for example, Gov. Cuomo in December finally banned fracking (hydraulic fracturing) outright. That will deny New Yorkers access to abundant natural-gas supplies in their own state.

Not only will such a ban drive up energy costs, it will also kill off jobs. One resident of New York’s beleaguered Southern Tier described his town as “dead in the water now,” thanks to Cuomo. (Even Bloomberg criticized Cuomo’s ban as “misguided.”)

Ultimately, Cuomo wants to move the Empire State beyond coal, natural gas and nuclear — and into an energy abyss. (New York laws already restrict oil use, too, by the way.)

Most notably, the governor has long opposed the Indian Point nuclear plant, which he once called a “catastrophe waiting to happen.”

Last summer, state regulators quietly proposed idling the plant for 100 days per year, ostensibly to protect fish during breeding season.

Entergy, the plant’s operator, points to more sinister motives: “This is not about science. This is about closing what is a safe, clean, environmentally responsible facility that generates electricity in a cost-effective manner for New Yorkers.” Entergy says the move would cost billions per year and could make the plant uneconomic.

While Cuomo bans fracking and shuns nuclear, he’s smitten for solar. Last spring, the governor announced plans to spend $1 billion to boost New York’s solar output by 3 gigawatts — a tenfold increase over the next decade.

That works out to $333,000 per megawatt-hour, which is more than 17,000 times the $19.26 cost New York residents currently pay for electricity.

New York already has the fourth-highest residential electric rates in the country (made worse by the state’s outrageous energy taxes). Cuomo’s policies will push those prices higher still, while leaving the state’s energy supply vulnerable to the whims of the weather. All of which will make it harder to live here, do business here and create jobs here.

Just as climate scientists can’t blame any single weather event on global warming, we can’t definitively quantify the impact of New York’s mindless anti-fossil-fuel and anti-nuclear policies.

But we do know for sure that the “beyond energy” policies of advocates like Cuomo, Bloomberg and the environmental lobby will boost costs, make blackouts more likely and take a tragic toll on the economy.

Even climate-change folks admit that “healing the planet” is a tall order. But this man-made disaster has an easy fix: Get folks like Cuomo and Bloomberg to stand down.

Click here to see the original op-ed.

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Daily Beast: Hillary’s Big Iowa Flip-Flop

Last week, Robert Bryce, a senior fellow at the Manhattan Institute, penned an op-ed discussing presidential candidate Hillary Clinton’s convenient flip-flop on ethanol. Bryce points out that after voting against ethanol 17 times in the Senate, Hillary’s presidential aspirations made her quickly change her tune in 2007. An excerpt from the piece follows:

As Clinton and her allies said back in 2002, the corn ethanol requirements are an anti-consumer government mandate. Between 2007 and 2014, the cost premium for ethanol over an energy-equivalent amount of gasoline has averaged 92 cents per gallon. Total cost to consumers over that eight-year period: about $83 billion. And the ripoff continues. This year, the RFS will require motorists to purchase about 13 billion gallons of ethanol. (Federal legislators, including, notably, California’s Dianne Feinstein, have filed bills to repeal the RFS.)

To be clear, other presidential hopefuls are also bowing and scraping in front of the corn lobby. Republican Jeb Bush, to his credit, at least says he wants a gradual phase out of the RFS. Rand Paul, that great defender of libertarianism, has proposed legislation that could allow the ethanol scammers to blend even more of their expensive Franken-fuel into our gasoline. Only Texas senator Ted Cruz has come out squarely opposed, calling the RFS “corporate welfare.”

But among the candidates, Clinton stands alone as the one who’s flipped stances on ethanol to one that is diametrically opposed to the interests of consumers. As of Tuesday, there was scant information about Clinton’s energy policies – or any other positions — on her website. Nevertheless, if she were going to buck Iowa’s corn barons she would have said so by now.

Clinton’s ethanol flip-flop is particularly egregious given that she wants to position herself as a champion of the little guy. On Sunday, the Associated Press quoted “senior advisers” from her campaign who said that her focus will be on “strengthening economic security for the middle class and expanding opportunities for working families.”

If she were serious about putting more cash into the pockets of ordinary citizens, she would be opposing the corn ethanol tax. Instead, she supports it. And therein lie two stories: the first illustrates Clinton’s ambition; the second illustrates just how thoroughly Iowa and Big Corn have corrupted the presidential selection process. And that corruption costs American motorists every time they pull up to the pump.

You can read the rest of the piece here.

American Energy Parade

Energy Parade 600 AEA

According to a new report from the Congressional Research Service, since fiscal year 2010 oil production on federal lands is down by 10 percent and natural gas production on federal lands is down 31 percent. This contrasts to oil production on non-federal lands, which is up by 89 percent, and natural gas production on non-federal lands, which is up by 37 percent since fiscal year 2010. If more oil and gas production is a good thing for the United States, the Obama Administration’s policies are a lesson in what not to do.

As Rep. Ed Whitfield (R-Ky.), chairman of the energy and power subcommittee, said: “While President Obama has been anxious to take credit for increased oil and gas production, the only areas he is responsible for is on federal lands — the only areas where oil and gas production is actually decreasing.”

Click here for the rest of IER’s analysis of Obama’s unwillingness to unlock America’s energy potential.

Is North Carolina’s Energy Mandate on Its Way Out?

Last month, four members of the North Carolina House of Representatives (Millis, Hager, Collins, and Warren) introduced legislation to curb the state’s renewable energy mandate. Their bill, H 681 (NC Energy Ratepayers Protection Act), freezes the state’s “renewable energy and energy efficiency portfolio standard,” which mandates a minimum contribution from renewable energy sources like wind and solar. Several energy sources—including solar power and energy from swine and poultry waste—benefit from specific mandates for each source.

Bill H 681 stops the mandate at the halfway point—the amended law would require 6 percent of total electricity production to be renewable for the years 2015 through 2018, rather than continuing on to require 12.5 percent by 2021 as included in the original renewable energy mandate. This action from the North Carolina legislature represents a positive first step on the road toward fully repealing the state’s misguided energy mandate. Freezing the mandate in place will help North Carolinians avoid unnecessary increases in their electricity bills.

Energy Mandates Impose High Costs in Exchange for…What?

As states across the country implement renewable energy mandates, some policymakers are questioning whether the costs associated with a forced transition to renewables (particularly wind and solar) are worth the alleged benefits. When we look at states that have managed to keep electricity rates low, we see that they get the largest share of their electricity from coal, nuclear, or hydroelectric power. In contrast, renewables like wind and solar are far more expensive than conventional energy sources and cannot supply the same reliable power as conventional sources.

A recent IER study found that wind energy costs $109 per megawatt-hour, which is a whopping three times more expensive than electricity from existing power plants running on coal, natural gas, nuclear, and hydro (cost estimates for existing generators come from a forthcoming IER study)..When the full costs of wind power are taken into account—including the cost of backing down reliable units, building new transmission lines, and paying for heavy subsidies with taxpayer dollars—wind power is even less affordable. The higher costs of unreliable energy fall on everyday North Carolinians in the form of higher utility bills and higher taxes.

As shown below, coal is the number one electricity source in seven out of the top 10 states with lowest electricity rates.

states low res prices

Some states are taking note. In Ohio, for example, the state legislature wisely froze its renewable energy mandate for two years in order to reevaluate the costs and benefits of the policy. In the deliberations on Ohio’s mandate, Institute for Energy Research staff provided testimony to the Ohio Senate Public Utilities Committee and highlighted the steep costs and scant benefits of the mandate. State energy mandates drive up electric rates, destroy more jobs than they create, and are an inefficient method of reducing carbon dioxide emissions. Earlier this year, West Virginia also passed a law scrapping its alternative energy standard, which would have required utilities to get 25 percent of their power from alternative sources by 2025.

A new report from Strata—a research group affiliated with Utah State University—further highlights the high cost of renewable energy mandates. The report finds that, if fully implemented, North Carolina’s energy mandate will reduce industrial activity by more than 13 percent and slash real personal income by almost 4 percent. Strata concludes that the mandate poses a “potential threat to the competitiveness of North Carolina’s commercial business base. These results portend dire consequences for the state.” These findings underscore the urgent need for reform.

Embrace Energy Abundance, Eliminate Energy Mandates

In many of the laws establishing renewable energy mandates—the bulk of which were enacted in the mid-2000s—policymakers expressed concern that energy resources would be more scarce in the future, and hence a policy of conservation would be prudent. In the intervening years, however, we have witnessed an energy renaissance that turned the reasoning for these mandates on its head.

In the case of North Carolina, for example, the renewable energy mandate was established in 2007. From 2007 to 2014, U.S. natural gas marketed production has increased 35 percent, providing a free-market answer to energy scarcity as opposed to a mandated transition to unreliable and expensive sources of electricity like wind and solar. From 2007 to 2013, U.S. shale gas production grew an amazing 783 percent, thanks to technological innovations such as the combination of horizontal drilling and hydraulic fracturing. The policy implication is that North Carolina should keep developing and producing energy from sources that survive the market test and flourish without the help of mandates and subsidies. Mandating sources that fail the market test is a recipe for higher prices.

Some policymakers may still want to support renewables, and in fact, many other policy supports for renewables already exist. North Carolina’s renewable energy mandate is just one of 117 programs that all support renewable energy in the state of North Carolina, as identified by the Database of State Incentives for Renewable Energy. In short, reforming the renewable energy mandate does not remove all support for renewables in North Carolina—it simply lightens the burden on ratepayers.

Conclusion

With the introduction of H 681, members of the North Carolina House of Representatives are offering a common-sense solution to the real energy problem, which is not scarcity but political meddling. Also, by freezing the mandate in place, policymakers will help North Carolinians avoid unnecessary increases in their electricity bills.

George Will: Colleges Preach “Religion of Sustainability”

Pulitzer Prize-winning columnist George Will recently penned an op-ed in The Washington Post discussing the divestment movement’s infiltration of college campuses. Will finds that the “religion of sustainability” has become an integral part of many college campuses’ liberal doctrines, as school administrators reduce the value of their endowments while doing nothing to curb fossil fuel consumption. An excerpt from Will’s piece follows:

The same sort of people — sometimes the same people — who once predicted catastrophe from the exhaustion of fossil fuels now predict catastrophe because of a surfeit of such fuels. Former U.S. senator Tim Wirth of Colorado, divestment enthusiast and possessor of astonishing knowledge, says: If we burn all known fossil fuels, we will make the planet uninhabitable, so, “Why should any rational institution invest in further exploration and development when we already have at least three times more than we can ever use?”

There is a social benefit from the sustainability mania: the further marginalization of academia. It prevents colleges and universities from trading on what they are rapidly forfeiting, their reputations for seriousness.

The divestment impulse recognizes no limiting principle. As it works its way through progressivism’s thicket of moral imperatives — shedding investments tainted by involvement with Israel, firearms, tobacco, red meat, irrigation-dependent agriculture, etc. — progressivism’s dream of ever-more-minute regulation of life is realized but only in campus cocoons.

College tuitions are soaring in tandem with thickening layers of administrative bloat. So here is a proposal: Hundreds of millions could be saved, with no cost to any institution’s core educational mission, by eliminating every position whose title contains the word “sustainability” — and, while we are at it, “diversity,” “multicultural” or “inclusivity.” The result would be higher education higher than the propaganda-saturated version we have, and more sustainable.

You can read the rest of Mr. Will’s piece here.

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10 Reasons States Should Just Say No to EPA’s Power Grab

Since the EPA announced its regulation of carbon dioxide emissions from power plants, what EPA euphemistically calls the “Clean Power Plan,” states across the country have been working tirelessly to assess their options. Many have found they are in a lose-lose situation. No matter what they do, their state will be drastically impacted. Recently, Majority Leader McConnell wrote an op-ed and then a letter to all 50 Governors urging them to think twice about acquiescing to EPA’s overly burdensome mandates.

The states appear to be listening. As of now, twenty states have passed or are considering some legislation pushing back on the EPA’s proposed rule. Several of these efforts involve binding legislation requiring legislative approval and Attorney General review of any State Implementation Plan (SIP) while many others impose limitations and reports studying the detrimental impact of the proposed regulation. Fourteen states have joined the lawsuit challenging the EPA’s authority to promulgate the rule, which is being heard this Thursday in the DC Circuit Court of Appeals. Finally, thirteen governors have written the EPA explaining that the agency’s proposed action exceeds federal authority and puts state compliance in question.

Many states are still weighing their options until the final rule is released later this year. Here are 10 reasons why the states should heed Sen. McConnell’s advice to resist EPA’s power grab:

1. The rule is extremely costly for the American people, particularly those on fixed incomes – The EPA severely underestimates how much this regulation will cost the economy and the American people. Even the non-partisan Government Accountability Office criticized their analysis. Two independent analyses point to significant costs. A study done by NERA Economic Consulting found the rule would cost at least $366 billion by 2031 and residents of 43 states would see annual double-digit electricity bill increases. A second study by Energy Venture Analysis found that combined electric and natural gas bills would rise by $680 annually per family.

2. While the rule comes at great cost, it accomplishes very little in environmental or health benefits – The stated purpose of this regulation is to tackle climate change, yet the EPA did not even attempt to measure the climate benefits of the rule. This is probably because EPA’s own models show the rule does almost nothing to address climate change: it limits global warming by just 0.02 degrees and lowers sea level rise by just 0.01 inch. The administration also claims the rule will improve public health, particularly focusing on kids’ asthma. This conveniently ignores the fact that carbon dioxide emissions have nothing to do with asthma. It also conveniently ignores that while conventional pollutants have steadily decreased over the past several decades, asthma levels have continued to rise, leaving some to question how these two could possibly be related. As a USA Today piece recently suggested, perhaps the President should be more concerned about the impact of his smoking on his daughter’s asthma than climate change.

3. EPA wants a federal takeover of the electricity system – Under the guise of state flexibility, the EPA regulatory scheme would make fundamental and irreversible changes to our electricity system that will centralize power in Washington and drive up electricity rates. This unprecedented rulemaking discards the principles of cooperative federalism, relegating states to the role of “marionettes dancing to the tune of a federal puppeteer,” as liberal law professor Lawrence Tribe has testified.

4. EPA is offloading responsibility for this takeover on the states – Not only is EPA centralizing power, but the agency is also trying to get states to put their stamp of approval on it. The regulatory framework is intentionally designed to get states to take the lead so the EPA’s hands do not get as dirty. Under this approach EPA does not want to be held accountable for the coming disastrous outcomes. This is similar to Obamacare, where the feds wanted states to set up their own health insurance exchanges so they would own some of the fallout for the failure.

5. States that enforce these mandates are ceding authority to the EPA – EPA is attempting to expand its authority under the Clean Air Act using this regulation. If successful at using this framework to take over the electricity system, EPA will be empowered to use it to go after other sectors of the economy (i.e. refiners, manufacturing). States that cede their authority are helping EPA establish a precedent that will be used again down the road to force states to cede even more sovereignty to federal bureaucrats. Once the feds takeover, they rarely ever return authority to the states.

6. The emissions targets are widely viewed to be unfeasible – In addition, the targets EPA has laid out for the states are widely seen as unfeasible, if not impossible, to meet. The power plant efficiency number of 6% is widely considered undoable. Since power plant operators have been so effective at boosting plant efficiency, experts suggest 2% is the most that is still possible. There are also questions about whether it is possible to force natural gas plants to operate at 70% when the national average in 2012 stood at 46%. Lastly, an annual 1.5% demand reduction could be widely off if energy use does not decrease, but rather goes up, as the Energy Information Administration predicts. All considered, there is reasonable fear that meeting these targets is impossible and could potentially threaten the reliability of the grid, or at the very least severely strain it.

7. The EPA does not have the resources to administer a multi-state plan – If the targets are seen as impossible, then a state should not harm their citizens by trying to comply with unreasonable mandates. Instead, states should call the EPA’s bluff and refuse to cede their authority or do the EPA’s bidding. If the EPA wants to do this, then EPA should own the consequences. If multiple states just say no, the limited resources at the EPA would be overwhelmed trying to administer the program.

8. State resistance would severely slow down implementation – Additionally, state rejection of this regulatory framework would severely slow down implementation. EPA’s lack of resources will make it difficult for the agency to meet deadlines, especially if they have to develop and implement multiple state plans. This gives the legal process more time to play out, increasing the likelihood that the Supreme Court could invalidate EPA’s rule before it is fully implemented. Even Professor Tribe has said EPA’s rule amounts to “burning the Constitution.”

9. State rejection of this rule will help build public support for reform – A serious effort by state leaders to fight back against this unconstitutional regulation would significantly help build public support for needed reforms at the Federal level. Survey work done last summer by AEA showed that public support for the proposed rule dropped significantly when individuals were informed about the negligible environmental benefits and the high economic cost of the rule.

10. Federal elected officials and State elected officials should work together to protect prosperity – Some have argued that McConnell should refrain from engaging the states on this issue. That is a ridiculous argument. The American people are well served when state leaders and federal leaders work together to protect their interest, especially in this case. Governors and state lawmakers should be working with Congressional leaders to fight this federal takeover.

Despite complaints from anti-energy interests on the left, Majority Leader McConnell is taking responsible action. While the Democrats controlled the House and the Senate, Congress rejected cap-and-trade legislation because of public outcry of the costs on consumers. Not content to let the will of the people stand, the Obama administration is attempting a legally dubious end run around Congress. Given all of this the Majority Leader has every reason to be involved. He is not alone in this fight. Recently, a coalition of over 30 groups from around the country wrote a letter to McConnell applauding him for his efforts. It’s time for state leaders to heed his advice and reject the EPA’s unprecedented assault on American families.

On Tax Day, Big Wind Gets A Windfall

The wind industry often peddles the false claim that conventional energy sources like natural gas, coal, and nuclear receive more subsidies than wind power. Industry lobbyists at the American Wind Energy Association (AWEA) use this myth as a talking point to push for more subsidies, including the federal Production Tax Credit. In reality, the exact opposite is true—wind energy requires massive subsidies to compete with conventional fuels—and new data (once again) prove it.

Recently, the U.S. Energy Information Administration (EIA) released a new report on federal energy subsidies. An analysis of EIA’s data by the Institute for Energy Research found that despite the wind lobby’s claims, wind energy is by far the most heavily subsidized fuel source, receiving more subsidies to produce less energy than conventional fuels. Moreover, even the data AWEA cites to bolster its case shows that wind is a bad deal for taxpayers.

EIA Data: Wind Receives Far More Subsidies than Fossil Fuels

First, consider the following chart derived from EIA’s new report, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013. Wind energy received more than $5.9 billion in federal electricity-related subsidies during FY2013, which is almost twice as much as coal, natural gas, and nuclear combined. Solar received the second-most electricity-related subsidies, at nearly $4.4 billion, while all other energy sources received considerably less.

Fed-Subsidies-&-Support-for-Elec-Production-FY-2013rev

The gap widens further when we consider subsidies per unit of electrical energy produced. Once again, the data show wind receives far more subsidies than conventional energy sources. In FY2013, federal electric subsidies propped up wind to the tune of $35.33 per megawatt hour of electricity, compared to just $0.57 for coal, $0.67 for natural gas and oil, $2.07 for hydropower, and $2.10 for nuclear.

Fed-Elect-Subs-Wind1

EIA’s data show that wind energy receives far more subsidies to produce far less energy than conventional fuels. Total federal electricity-related subsidies rose 38 percent between FY2010 and FY2013, while electricity-related subsidies for renewables including wind and solar climbed 54 percent. Despite generous and rising subsidies, wind energy supplies just 4.5 percent of U.S. electricity. Meanwhile, natural gas, coal, and nuclear receive far less in subsidies but generate more than 86 percent of the electricity Americans use.

Wind Lobby’s Misleading Math

After EIA released its new report, the American Wind Energy Association (AWEA) wrote a blog post that claims EIA is “missing the big picture on energy subsides” because the EIA report did not consider a longer time frame. AWEA argues that if you consider subsidies since 1950, wind’s subsidies are in line with other sources.

AWEA’s argument, however, is misleading for at least two reasons: even by AWEA’s own numbers, wind still receives more subsides per unit of total energy than conventional fuels; and AWEA uses an overly broad definition of “subsidies” that includes many tax incentives available to all domestic manufacturers, not just energy producers.

First, AWEA claims EIA misses the “big picture” by only looking at subsidies over the last three years. Instead, AWEA examines total energy subsidies between 1950 and 2010, concluding that oil received $369 billion in subsidies, natural gas received $121 billion, coal received $104 billion, nuclear received $73 billion, and wind and solar combined received $74 billion. (These figures include subsidies for all energy, not just electricity production.)

A true assessment of the “big picture,” as AWEA claims to want, requires exploring how much energy was produced for each dollar of subsidy. This could be considered the “value” to taxpayers for their “investment.” By this measure, using the numbers AWEA urges us to consider, wind still costs taxpayers considerably more than conventional fuels. As the following chart shows, wind and solar received 138 times more subsidies per million British Thermal Units (MMBTU) of energy produced than coal, 115 times more subsidies/MMBTU than natural gas, 41 times more than nuclear, and 35 times more than oil. [Note: the study AWEA cites lumps together wind and solar, so we cannot break down the data any further.]

Total-Energy-Subsidies-Per-Unit-of-Production,-1950-2010

It is misleading to compare total subsidy numbers without considering the cost per unit of energy produced. A look at the “big picture” as AWEA defines it shows that wind is still a worse deal for taxpayers. While the American Energy Alliance opposes all energy subsidies, subsidies for wind have yielded little, making them expensive for taxpayers, while subsidies for conventional fuels have come at a relative bargain.

AWEA Doesn’t Know—Or Care—What a Subsidy Is

Another issue is how AWEA defines a “subsidy.” The study AWEA cites organizes subsidies into several categories: tax policy, regulation, R&D, market activity, government services, and disbursements (grants). The largest category of total subsidies, according to this report, is tax policy, which comprises 47 percent of the total dating back to 1950.

The study defines the tax policy category as “special exemptions, allowances, deductions, credits, etc., related to the federal tax code.” Crucially, the report cites examples: “The oil and gas industries, for example, receive percentage depletion and intangible drilling provisions as an incentive for exploration and development. Federal tax credits and deductions also have been utilized to encourage the use of renewable energy.”

AWEA misses this crucial distinction between the tax incentives offered to oil and gas companies versus wind companies. The percentage depletion allowance and intangible drilling costs are not really “loopholes” but instead reflect economic reality: extracting barrels of oil really does reduce the value of an oil field, which must be taken into account when measuring an operation’s taxable net income.

Oil and gas companies cannot claim the PTC—it is exclusive to renewable energy producers. This targeted subsidy, the PTC, intentionally gives preferential treatment to wind developers at the expense of conventional producers. On the other hand, many of the incentives available to oil and gas producers are not oil and gas specific, but available to domestic manufacturers across numerous industries. That means all manufacturers generally receive similar tax treatment, while the PTC amounts to a special carve out for wind producers.

AWEA draws a false equivalence between the broad-based incentives available to manufacturers and the exclusive subsidies offered to wind developers. When the general public reads statistics about “subsidies for fossil fuels,” they naturally think these were specifically designed as arbitrary handouts for oil and gas companies; the public wouldn’t realize that much of these were features of the tax code that make accounting sense, and/or reflect broader policy goals such as “promoting domestic manufacturing.” Furthermore, since tax policy represents close to half of the subsidies in the study AWEA cites, a more realistic accounting would further increase the per-BTU subsidy cost of wind compared to conventional fuels.

Conclusion

The wind industry continues to perpetuate the myth that wind subsidies are somehow “a drop in the bucket” compared to conventional energy. A look at the “big picture,” as AWEA claims, shows exactly the opposite, with subsidies for wind dramatically outpacing those for conventional fuels. Yet wind lobbyists use this myth to argue for even more subsidies, pleading with lawmakers to level a playing field that is, in reality, already tilted in their favor. Instead of propping up certain energy technologies over others, we should end all subsidies and let energy sources compete on their own merits.


[1] Preferential tax treatment for “intangible drilling costs” is similar to accounting provisions available to other industries for qualifying business investments. Those provisions go by other names, but they have the same effect. See http://instituteforenergyresearch.org/analysis/the-obama-administrations-dishonest-claims-on-big-oil-tax-giveaways/

Newsweek: What’s the True Cost of Wind Power?

Randy Simmons, professor of political economy at Utah State University, recently co-authored an article with Strata Policy Analyst Megan Hansen that sheds light on the true, hidden cost of wind power. Simmons and Hansen find that the enormous amount of federal subsidies and grants given to wind power every year make it hard for Americans to understand just how much they’re paying for such an inefficient, costly resource. An excerpt from their findings follows:

The high costs of federal subsidies and state mandates for wind power have not paid off for the American public. According to the Mercatus Center at George Mason University, wind energy receives a higher percentage of federal subsidies than any other type of energy while generating a very small percentage of the nation’s electricity.

In 2010 the wind energy sector received 42 percent of total federal subsidies while producing only 2 percent of the nation’s total electricity. By comparison, coal receives 10 percent of all subsidies and generates 45 percent and nuclear is about even at about 20 percent.

true cost graph

Wind gobbles up the largest share of subsidies yet produces little power.

But policymakers at the federal and state level, unfortunately, have decided that the American people will have renewable energy, no matter how high the costs. As a result, taxpayers will be stuck paying the cost of subsidies to wealthy wind producers.

Meanwhile, electricity consumers will be forced to purchase the more expensive power that results from state-level mandates for renewable energy production. Although such policies may be well intended, the real results will be limited freedom, reduced prosperity and an increasingly unreliable power supply.

You can read the rest of Simmons and Hansen’s piece here.

WSJ Live: Cheaper Oil, Brighter Energy Future

AEA President Tom Pyle joined Mary Kissel on WSJ Live to discuss the ways in which energy producers might adapt to the historically low oil prices made possible by America’s shale revolution. And while private innovation has led the charge, Pyle recognizes that even more could be done if the federal government simply got out of the way.

Taxes In The Wind

Taxes In Wind 600 AEA

The federal wind Production Tax Credit (PTC) is an incredibly wasteful subsidy that doles out billions of taxpayer dollars to the wind industry and threatens the affordability and reliability of electricity generation from natural gas, coal, and nuclear power. A report by the Institute for Energy Research makes the case for ending Big Wind’s favorite handout. Highlights from the report include:

  • The PTC is costly. A two-year extension will cost $13.35 billion, which is enough to pay 124 million Americans’ monthly electricity bills.
  • Americans oppose the PTC. A survey by the American Energy Alliance finds that 65 percent of voters believe two decades worth of tax credits for the wind industry is long enough.
  • The PTC threatens grid reliability. Wind typically produces the most power when it is needed least: one study finds that “over 84 percent of the installed wind generation infrastructure fails to produce electricity when electric demand is greatest.
  • Wind energy is expensive. When all factors are considered, wind energy costs $109 per megawatt hour, which is twice as much as this year’s average wholesale electricity price of $54 per MWh.
  • A vote for the PTC is a vote for Obama’s climate agenda. A key “building block” of EPA’s CO2 rule for existing power plants is increased wind generation. But wind energy depends on the PTC: wind installations dropped 92 percent after the PTC expired at the end of 2012.

So when you’re thinking about what your tax dollars are going towards on April 15th, remember that Big Wind is living large on your dime.

Click here to read IER’s full report.