(Recent IER Panel on the Hill)
by Robert
Bradley Jr.
January 7, 2014
January 7, 2014
“Here’s to a post-PTC world. One
where, in Lisa Linowes words, ‘the industry shifts their business plans away
from those based on tax avoidance to plans based on energy production’.”
Last
month, the Institute for Energy Research (IER) held a policy luncheon on Capitol
Hill to discuss the problems of wind power in light of the debate about whether
to extend the long-standing (1992–) production tax credit (PTC). The event
highlighted a new IER study calculating the “taker” and “payer” states from the
PTC, Estimating
the State-Level Impact of Federal Wind Energy.
I
moderated the panel. Panelists included Travis Fisher (IER) and three leading
grassroots activists: Lisa Linowes of New Hampshire, Tom Stacey from Ohio, and
Kevon Martis of Michigan. Lisa, Tom, and Kevon are wind-power experts whose
volunteer work is inspired by the economic waste and wholly unnecessary
degradation of rural life.
I began by
describing wind power as the perfect
imperfect energy due to its economic and environmental drawbacks.
Converting wind energy to electricity, indeed, has been a perennial folly since
the 19th century for reasons explained in books of the day.
I
identified industrial wind as a “crony industry,” given its tip-to-toe
government dependence. Such is different from consumer-friendly industries that
might be populated by some crony companies (firms desiring special government
favor at the expense of competitors, ratepayers, or taxpayers).
Travis Fisher
Travis
Fisher, coauthor of the new IER study, explained his methodology of comparing
PTC tax receipts per state to tax payments from that state. The straightforward
analysis found takers and payers in unusual places. Texas wind producers were
the biggest takers, and California taxpayers the biggest payers, given where
the wind turbines spin.
Fisher
noted that the study is valuable because it actually puts a number on wind
energy subsidy transfers between states and regions. Energy analysts have often
discussed those transfers in general terms but never attempted to quantify
them.
(Fisher
elsewhere eviscerates the ‘job creation’ myth of windpower, invoking the
classical economic wisdom of Frederick Bastiat in the 19th century and Henry Hazlitt in the mid-20th
century.)
Lisa Linowes
Lisa
Linowes, the founder and executive director of Industrial
Wind Action Group, reviewed the economic distortions of volatile,
and even negative, pricing from must-produce, must-take, wind-generated
kilowatt-hours.
“The
combination of the federal PTC and state RPS policies have shielded wind
developers from the basic supply and demand forces present in a healthy
competitive market,” she explained. “As a result, we are
fast-tracking the construction of expensive renewable resources that are
variable, operating largely off-peak, off-season and located long distances
from where the energy is needed.”
Tom Stacy
Tom Stacy,
Ohioan for Affordable Electricity, explained the characteristics of electricity
(a unique product that must be consumed the instant it is generated, not
stored). As such, wind power is a liability parading as an asset. Why? Because such electricity is not
demand-responsive but a variable, unpredictable energy flow ill-timed to
consumer needs (a fundamental characteristic of the perfect imperfect
energy).
“The wind
PTC is not a financial leg-up to an equivalent quality source to make it price
competitive with conventional sources,” he explained. “The wind PTC rewards a
misfit technology for its lack of
control over its fuel source – a fuel that will continue to behave badly no
matter how ‘price competitive’ our subsidies make it.”
Kevon Martis
Kevon
Martis of the Interstate Informed Citizen’s Coalition then rebutted the typical
arguments for government sponsorship of wind energy. Wind power does not
displace oil, nor is it cheaper. Wind’s alleged fuel diversification is diluted
by its required co-pairing with fossil-fuel generation to overcome
intermittency.
Wind
energy—a niche, problematic fuel source—is also irrelevant to the global
warming/CO2 emissions debate. Martis states: “It makes absolutely no
sense to claim that we need an ‘all of the above’ energy policy to wean us from
‘climate damaging’ fossil fuel plants by subsidizing a source of energy that
can only replace a small fraction of that fossil generation but at a snail’s
pace and very high price.”
Conclusion
The
unintended consequences and non-neutral effects of government intervention into
energy markets were on full display during this policy luncheon at the Rayburn
House Office Building last month.
Concentrated
benefits to cronies and the political class; diffused costs to the rest of us….
Wrong place, wrong time, wrong type electricity ruining prices for right
place-time-type generation …. The false arguments of climate-change benefits,
diversification of risk, cheapness, infant industry, and (net) job
creation….
Friends
and foes of Big Wind went away with a better understanding of a public policy
whose time of shine on the taxpayer’s dime is in decline.
Here’s to a post-PTC world. One
where, in Lisa Linowes words, “the industry shifts their business plans away
from those based on tax avoidance to plans based on energy production.”
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