The Wind Industry says it's cheaper than fossil fuels, then cries for more subsidies
By Robert Bryce
If
anyone needed proof that subsidy-dependent businesses will always seek
more subsidies, look no further than the U.S. wind industry. On
Wednesday, the wind sector won a vote in the House on a tax bill that
includes a one-year extension of the production tax credit (PTC), which
gives wind companies 2.3 cents for every kilowatt-hour of electricity
they produce. The companies can collect that subsidy for a decade after
they are deemed eligible.
The extension of the PTC was part of a
bill that contained more than 50 tax breaks and subsidies that will cost
taxpayers more than $40 billion. The portion attributable to the wind
industry: about $6.3 billion.
It appears that the Senate will pass the bill and President Obama will
sign it into law. Thus the wind industry, which has been getting
subsidies (with a few short interruptions) since 1992, will continue
feeding at the trough.
If there was any doubt that the wind industry needs subsidies,
look at the statement put out on Tuesday by the American Wind Energy
Association, the sector’s main lobbying group. AWEA said
that after the PTC expired in 2013, “new wind installations came to a
halt, resulting in a 92 percent drop in new wind projects.”
Of
course, rent-seeking entities love to claim that their pet projects
deserve subsidies because they will create jobs. Indeed, the phrase
“create jobs” appears twice in a one-page letter
that was sent to leaders of Congress last month imploring them to
extend the PTC.
The letter was signed by AWEA and some 450
organizations, including the usual environmental groups — the Sierra
Club, Clean Water Action, the National Wildlife Federation, and the
Wilderness Society — as well as a host of major corporations. Among
them: NextEra Energy, one of the world’s largest wind-energy producers. I
wrote about NextEra last year in these pages after the company filed a
SLAPP suit in Canada against Ontario anti-wind activist Esther
Wrightman. (Here’s a link. Wrightman, by the way, has since moved out of Ontario, and the project she was fighting, NextEra’s Adelaide Wind Energy Centre,
has gone forward.) Others that signed the subsidy-seeking letter
included Siemens Corporation, E.On, and Nucor Corporation, which is one
of America’s biggest steel producers.
AWEA claims that the wind industry supports 73,000 jobs. But how much do those jobs cost taxpayers?
Earlier
this year, Susan Combs, the Texas comptroller of public accounts, came
up with an estimate. She reported that each wind-related job in the Lone
Star State (which has more wind-energy capacity than any other state) costs the state’s taxpayers about $1.7 million.
That’s an increase over what Combs found back in December 2010, when she reported that each wind-related job was costing taxpayers
$1.6 million. In an August op-ed published at Economics21, Combs said
that “instead of generating jobs and providing a reliable and consistent
energy source, wind projects just generate higher costs.”
Perhaps
more remarkable than the high cost of wind-energy jobs is the fact that
the U.S. is continuing to subsidize wind energy at a time when AWEA
itself is claiming major reductions in cost and European countries are
slashing those very same subsidies.
In a press release issued last month,
the lobby group declared that the cost of wind energy has “dropped by
more than half in the last five years.” Furthermore, last month an AWEA
spokesperson boasted to the New York Times that some wind
projects are “coming in below the cost of even existing generation
sources.” That same November 23 story, “Solar and Wind Energy Start to
Win on Price vs. Conventional Fuels,” quoted Jonathan Mir, a managing
director at the Wall Street firm Lazard,
who said that the price of electricity that wind developers need to
make money is now “essentially competitive with what would otherwise be
had from newly constructed conventional generation.”
Mir and his
colleagues at Lazard estimated that production of wind energy, without
subsidies, now costs about 3.7 cents per kilowatt-hour, less than what
they found for the same amount of electricity produced from natural gas
(6.1 cents) and coal (6.6 cents). So if Lazard is correct and it’s
cheaper to produce electricity from the wind than from other sources,
why does the wind industry need subsidies?
That’s a particularly
relevant question given that European countries are slashing subsidies
for renewables. In July, Germany reduced subsidies for wind and solar by
about 25 percent. On December 2, the Financial Times reported that an offshore wind farm planned for Northern Ireland has been “scrapped” owing to reductions in the subsidies paid for such projects.
To
be sure, the ongoing battles over wind projects go far beyond the issue
of subsidies. Citizens and environmental groups (commendably among them
is the American Bird Conservancy) in the U.S. and Canada and across
Europe are fighting wind-energy sprawl based on a variety of concerns,
including destruction of scenic landscapes, the turbines’ deadly effect
on bats and birds, and the irritating noise they produce.
But it’s
the ongoing subsidies that really annoy Lisa Linowes, one of America’s
most prominent critics of the wind industry. Linowes, who lives in
Lyman, N.H., is the executive director of The WindAction Group as well
as the publisher of the website windaction.org. Asked on Thursday about
the vote to extend the PTC, she replied, “We thought the Republicans
would have the stomach to stop this.”
— Robert Bryce is a senior fellow at the Manhattan Institute. His latest book, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong, was published in May by PublicAffairs.
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