Editor’s note: This article, by David Jenkins, president of Conservatives for Responsible Stewardship, was originally posted on The Hill, Congress Blog, and is reposted here with permission. The article is entirely from the insight and effort of the author and was not solicited anyone in the wind industry.
Former Sen. Don Nickels’ (R-Okla.) piece in The Hill last week, Allowing wind to thrive without the PTC, is just the latest salvo in the fossil fuel industry’s self-serving effort to eliminate the wind energy production tax credit (PTC).
Some of these attacks argue, as Nickels does, that wind energy is a mature industry no longer needing a tax credit, while others claim it is a failed industry undeserving of one. Anti-PTC rhetoric over the past several months have run the gamut, from accusing the tax credit of undermining the free market, to claiming wind turbines bombard “our flesh” with “subsonic vibrations.”
One thing all of these claims have in common is that those making them have a connection to Koch Industries. Nickels’ firm, the Nickel’s Group, lists as clients Koch Industries and other energy interests that compete with wind. Koch-affiliated groups such as Americans for Prosperity, Heritage Foundation and the American Energy Alliance have all been attacking the PTC relentlessly.
While often cloaked as a principle-driven concern about the energy market or the federal budget, this campaign against wind energy is anything but.
At the same time these groups—and affiliated individuals—are indignantly protesting the PTC and calling for a level energy playing field, they are completely silent on the plethora of tax breaks and other goodies showered on coal, oil and natural gas.
According to Taxpayers for Common Sense, coal has been directly subsidized to the tune of more than $72 billion.
The coal industry benefits from the ability to expense exploration and development costs, deduct the costs of investment in mines (depletion allowance), and treat royalties as capital gains. It also receives targeted production tax credits along with assorted clean coal subsidies.
Coal, which accounts for 39.5% of U.S. rail tonnage, benefits disproportionately from railroad subsidies as well.
Coal and natural gas both receive below cost mineral leasing on public lands, Section 199 deductions for mining/drilling activity, and the unique tax benefits that accrue from master limited partnerships (MLPs)—a type of business structure limited exclusively to enterprises that derive 90% of their revenue from natural resource development. None of these apply to renewable energy.
Recent research shows that just by factoring in the MLP structure and the depletion allowance, natural gas receives a tax benefit that is $2/MW-hour greater than the one provided to wind energy via the PTC.
Both coal and natural gas are mature industries receiving billons in federal incentives, yet here we have all of these self-proclaimed free market champions with ties to Koch Industries choosing to direct their ire at a performance-based incentive for wind energy.
If their concern was genuinely about eliminating federal subsidies and letting the market drive energy choices, those crusading against the wind PTC would also be working just as hard to eliminate the subsidies that benefit fossil fuels. They are not.
The PTC remains necessary as long as wind energy’s fossil fuel competition continues to receive special tax benefits that are not available to wind. Even if that were not the case, there are plenty of good reasons to encourage diversifying our nation’s energy portfolio with clean, renewable, homegrown energy.
This high profile campaign against the wind energy PTC is not driven by free market principles, conservatism or our national interest. It is driven by special interests that are not seeking to create a level playing field, but rather to maintain a skewed one.
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