A subsidy that's blowin' in the wind

The wind energy Production Tax Credit, the cornerstone of President Obama's green energy program, is set to expire in 35 days.  After 20 years, do we still need it?  Photo: Abandoned Wind Farms Hawaii tonyaardvark.com

CHICAGO, November 26, 2012 – The U.S. wind industry is in despair. The Production Tax Credit (PTC), a subsidy of 2.2 cents per kilowatt hour to producers of electricity from wind turbines, is set to expire at the end of this year. The American Wind Energy Association cites a study by Navigant Consulting, claiming that, “…37,000 Americans stand to lose their jobs by the end of the first quarter of 2013 if Congress does not extend the PTC.”

The Natural Resources Defense Council, the Sierra Club, and other environmental groups have rushed to the defense of the PTC. The Sierra Club states, “At a time when we need clean energy more than ever, we simply cannot afford to let the PTC expire.” The PTC is the cornerstone of President Obama’s green energy program and a key measure supported by environmental efforts to fight global warming.

The Production Tax Credit was established by the Energy Policy Act of 1992 to support the nascent wind industry. But twenty years later, is this subsidy still needed? By the end of 2011, 39,000 wind turbine towers were operating in the United States and about 185,000 turbines were in operation worldwide, according to the International Energy Agency. This is no longer an infant industry. Despite the large number of wind towers, wind provides less than one percent of U.S. energy and less than one percent of global energy. A one-year extension of the PTC would cost American taxpayers over $12 billion.

In September, 19 companies sent a letter to the leaders of the U.S. House of Representatives, urging extension of the PTC. Why would Johnson & Johnson, Sprint, Starbucks, and other signers of the letter support subsidies for another industry? They voiced concern that “Failure to extend the PTC for wind would tax our companies and thousands of others like us that purchase significant amounts of renewable energy…”

Never has corporate America been so misguided. Foolish policies like the PTC and proactive company programs to buy “green” renewable energy are based on Climatism, the belief that man-made greenhouse gases are destroying Earth’s climate. An increasing body of science shows that climate change is natural and that human emissions are insignificant. Nevertheless, Johnson & Johnson’s web site claims a reduction of 23 percent in carbon dioxide emissions from 1990‒2010. That emissions reduction and two bucks might get you a cup of Starbuck’s coffee.

While many people would like to power the world with zephyrs, the intermittency of the wind means that wind turbines cannot replace conventional nuclear, natural gas, or coal power plants. The 39,000 U.S. wind turbines generated only 29% of their rated output during 2011. When the wind doesn’t blow, conventional power plants must provide backup power if continuity of electrical supply is to be maintained.

In fact, electricity sourced from wind turbines does not cut CO2 emissions from a power system. Because of the rapid variation in the wind, backup coal or natural gas power plants must frequently and inefficiently cycle on and off to support demand. Studies from electrical power systems in Netherlands, Colorado, and Texas show that combined wind-conventional systems emit more CO2 and use more fuel than conventional systems alone.

Wind is also more costly than conventional systems. Analysis from the U.S. Department of Energy (DOE) shows that electricity from both coal and natural gas is much less expensive than from wind power, without requiring subsidies for operation. The DOE estimates the world has 200 years of technically recoverable reserves of natural gas, thanks to the hydraulic fracturing revolution. If the theory of man-made global warming is wrong, why subsidize another wind turbine?

The government can always provide subsidies to create jobs or to sustain jobs, but this may not be the best public policy. Thomas Jefferson was correct when he said, “It is error alone which requires the support of government. Truth can stand by itself.” Suppose we let the wind industry compete on its own merit?

Steve Goreham is Executive Director of the Climate Science Coalition of America and author of the new book The Mad, Mad, Mad World of Climatism:  Mankind and Climate Change Mania.


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Steve Goreham

Steve Goreham is a speaker, author, and researcher on environmental issues and a former engineer and business executive. He’s a frequently invited guest on radio and television as well as a freelance writer. He is the Executive Director of the Climate Science Coalition of America, a non-political association of scientists, engineers, and citizens working to inform Americans about the realities of climate science and energy economics. 

Steve is also author of two books on climate change, The Mad, Mad, Mad World of Climatism: Mankind and Climate Change Mania and Climatism! Science, Common Sense, and the 21st Century’s Hottest Topic.

 Steve holds an MS in Electrical Engineering from the University of Illinois and an MBA from the University of Chicago. He has more than 30 years of experience at Fortune 100 and private companies in engineering and executive roles. As a white water kayaker, he paddled many of the great rivers of North America. He is a husband and father of three and resides in Illinois.

 

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