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Energy Tax Reform: Scrap the Baucus Proposal (Part I: Summary & Conclusions)

“Clearly, the wind industry would be a huge beneficiary of [this] proposed tax break scheme…. Almost certainly, lobbyists for the wind industry were heavily involved in the drafting of the Committee’s proposal…. It’s time for the Congress to consider the national interest, including the interests of citizens, taxpayers, and electric customers, before again extending tax breaks for the wind industry.”

MEMORANDUM FOR: Chairman and Members the Senate Finance Committee

SUBJECT: Energy Tax Break Proposal announced on December 18, 2013,

Thank you for the opportunity to comment on the December 18, 2013, Staff Discussion Draft of the Senate Finance Committee’s Energy Tax Reform proposal.

Your proposal to repeal all existing renewable energy tax breaks is a good one and it should proceed. Your proposal to adopt a new renewable energy tax break scheme should be scrapped.

This memorandum provides comments on the portion of the proposal dealing with energy used to generate electricity covered on pages 3 and 4 of the above cited document.

Executive Summary

The Committee’s proposal that would base the availability and size of the proposed tax break for energy used in producing electricity on “cleanliness” (specifically, “greenhouse gas emissions”) measured at a “generating facility” is faulty in three important respects; specifically:

· Considering emissions at a generating facility would not, in the case of wind turbines, produce an accurate measure of “cleanliness.”

· The proposed single criterion, “cleanliness,” ignores many factors that are critically important when attempting to develop an equitable energy tax break.

· Contrary to Committee assertions, the proposed tax would not be ”technology neutral.”

The large number of wind turbines and “wind farms” that have already been constructed as a result of nearly 20 years of wind production tax credits and other subsidies have caused significant adverse environmental, economic, energy system reliability, scenic, and property value impacts that cannot, realistically, be ignored when considering a new tax break for wind. These impacts include:

· Electricity from wind that is high in true cost and low in true value.

· Massive wealth transfers harming ordinary taxpayers and electric customers.

· Misdirecting billions in capital investments dollars.

· High electricity prices that are particularly hard on low income people.

· Adverse environmental, ecological, scenic, and property values impacts.

[Note: Part II will excerpt from the detailed analysis between the Summary and the Conclusions]

Conclusions

Without any doubt, massive federal and state tax breaks during the past 20 years have resulted in the construction of many wind turbines and “wind farms” in the United States. The tax breaks and subsidies have been provided because the wind industry and other wind energy advocates have greatly overstated the benefits and understated the true cost of electricity from wind. These parties have, to a great extent, misled the public, media and government officials.

Work done by analysts in the U.S. and around the world has, during the past five or six years, demonstrated conclusively that wind energy has many adverse environmental, ecological, economic, scenic, and property value impacts.

In fact, the many factors discussed above, and not just “cleanliness” as defined by the Senate Finance Committee should be taken into account when considering whether massive tax breaks and subsidies should be continued for the wind industry.

Despite 20 years of massive federal and state tax breaks and subsidies for the wind industry and the current availability of multiple suppliers of these uneconomic machines, the industry offers no sound evidence that wind turbines will ever be a commercially viable (i.e., without tax breaks and subsidies) source of electricity.

Clearly, the wind industry would be a huge beneficiary of the proposed tax break scheme announced by the Senate Finance Committee on December 18, 2013. Almost certainly, lobbyists for the wind industry were heavily involved in the drafting of the Committee’s proposal. Otherwise, it’s unlikely that the industry’s Washington-based lobbyists, the American Wind Energy Association, could have issued a statement commending Senator Baucus and the Senate Committee almost simultaneously with the Committee’s release of its tax break proposals.

It’s time for the Congress to consider the national interest, including the interests of citizens, taxpayers, and electric customers, before again extending tax breaks for the wind industry.

2 comments

1 Bill Chaffee { 01.18.14 at 1:40 pm }

One of the adverse affects of wind turbines is that they tend to change the climate for the worse. They increase turbulence and vertical mixing of the air which increases night temperatures. This can worsen drought conditions. They are probably altering the climate in other way by removing kinetic energy from the air.

2 Rolf Westgard { 01.20.14 at 3:31 am }

Let us hope that those wind subsidies stay dead. Next target solar.

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