Despite a multi-year push to finally eliminate the cronyist wind power production tax credit (PTC), taxpayers are once again facing an all-too-familiar prospect. After months of wrangling, thanks to Senate torpor, the wind PTC will be folded into a package of other tax extenders and renewed – this time retroactively for one year.
Like so many other “temporary” government programs, the wind PTC is still with us more than 20 years later – distorting the energy market and, in states with a renewable energy mandate, increasing electricity costs. Wind energy is a costly boondoggle because it is intermittent, inefficient, and unreliable – even too much wind at high speeds can be a problem. Few people want giant windmills in their backyards and often the optimum location for a wind farm is far from the population centers that need the most electricity, making transmission a major problem. Wind farms are also to blame for killing many birds and threatened bats.
Despite all these shortcomings, with an enticing tax credit of 2.3 cents per kilowatt-hour produced, wind power doesn’t seem so shabby. Investor Warren Buffet explained the appeal earlier this year:
"I will do anything that is basically covered by the law to reduce Berkshire's tax rate," Buffet told an audience in Omaha, Nebraska recently. "For example, on wind energy, we get a tax credit if we build a lot of wind farms. That's the only reason to build them. They don't make sense without the tax credit."
That’s right, if it weren’t for the PTC, wind energy wouldn’t be worth it. And sadly, continuing to artificially prop up the wind industry means that they have little incentive to innovate and pursue the technologies that could make wind or other forms of alternative energy economically competitive without Big Government favoritism. Instead, this tax extender will continue to drive investment down a dead-end.
Taxpayers deserve a true “all-of-the-above” energy policy – not one that manipulates the Tax Code to dispense favors or props up powerful industries with market mandates, such as the Renewable Fuel Standard. At least given the short-term extension Congress is considering, the PTC will soon expire and hopefully taxpayers can do more than tilt at windmills.