7 Myths About the Wind Production Tax Credit

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Cartoon courtesy of NetRightDaily.

By David Kreutzer, Ph.D.

The Heritage Foundation

The wind production tax credit (PTC) has created an industry that produces overpriced, intermittent power, and it will continue to produce overpriced, intermittent power so as long as there is a PTC to pay for it. Here are the top seven myths associated with the PTC:

Myth #1: Wind power is, or will soon be, cheaper than conventional sources.

Fact: If this were true, then there would be no need for subsidies.

First, this is a rerun of an argument that has been made for at least 20 years. Second, if wind were already cheaper, then it could compete right now. If it is on the verge, then wind-power producers could enter into long-term contracts (which they already do) that would allow them to recoup their investments in the near future when wind will supposedly be so cheap. Neither case argues for subsidies.

Myth #2: We need to extend the PTC so that businesses will have certainty.

Fact: The only uncertainty regarding the PTC arises from attempts to extend it.

The legislation in force has been very clear ever since it was written: Wind turbines put in place byDecember 31, 2012, qualify for 10 years of production tax credits. Windmills placed in service this year will continue to receive credits—which are worth 40 percent or more of the wholesale value of electricity—for every kilowatt-hour generated until 2022.

Myth #3: Subsidizing wind stimulates the economy.

Fact: Subsidies do not strengthen the overall economy.

Subsidies may well provide jobs and income for those receiving the subsidies, but, as the Spanish experience illustrates, whatever job-creating mechanism the subsidies put in play is offset by running this same mechanism in reverse elsewhere: Financing the subsidies requires taxing other parts of the economy.

In fact, the positive impact of the subsidies is more than offset, since the value of the resources employed in the subsidized industry exceeds the value of the output produced. (If it didn’t, they wouldn’t need subsidies.)

Myth #4: We need to subsidize wind to stay competitive with those countries that are already doing so.

Fact: Countries that subsidize wind are not to be emulated.

Four years ago, the model for a “green economy” wasSpain, but as its economy crashed, it dumped the subsidies. IfSpaintruly believed subsidizing wind power strengthened its economy, it would have increased the subsidies.

Even Europe’s economic powerhouse, Germany, is backing off of its wind subsidies as the cost becomes prohibitive and the difficulties of integrating the intermittent supply threaten its grid.

So now Chinais the model for our new-energy economy. We should note that Chinahas only the 122nd highest GDP per capita in the world—well behind countries such asBulgaria andBotswana. There are no calls to model our economy after those two, and there shouldn’t be any for apingChina’s economic policies.China gets richer as its economy becomes more like ours—not the other way around.

Myth #5: We need to switch to wind because we are running out of fossil fuels.

Fact: We have centuries of the fossil fuels needed for electric power.

The U.S. Energy Information Administration estimates that we have between 200 and 500 years worth of coal in theU.S. Though production of shale gas has grown so dramatically that projections are difficult, a conservative estimate shows that we have 100 years of natural gas available in theU.S. It’s worth remembering that long-run projections of fossil-fuel availability have frequently underestimated the actual reserves.

Myth #6: Wind power provides energy security and reduces our dependence on foreign oil.

Fact: Wind does not substitute for oil.

TheU.S.generates less than 1 percent of its electricity from oil and has enough domestic coal and gas to provide electric power for centuries. Throw in nuclear, and our ability to provide our own electricity is virtually unlimited. It may be that electrifying our automobile fleet would reduce oil imports, but charging the batteries in electric cars can be done more cheaply with abundant, conventional, domestic fuels than with wind.

Myth #7: Wind power will stop global warming.

Fact: An all-out program to increase wind power would not significantly reduce global temperatures.

The Waxman–Markey cap-and-trade bill, with its 80 percent CO2 reduction target, would have limited CO2 emissions far more than would any wind-power subsidies. However, the Waxman–Markey bill would (at best) moderate world warming by only 0.11 degrees centigrade by the end of this century.

 

42 COMMENTS

  1. I believe your statement about Germany referenced by a Bloomberg article is false! Did anyone from The Maine Heritage Policy Center actually read the article?

    From the article:
    “German Chancellor Angela Merkel’s government plans to cap renewable-energy subsidies WHEN capacity reaches national targets as the administration seeks to cut the cost to consumers of its decision to phase out nuclear power.”

    “At the same time as capping subsidies, Merkel plans to lift the target for renewable power to 40 percent of total generation by 2020, from 35 percent previously. Altmaier said Germany, which plans to shut all its nuclear reactors by 2022, will certainly surpass the earlier renewables forecast. “

  2. 8.) MYTH: Buildings, cars, and cats kill more birds than turbines do.

    REALITY: Buildings, cars and cats don’t kill many eagles. Windfarms do.
    See this: http://www.abcbirds.org/newsandreports/releases/121010.html.
    And this: http://www.savetheeaglesinternational.org.

    9.) MYTH: Property Values are not affected by industrial wind factories sprawled throughout entire townships.

    REALITY: Property values are VERY negatively impacted by the close proximity if industrial wind installations. In my opinion, these homes have been rendered WORTHLESS. I wouldn’t buy one – would you?
    See: http://www.northnet.org/brvmug/WindPower/RealEstate.html.

  3. David Kreutzer is a smart guy and everyone should be listening to his message. I happen to know because I am an expert on wildlife and have been after this industry for years about their massive slaughter to birds and bats. I have seen so many bad decisions and so many bogus documents produced, that I see all support for wind projects as an endorsement for corruption.. When looking beyond the fraud, the propaganda and media hype here is the reality of wind energy. Wind energy per kilowatt, is the most costly and destructive form of energy production we have today.

    Since the 1990s bird and bat populations have been declining across the world from the propeller style wind turbine. Fraudulent wind industry studies and government agencies have kept this hidden. If you believe what is being put out by the industry then there are over 2000 golden eagles in CA and several hundred pairs nesting in southern CA. It is 100 percent false because there are only a few dozen left in southern CA. For decades with the help of the USFWS, wind industry studies have been rigged so wind turbine mortality could be hidden. Other studies that should have been done have been completely avoided.

    Here is another example of a species impacted from this industry, the whooping cranes. They had been increasing in numbers for decades, but since 2006 have been declining after thousands of wind turbines invaded their migration route. These are impacts that people have to understand and there is absolutely nothing to embrace about selling out the environment for a token amount of energy.

    It took a while to set in but people across the world are finally waking up to the decades of deceit and the horrific impacts caused by the wind industry. Word is out about the blatant corruption, agency collusion and the industry’s rigged studies. As a result communities are being forced to fight back against fragmented ecosystems, infrasound, the slaughtering of the bird populations, hideous view sheds and their falling property values.

    Everyone should be paying close attention to politicians because they need to stop selling this wind energy madness. If they support this industry then consider them players in a multi-billion dollar corporate scam that can not possibly save mankind, make one bit of difference towards climate change, or supply society with enough energy to offset any other form of energy production. Even renewable energy standards set for States like CA should be dismissed by community planners because these were standards created primarily by politicians and industry to help sell wind turbines.

  4. The warm wind produced by the bickering in Washington could save the planet more quickly than all the subsidies! However, it is WAY TOO expensive as well. Let the free market determine the value of wind, solar, and all other energy sources WITHOUT government’s dictates.

  5. Don’t get green with envy, since only about 22% of the wind capacity is output, and most wind farms purchase electricity to keep running some of it from fossil fuel sources; Solar is about the same or less depending on solar cycles.

    On the other hand, gas and hydro output at 80-90% of capacity, giving us a higher rate of return at less cost and with greater longevity. Wind turbines have only a ten year warranty, solar panels approx. 20-25 years.

  6. Hydro can last 100 years or more, and has significant watershed, flood management, drought protection, and water quality improvement benefits. Wind farms erode the landscape with access roads and transmission lines, and remove CO2 absorbing forests. Solar farms take up a lot of space and are getting more controversial when used to generate power. Then there is the storage of excess power when demand is low, another untold expense.

    So when you scrutinize this increase in production, it boils down to not so much and is full of problems and needs for backup and storage.

  7. Bob, you are pitiful. This is just another part of Obama’s agenda to destroy the American economy and turn us into a more debt ridden socialist nation. Government intervention in the energy market will be a disaster. Here in Maine, we are still paying the price for “stranded costs” for previous experiments in manipulating the energy markets.

    Now we are seeing the destruction of rural Maine’s “Quality of Place” from the proliferation of industrial wind blight. Try learning about how the wind industry is affecting Maine by going to http://www.windtaskforce.org, brought to you by honest Maine citizens who seek the truth about the wind scam.

  8. The only reason for wind is the PTC, the investors are grabbing for all they can get.
    The only time windpower is usable is peak demand, offsetting a fraction of natural gas, never cheaper coal. Calculating all the dumped power into your calculations misleads the public. Wind power cannot be stored. Wind cannot be produced when needed. Less than 1% total electricity generation is a pathetic return on investment. Why should we continue to subsidize this? As the ToysRUS ad states: WHY? Why?

    The 75,000 jobs are a gross overestimation.

    Wind doesn’t replace oil. We don’t power cars with wind. And not many can afford a $40K Volt despite the government subsidies for this that ammount to $250,000 per vehicle in a study by MICapCon.http://www.michigancapitolconfidential.com/article.aspx?ID=16192

    Its time for wind to prove itself. Compete like everyone else. http://www.instituteforenergyresearch.org/wp-content/uploads/2011/08/Federal-Electric-Subsidies.png

    We need an ALL of the Sensisble energy policy. Wind power fails in technology, science, economics. http://www.InfoPTCFacts.org

  9. No, Lauren, everything the propaganda machine from the bastard son of Enron wind industry has spewed out in the last 20 years has been de-bunked. That is why you are backed into groveling about jobs in a desperate attempt to save your taxpayer life-line.

    I disdain any of my taxes paying for something that doesn’t work and I am downright irate that RPS pushed by the wind industry through pandering politicians are forcing the most expensive, unpredictable, unreliable, non-dispatchable, grid-skittering source of electricity on to our electric utilities. It is socialism, not free-market capitalism.

  10. This is laughable! The AWEA propaganda machine posting on here. Is this a joke, AWEA? It is your myths you have been spinning for 20+ years about wind that have been de-bunked. The truth has been shown on the wind industry like sunshine on vampires. Wind doesn’t work. It is folly to subsidize something that is such a miserable failure. http://www.windtaskforce.org/profiles/blogs/full-year-report-of-wind-output-in-maine The figures don’t lie, but the wind industry sure does.

  11. of course the people promoting wind, who will lie and deny, are saying these claims are debunk..where they get their paycheck is making sure the scam survives…it is like a tobacco company saying lung disease is proven not to be caused by cigarettes..PLEASE….

  12. Bob Sipe That is an asinine comment! I know Donna and she is one of the most honest, sincere, and gentle people I know. Local citizens are fighting an honest fight against the wind scam with no connections that you allege.

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