Tag: "wind power"

Texas Wind Energy’s Expensive Wait and See Experiment

Wind energy subsides and other public incentives cause “Wait and See Experiment” in Texas. The state is now home to one of the largest sources of wind energy production in the world.

  • Texas has invested about $7 billion in a sprawling wind power network that spans nearly 4,000 miles.
  • Alternative energy projects have benefited mostly from generous public investment, including direct subsidies and tax incentives.
  • More private firms, like Google, Walmart and Microsoft have also channeled resources into the emerging wind sector.
  • Analysts point out that the slow trickle of capital reflects the maturing of wind power, even as alternative energy still remains very reliant on public support.
  • T. Boone Pickens was forced to abandon a massive wind farm initiative in 2012 knocking him off Forbes 400 list of richest Americans the very next year.

Texas is taking a huge risk by diving so deep into wind technology. Relying on the alternative energy subsides and other incentives, many investors in this new technology are running a risk of entering too early into the market or competing in the wrong market all-together. Subsides can have a negative impact to the economy by working against free markets.

Aug 18, 2014 | Leave a Comment | by

The “Inequality” of Federal Wind Energy Subsides Distribution

President Obama has been famously outspoken about “a dangerous and growing inequality” in our economy that has “jeopardized middle-class.” He was so adamant about our private sector’s misallocation of income away from a majority of Americans and towards a fortunate few that he proclaimed, “I believe this is the defining challenge of our time: making sure our economy works for every working American. It’s why I ran for President… It drives everything I do in this office.”

Apparently, the President’s concern for fairness in the distribution of public sector benefits across society does not seem to drive his support for federal renewable energy policies, many of which tend to favor some U.S. states at the expense of others.

For example, the Institute for Energy Research (IER) released a study at the end of last year that examines the federal allocation of wind energy subsidies across the country. Their analysis estimates the net value of Wind Production Tax Credits (PTCs) distributed across the states by comparing the federal wind-subsidy tax burdens paid by the citizens of each state to the percent of PTCs received by that state. The IER then examines the allocation of those net PTCs across our fifty states.   

The IER estimates that in 2012, ten states received over 72% of the total PTCs during that time frame, with many states receiving nothing. The table below notes some net winners and some net losers:

Net Losers   Net Gainers  
California

$195,849,979

   Texas

$394,451,907
New York

$162,554,909

   Iowa

$265,448,788
Florida

$138,141,406

   Oklahoma

$150,598,298
New Jersey

$125,585,386

   North Dakota

$110,663,105
Ohio

$103,847,354

   Oregon

$99,483,222
               

These numbers do not correlate with population, per capita incomes or any other characteristic commonly used to justify redistribution efforts. Yet, if one were to ask the President or his Cabinet members to justify this policy of inequitable allocation of federal wind energy subsidies, their response would surely be: in America’s diverse geographic environment, those states that are capable of producing more wind energy for the country will naturally receive a greater share of federal wind subsidies.

The irony is that one might say the exact same thing about the American private sector: in our nation’s diverse business environment, those individuals who are capable of bringing more value to the economy will naturally receive a greater share of our nation’s income. Perhaps meritocracy can justify only public sector benefits allocations, rather than the private sector benefits allocations.

Apr 21, 2014 | 1 comment | by

Favoring Wind Power Endangers Birds and Bats

The Obama Administration has used subsidies and regulation to promote wind power. Yet the deaths of thousands of birds and bats from wind turbines, and the misappropriation of funds shows the danger of endless government subsidies and rules that are enforced only when they benefit certain industries.

Wind turbines kill approximately 600,000 birds a year. The American Bird Conservancy thinks that the Golden Eagle will wind up on the endangered species list because so many are being killed by turbines. Wind turbines also kill an estimated 900,000 bats each year. According to National Geographic bat-friendly turbine designs exist, but the wind-power industry has been slow to install the new turbines.

More disturbingly, the administration seems to be selectively enforcing laws. The Bald and Golden Eagle Protection Act and Endangered Species Act prescribe strict penalties for killing eagles and condors respectively. But the administration has given an exemption from prosecution to a California wind company if the company is responsible for the death of the California Condor, one of the rarest birds in the world. The administration wants to grant a similar exception to birds on the 1,500-mile Texas to North Dakota migratory corridor. And the administration seems to be ignoring bat deaths altogether.

Other businesses that inadvertently harm protected animals face hefty consequences. Shooting or electrocuting the Bald Eagle can lead to a $250,000 fine and two years in jail. Harming the bird can also lead to legal fees incurred in federal prosecution. Further, the wind industry is allowed to build wind farms on protected lands despite the danger to native animals.

No power source is perfect. Coal and oil power produce emissions. Nuclear power plants require a site to store used fuel rods. Solar power panels use large amounts of land, displacing native animals. But the wind power subsidies and selective enforcement of laws shows the government is deliberately distorting the market to favor a certain industry. Eliminating subsides and uneven enforcement of rules would allow energy companies to produce high-quality low-cost energy. Further it would improve not worsen the lives of birds and bats.

Apr 07, 2014 | 2 comments | by

Green Jobs: Hope or Hype Redux

On the campaign trail in 2008, then-Senator Barack Obama announced a plan to create five million new “green collar” jobs. Since becoming president, he has repeatedly touted his support for green jobs; for instance, in his 2010 State of the Union address and Earth Day remarks on April 22, 2010. In addition, recent stimulus legislation and appropriations bills have contained provisions to subsidize or promote green job creation.

Unfortunately, there is growing evidence that government support of green industries will cost more jobs than they create. 

Spain. President Obama has identified Spain as a model for a new economy driven by green jobs. But a 2009 study from Madrid’s King Juan Carlos University showed that for every green job the Spanish government created, 2.2 jobs were lost as energy-intensive industries either closed down or moved to other countries with lower energy costs:

  • The government’s green job push created approximately 50,000 jobs, but resulted in a loss of more than 110,000 jobs in other industries.
  • Only 1 in 10 of the new green jobs was permanent.
  • Each green job created since 2000 has required about $774,000 in government subsidies. [See the figure.]

Denmark. On Earth Day in 2009, President Obama cited Denmark as another country that has benefited from subsidized green job creation. Like Spain, Denmark’s green industry – primarily wind-powered electricity generation – was heavily subsidized and likely would not have existed without government support. According to “Wind Energy: The Case of Denmark,” a 2009 report by the Center for Political Studies, a Danish think tank:

  • The Danish government spent $90,000 to $140,000 to create each wind job.
  • About 28,400 people were employed in the Danish wind industry, but only about 1 in 10 were new jobs – the remaining 90 percent were simply positions shifted from one industry to another.
  • From 1999 to 2006, the average government-subsidized clean energy technology worker added $10,000 less to the Danish economy than did the average employee in other industrial and manufacturing sectors. 
  • As a result, Danish gross domestic product was about $270 million less than it would have been if the wind industry work force were employed in other sectors.

Thus, a 2006 report from the Danish Economic Council concludes, “The wind power expansion in the 1990s is an example of a policy that was unprofitable from society’s point of view, even taking the economic advantages that the wind business enjoyed into consideration.”

Read the full NCPA Brief Analysis, “Green Jobs: Hope or Hype Redux.”

Sep 21, 2010 | Leave a Comment | by
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