Tax breaks showered on dubious ‘green’ ventures
Most taxpayers found a significant chunk of change missing from their recent paycheck thanks to a last-minute congressional scramble to avoid the so-called fiscal cliff, but for many alternative energy companies the deal was a tax break bonanza that will cost the federal government $18 billion in lost revenues over the next decade.
Companies still experimenting with wind to power electricity were the biggest winners landing $12 billion in tax credits that expired on New Year’s Eve.
Another victory was scored by algae growers, who will get $59 million in tax breaks to encourage production of cellulosic biofuel, which still doesn’t actually exist but has been mandated by the Environmental Protection Agency (EPA) for use by refineries.
Adding insult to injury, the algae tax break was passed just days before the American Fuel and Petrochemical Manufactures petitioned the EPA, again, to waive the cellulosic biofuel mandate because no domestic supply has existed since the requirement went into effect more than five years ago. To bypass the EPA rule, refineries have had to pay millions of dollars in waiver fines.
“Congress never fails to disappoint, even in times of fiscal crisis,” said Charles T. Drevna, president of the American Fuel and Petrochemical Manufacturers. “In this case, by using taxpayers’ money to prop up a politically correct renewable energy industry that would otherwise be non-existent without government subsidies.”
“Further, this administration has clearly and openly favored its version of ‘all of the above’ energy sources, by handing out millions in subsidies to wind, solar, biofuels and other forms of renewable energy,” Drevna said.
Also included in the massive package that totals $75 billion in tax breaks are $650 million in tax credits for the manufacturers of energy-efficient appliances, $404 million for alternative-fueling stations, and $7 million for the makers of electric motorcycles and three-wheel plug-in vehicles.
For commuting workers, a tax break will continue that allows employees to get $240 a month tax free from their paychecks to offset parking costs.
Tax breaks will go to homeowners who install energy-efficient windows, doors, skylights or certain types of air conditioners and water heaters. This tax was part of President Barack Obama’s stimulus bill in 2009 but expired in 2011. Another tax credit will be available to builders of energy-efficient homes.
“Basically, it’s a tax dodge,” said Dan Kish, senior vice president for the Institute for Energy Research. “If they want to reduce taxes on companies that’s one thing, but paying certain segments to do something that is not economical just does not make sense.
“The government is just driving up the cost of energy,” Kish said.
Standing on it’s own feet
Sen. Lamar Alexander (R-Tenn.) led the fight to defeat the extension of the wind tax credit, which has already poured $16 billion into the fledgling industry since 1992.
During a speech on the Senate floor last month, Alexander said the tax credit is fleecing American taxpayers.
“This is a proposal that is as brazen as a mid-day bank robbery on Main Street,” Alexander said.
Rep. Mike Pompeo (R-Kan.) authored legislation to end the Wind Production Tax Credit that he says picks winners and losers in the energy market.
“The Solyndra scandal has demonstrated that taxpayers must no longer be forced to subsidize these industries. When the government bets on these energy technologies, it typically selects the most unaffordable energy leading to unnecessarily higher energy prices for all Americans,” Pompeo said.
“The wind industry, comprised of numerous multi-billion dollar companies, can and must be able to stand on its own two feet,” Pompeo said.
A report on the use of wind power in California published last month by the Los Angeles Times showed that legally mandated solar and wind power is so unreliable that the demand on power plants using fossil fuels has actually increased.
“Wind and solar energy are called intermittent sources, because the power they produce can suddenly disappear when a cloud bank moves across the Mojave Desert or wind stops blowing through the Tehachapi Mountains,” the Los Angeles Times reported. “In just half an hour, a thousand megawatts of electricity—the output of a nuclear reactor—can disappear and threaten stability of the grid.”
More than 30 states now mandate that wind power or other alternative fuels be used to generate power.
The Heritage Foundation says the wind industry has become too dependent upon government subsidies and that the companies are spending too much time and resources to lobby government for the tax breaks, rather than creating new innovations to lower the cost of power.
“If the wind farms were truly economically competitive, they should be financeable without the generous support of taxpayers,” Nicolas Loris and Katie Tubb wrote for the conservative foundation.
“As the extension gets the industry though another year, they’ll be right back at the bargaining table when the credit expires, adamantly pushing for another extension,” Loris and Tubb said.
“Congress choked under pressure, took a bad idea, and ran with it. Far from addressing the real problem of spending, Congress prolonged some of the worst energy policy,” Loris and Tubb said.
The extra cost to consumers using just 3.5 percent of electricity generated from wind is enormous, at an estimated $10 billion a year, according to the American Tradition Institute.
Interestingly, the construction of massive wind turbines across miles and miles of acres has also created controversy within an important segment of President Barack Obama’s base of supporters, environmentalists.
The American Bird Conservancy filed a lawsuit last summer against the Interior Department claiming wind power projects are killing large numbers of bats and birds.