Wind Power Panic: AWEA’s Last Stand (death spiral looms for taxpayer-dependent industry)
By Lisa Linowes -- February 13, 2012If you haven’t heard from the American Wind Energy Association (AWEA), you probably will.
Ominous, scary ads are running nationwide warning of the crushing blow to American jobs if Congress fails to extend the Production Tax Credit (‘PTC’), the 20-year ‘temporary’ subsidy most credited for market growth in the wind sector. The PTC is due to expire at the end of this year.
Most of the ads target particular House members who, so far, have resisted the industry’s demands for their PTC earmark. The pressure is particularly heated right now as Congress negotiates the payroll tax holiday bill, which is viewed by many as the last best chance to attach an extension of the PTC before November’s presidential election.
AWEA is also leaning on its friends to do its bidding. Politicos from wind-friendly states like Iowa, and Kansas have written letters to members of the Congressional conference committee that’s now hashing out the tax bill. The letters repeat the same tired talking points about jobs.
Jobs Fallacy
It’s embarrassing to see these politicians blindly repeat what they’ve been told with no apparent understanding of the costs and impacts of pro-wind policies. Government (taxpayers) do not create jobs on net. Resources taken from the private sector reduced demand and thus (unseen) jobs to create the seen (wind) jobs.
But higher energy costs and misallocated resources in the process make us all poorer. Henry Hazlitt refuted ‘green jobs’ decades before the term was invented in Economics in One Lesson via his explanation of seen-versus-unseen jobs.
A Ballooned Subsidy
Do you think Senator Harkin or Governor Brownback realize that since the PTC was adopted in 1992, its annual cost has ballooned from $5 million a year in 1998 to over $1 billion annually today. Or that this open-ended subsidy of 2.2¢/kWh in after-tax income represents a pre-tax value of approximately 3.7¢/kWh? In many regions of the country the PTC equals, or exceeds the wholesale price of power!
Even if the PTC were to sunset, taxpayers are still obligated to cover nearly $10 billion in tax credits for wind projects built in the last decade. This is in addition to the nearly $20 billion in debt already accrued for wind projects built under Section 1603.
Wind Jobs vs. Employment
Like AWEA’s ads, our windy politicos complain about the loss of jobs if big wind is not coddled further by the government. How would they respond if told that despite the billions in public funding since 2008, the wind sector lost 10,000 direct and indirect jobs, bringing the total to 75,000 jobs? [1]
Or that States like Vermont have found that “above-market energy costs tied to renewables have the deleterious effects of reshuffling consumer spending and increasing the cost of production for Vermont businesses.” These increased costs reduce any positive employment impacts of renewable energy capital investment.
It takes only 0.1 jobs per megawatt to operate a wind plant. Most of the sector’s jobs are temporary construction positions with less than 20,000 involved in the manufacture of industrial parts that could be used in turbines.
If we accept that earmarks for the wind industry are still appropriate, the PTC is highly inefficient and should, at least, be updated to respond to current market conditions. For example, since it is uniform across the country the PTC supports poorly sited wind development in some areas while in other areas pays for projects that would have been built regardless of the credit.
The policy also ignores other crucial factors driving wind development in the U.S. including State mandates and energy prices. With more than half the states mandating renewable development, some policy experts question why projects receive benefits from both State renewable portfolio policies and the PTC. Good question.
Pushback to Wind Push
Finding politicians to mouth support for big wind is not hard. But the American public is not as easily manipulated. In a letter this week to the Las Vegas Review Journal, one reader responded to AWEA’s call to action by contacting Representative Joe Heck and asking him to “kill all the tax breaks and subsidies for wind, solar, and ethanol energy,” adding that “if they cannot stand alone without government help, they will have to reinvent their technology or go out of business.”
This weekend, a letter signed by over 200 ranchers and residents was sent to the Nevadan congressional delegation, asking them to vote NO on any further extensions of the PTC. Similar letters were sent from states across the U.S. representing two-thousand signers.
Conclusion
When Enron (the parent of Enron Wind Corp.) declared bankruptcy in 2001, the government said no to a bailout, and 4,000 workers were laid off in Houston, Texas, and elsewhere around the world. But on that day forward, economies became more efficient with skilled employees leaving failure to gain viable consumer-driven employment. Today, mirage “green” jobs can go to real jobs in the booming real energy industry.
The PTC is one earmark many Americans know about, and their opinion of it is remarkably consistent: The cost of the PTC is excessive, the benefits elusive and, frankly, big wind’s pitiful performance measured against industry promises makes this entitlement an easy one to sunset.
———————–
[1] Lawrence Berkeley National Laboratory reports (p. 7): “The American Wind Energy Association, meanwhile, estimates that the entire wind energy sector directly and indirectly employed 75,000 full-time workers in the United States at the end of 2010 – about 10,000 fewer full-time-equivalent jobs than in 2009, mostly due to the decrease in new wind power plant construction.” A recent AWEA blog (February 3, 2012) confirms the 75,000 is still current.
Two studies (Civitas in the UK and C. le Pair in the Netherlands) in Europe have shown wind energy does not reduce CO2 emissions to the atmosphere. In fact, C. le Pair’s study said heavy wind investment in his country increased CO2 by 3%.
The Civitas study and a study done by King Juan Carlos University indicate heavy green energy investment results in substantially altering economies in a negative manner. The Civitas study showed that wind energy, is more expensive than any other form on a levelized basis with offshore wind virtually doubling down on the cost differential.
Wind energy has proven to be a boondoggle.
A sure-fired way to put a stake through the heart of this ridiculous technology would be to index any PTC–indeed, any public wind subsidy–to actual measured reductions of fossil fuel usage/CO2 emissions directly caused by wind performance. This should be the challenge to those in the bipartisan Iowa delegation–Grassley, Harken, Braley, Loebsack, Boswell, Latham, and King–as well as for Romney, Gingrich, Obama, Chu, Salazar, and all the other wind politicos.
Byron,
I suggest that “wind energy” is having its desired effect. The progressives have been hard at work for well over a century to destroy the capitalist global economy. So far, “green” energy has been extremely successful meeting that goal. It is working beyond their wildest dreams. Especially since nearly everyone has bought into the notion that man is evil and that ANY action man takes to further his genuine interests are therefor evil. Most never consider for a moment what evil means in the context of the life of man.
Keep in mind, the definition of “what works” is dependent upon your actual goal and has nothing to do with what you say your goal is. So don’t listen to the progressive’s words. Just watch their consistent results. That will expose their real purpose and that it is malignant to its core.
Lisa, I assume you’d also advocate for fossil fuel companies paying back the hundreds of billions of dollars they received in subsidies over the last 60+ years? Plus additional costs to pay for the harm they cause to human health and the environment?
http://www.misi-net.com/publications/2008energyincentives.pdf
http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=12794
Byron, Jon, we dispensed with the le Pair/Civitas attack here:
http://www.awea.org/blog/index.cfm?customel_dataPageID_1699=13380
Michael Goggin,
American Wind Energy Association
Michael:
On oil and gas subsidies, please see this blog I did, ‘U.S. Energy Subsidies: Wind and Solar Have No Argument” (November 21, 2011). The tax breaks for oil and gas began a half-century after the oil industry was commercialized–versus the wind industry that needs subsidies to try to get out of the starting gate. As I state in the post:
“Corporate taxation began in 1909, and the depletion tax writeoff began in 1913. The intangible drilling and development cost deduction began in 1917. So the classic subsidies cited by renewable apologists began a half-century after the industry was born. Direct government subsidies, such as checks written on the U.S. Treasury, were virtually nonexistent in the history of the petroleum industry.”
Your rebuttal is welcomed.
All well said, Lisa. I have to turn off the TV whenever that AWEA “jobs” add comes on. Worst part “unseen and unheard” is that 65-70% of wind turbines installed in the U.S. are imported from overseas. So, yea, maybe they’re creating jobs, but certainly not for the American taxpayers paying the tab. So much for the “Made in America” act.
AWEA couldn’t dispense with a PEZ dispenser. Although I agree that there are problems with both the Le Pair and Civitas analyses (in many ways the latter was based on the former), I’ve concluded that these reports are far too generous to wind: they don’t describe completely how dysfunctional the technology really is. Until the industry and the various grid systems agree to publish chronological load dispatch analyses at, say, 15-mimute intervals, showing how wind volatility affects the performance of thermal plants, no one can be sure what is really going on. This situation obtains primarily because the wind industry insists its performance be enshrouded in proprietary confidentiality laws, which are an incredible croc, if only because of the way wind is swaddled in public subsidies–giving the public a right to know.
Meanwhile, I simply look at the history of the fuel generation mix in any region with lots of installed wind to see if I can find a causal relationship between more wind and less use of fossil fuels. I can’t even find an inverse correlation. What is invariably true, around the world, is that, other things being equal, the more wind, the more use of coal.
Which makes the fossil fuel industry very happy. Everyone should take a gander at AWEA’s board to see how Big Energy loves wind–the gift that keeps on taking….
Mr. Goggin, I support Rep. Pompeo’s bill HR 3308 which would end all subsidies for energy sectors except true R&D, although I suppose you could quibble about some definitions. And no, I don’t expect the other industries to pay back previous subsidies. At least they made our country strong. They have delivered affordable energy at the flip of a switch for decades upon decades. Your scam (can’t really call it an industry) has soaked up tens of billions in subsidies and now delivers a crappy 2% of our electric energy. You and your cronies are stealing billions from our children. I don’t know how you sleep at night.
Robert, it shouldn’t take a history major to tell you that oil didn’t become a large industry until the 1900s. I pulled data on the history of U.S. oil production, and U.S. oil industry output was a mere 680,000 barrels per day in 1913, and had grown to 920,000 bpd in 1917. The industry more than doubled in size to 2 million bpd by 1923. It then proceeded to double several more times to get to reach a peak of 9.6 million bpd in 1970. Receiving hundreds of billions of dollars in government support, which the fossil fuel industry continues to receive to this day, certainly must have helped with that growth.
Regardless, the larger question is why would anyone be focused on cutting incentives for clean energy production when, as you acknowledge, dirty sources of energy continue to receive subsidies that were put in place almost 100 years ago? Even conservative economists would explain that good social policy is to penalize dirty energy sources that have costly negative externalities and/or incentivize clean energy sources that do not. Why are you arguing that we should do the opposite?
Michael Goggin,
American Wind Energy Association
Looks what’s happened in Europe. Huge subsidies to endless bottomless-pit green schemes are a major unheralded factor in their virtual bankruptcy. Stop the madness!
Wind subsidies are out of balance compared with true “baseload” energy providers: http://www.instituteforenergyresearch.org/wp-content/uploads/2011/08/Federal-Electric-Subsidies.png
KPMG’s “Rethinking the Unaffordable” states $110B allocated to renewable investment is “enough to clear the entire UK budget deficit, corporation tax and stamp taxes for one year.” “Decisions on energy investment are worth getting right, not only to fulfill the duty of ensuring that taxpayer money is efficiently and effectively invested, but also for the future competitiveness of the UK’s economy as a whole.” Let’s hope “our” decision makers are paying attention to the debate in the UK. 100 members of Parliament are protesting the on-going high subsidies that taxpayers are forced to pay. (2/5/12)
http://www.kpmg.com/uk/en/IssuesandInsights/ArticlesPublications/Documents/P
http://www.telegraph.co.uk/earth/energy/windpower/9061554/Full-letter-from-MPs-to-David-Cameron-on-wind-power-subsidies.html
Continuation of these subsidies would be a willful scam against fellow American taxpayers. There is no excuse for allowing this to go on.
Michael:
The point is that the industry was established and on a high growth trajectory before special tax incentives entered the scene. And the oil industry did not need special tax favors to exist or thrive.
The domestic oil industry, in fact, was in ‘overproduction’ from about the mid-1920s until the early 1970s. The industry had to get tariffs and/or quotas to reduce oil imports and get market-demand proration in the major oil states (except California) to reduce supply. The tax incentives actually exacerbated the problem of overproduction–a government intervention begetting another government intervention.
This industry was based on consumer demand that did not need tax incentives to exist or thrive. Oil was never ‘intermittent’ like wind but a high-quality, consumer chosen product. Same thing with natural gas as it displaced coal gas …
Your product, windpower, was born out of government subsidies and will die without subsidies. There is not fundamental consumer demand behind wind electricity because of cost and intermittency.
On externalities, there is a growing realization that wind in the middle of nowhere is pretty useless and wind near people is a negative externality. Would you like to live next to an industrial wind turbine? Want to go camping there? I hope not!
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We are now spending our last 2 trillion dollars in the federal budget and they still haven’t balanced it yet. It’s going to get worse, get ready. The Wind corps, and industry is a has been sort of market which can only work in a low profile atmosphere. The single stage residential charging system is the only way this type of system can work because it is too dubious. Yes let the wind market crash because when the funding is up then we can take those monster turbines and set some dynamite under them to clear the way for our scenic view once again. Oh By the way those turbines belong to the taxpayer.
The goal is to get to products that will not need government money to be profitable for both industry and the consumer.
Windshine electric generators are that solution. A true turbine not a glorified windmill they will achive a level of output that is more consistant and less costly and not kill birds or make that whoosh noise that is a big problem. No need for 400 ft towers. Not an eye sore either.
Scalable from utility to commercial to residential to prtable and we even have a unit that will give extended range to EV’s.
There are always solutions to problems, and government is not one of them.
Alan White, Managing General Partner, Windshine Electric
Michael Goggin:
I must agree with Robert Bradley’s assessment of why wind should not be subsidized. But furthermore, your assertion that wind is “clean” is a cleverly devised fallacy. AWEA has always tried to separate itself from the flexibility of fossil-fueled generation it relies on. Exercising that flexibility on behalf of wind intermittency (which often increases with wind speed) comes at a cost: fuel efficiency.
Properly measuring the extent of that inefficiency over time is problematic, which plays into AWEA’s “soft soap” public relations blitz, as you well know.
We can all create or cite studies here and there that suggest intermittency’s fuel cost is significant or insignificant. But to date utility owners have not been forthcoming with the data that could clear up the matter. Not surprisingly, wind is the most profitable use of capital for utilities today – all at taxpayer (and eventually rate payer) expense.
The real cloaked reality is that wind relies on fossil fuel flexibility at a maximum ratio of one part wind to three or four parts fossil fuel, and this host/parasite relationship is vital to wind’s survival. That AWEA has managed to separate itself from fossil fuels in the public’s mind is to it’s marketing team’s credit. But it speaks very poorly of AWEA’s ethical and moral fiber.
Just remember – the more the public knows about wind energy, the less they like it.
Michael and Tom:
Can both sides work find the right neutral party to try to resolve the question about the incremental gas burn associated with revving to fill in for intermittent wind? What would be the data requirements, and what neutral, arms’ length organization could interpret the data?
AWEA’s arguments get daffier and daffier. By maintaining that wind deserves subsidy because conventional generation has received/is receiving subsidies–the old good for the goose and gander scenario, Goggin replaces reality with fantasy. Should society subsidize drunken ambulance drivers because the American Drunken Ambulance Drivers Association maintains it will help the nation’s employment situation and provide backup to the conventionally sober fleet, which does all the functional work? Should the country subsidize gliders as substitutes for the 747 in commercial air transport because Boeing has received public incentives?
Although I agree it’s high time to end all energy subsidies, letting the market take over, I also think that subsidies for capacity generation and productive air transport made a great deal of sense, lifting all boats on an ever rising tide, greatly contributing to public health, wealth and welfare. Subsidies for wind, which provide no capacity while destabilizing the grid, in the process making everyone and everything work harder just to stay in place, can take place only in deranged political circumstance.
You can be in the wind business and like oil at the same time, for one cannot manufacture anything without highly refined machine oil. The polymers and other materials needed to produce one item all take oil in one form or another.
Clean is not the right term for wind, or solar or any other form of electric power production. Neither is renewable. they al have a carbon based componate of one sort or another.
Alternative form of production. Adding to the production capacity. There is no panacea in production, just the fact that modern life styles requires electric power and the more that is produced the better. The picking of winners and losers based on a government equation is not the best way. Each platform needs to live and die on its own for then technology that produces a winner will survive as we need as moch total production as possible. Research in technology sometimes produce results 180 degrees out of phase from the desired result, but then again that is the why you keep trying. WD 40 is an example of not giving up at 39 tries.
Robert, Tom, Jon: Without spoiling the ending, stay tuned and you will see the emissions question put to rest once and for all…
I would suggest a joint effort by IEEE and ASME. I believe the joint expertise which they could bring to the table would be sufficient.
I’ll await–skeptically–AWEA’s latest attempt at bloviation on carbon emissions. Meanwhile, none here should lose sight of the incivility of giant wind documented by the subject of this piece. This is a long standing maneuver by this awful organization whenever its lies are exposed for all to see and hear–attempt to ignore the issue by putting up another issue (then, when that issue to exposed for what it is, moving on–and on and on…). Wind is not just two-faced; it has many faces, each put on to disguise the panoply of mendacity that is its core identity. Whether the issue is power v energy; capacity v unpredictable variability; local revenues, taxes, jobs; noise; wildlife mortality; destruction of heritage views and property devaluations; public health; the scale of its footprint; the cost to rate and taxpayers (wind is best seen as a tax shelter generator for old and new money) ; and, not least, wind’s ability–or lack of it–to offset the use of fossil fuels and meaningfully reduce greenhouse gas emissions.
Iberdrola backs subsidies freeze on renewables
Credit: By Pilita Clark, Environment Correspondent, Financial Times, /www.ft.com 12 February 2012
The world’s leading onshore wind farm owner has applauded the Spanish government’s renewable subsidies freeze, saying it is a sensible move for a country that has been paying too much for electricity it does not need.
“What we were doing was irrational,” said Ignacio Galán, chairman of Iberdrola, which is also Spain’s biggest power utility by market value.
Two weeks ago the Spanish industry minister, José Manuel Soria, announced a temporary halt of subsidies for all new power plants using renewable energy, to help to curb the country’s €24bn electricity “tariff deficit”.
Irrational indeed!
So AWEA is going to present us with another cooked “study” proving that they are right? AWEA’s response shows just how much they don’t get it. AWEA’s paid-for productions have no credibility with the public they are forcing big wind machines on. If this industry has any hope, it must dispense with the arrogance. The overwhelming evidence is people don’t want to live near 400+ foot tall wind energy generators. AWEA, time to deal with it or get out of business. Because the way you’re doing business is offensive and self-defeating. These wind machines are destroying the lives of thousands of people, needlessly. Step up and address the problems by working with people instead of imposing your agenda on them.
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Michael:
If you can produce a peer reviewed study supporting the cost benefit relationship for industrial wind generation, then all subsidies should be dropped immediately to let the market take over.
40 year veteran of the power industry
[…] his risky move to “double-down” on green stimulus. The signs of it are out there. The only question is, who will end up with the most egg on their face when the […]
Mr. Groggin,
If AWEA is “assisting” NREL with yet another report on the benefits with wind by isolating favorable data then please spare us. Many of us in the power industry have had enough of these reports.
The public will only be fooled again to support yet another transfer of wealth from rate payers that are already struggling to pay their monthly bills into the coffers of IPP’s and a handful of multi-national corporations. The IPP’s that are in the game are there for a quick return of the investment on the backs of taxpayers or they are required to be in the wind game to meet individual state RPS mandates.
Another NREL report that is heavily dependent on AWEA “analysis” is not anyone’s definition of peer reviewed or independent research. The marriage between AWEA and NREL, which is being funded by the taxpayer, needs to end.
[…] a more complete analysis of what this decision entails, check in with Master Resource. Ominous, scary ads are running nationwide warning of the crushing blow to American jobs if […]
Wind power has been sucessful if you count the donation to politicians
Could anybody provide the solid source of the PTC subsidy calculation and method? Thanks
Sure, CG. Wind’s PTC is pegged at 2.3 cents for every kWh produced, assuming no double or even triple counting (it many places this is possible because of the loose accounting standards). So, single counting, let’s look at Iowa, where in 2010 wind produced 8,800,000, 000 kWh. Now multiply by .022. The product is the amount the industry can deduct from it annual federal income tax obligations.
Keep in mind that none of the wind production is indexed to actual reductions in fossil fuel production or greenhouse gas emissions. Also keep in mind that this is but one of wind’s possible subsidies.
While I am not as eloquent or in possession of as many of the facts in this controversy as what I have been reading, I can say from experience as one being affected by the wind industry, that they deal in deceit and dirty business. Gag orders put on lease holders and false representations of the noise levels emitted are but two tactics that come to mind.
The way I see it, the wind companies have reaped all the benefits of eminent domain without paying the property owner. If you are one of the unfortunate property owners to live by these 500′ monsters, then you can’t live in your house, you can’t sell it because no one else wants to live in it, and you can’t afford to just abandon it and move away. I say this is criminal and there must be something illegal in this type of operation.
Add to this that the wind company is using your tax dollar to make you sick, ruin your property values, and increase the cost of electricity to you and you really wonder how the government that is supposed to protect its citizens can let this happen. Now that I have worked up a good anger once again, I guess I have nothing more to say except that there is justice due. If not from government then from a higher source.
I wouldn’t want to be the one on the receiving end of that. MJP
I am wondering whether this calculated money matches the Treasury data?
CG Dong — thank you for your question. In 2007 the EIA released a report that looked at subsidies paid out based on fuel type, including wind. Section 27 of the appendix http://www.eia.gov/oiaf/servicerpt/subsidy2/pdf/appena.pdf , describes Treasury’s estimate of revenue loss which is how the tax credit is defined. Our numbers are right in line with Treasury’s. It is important to note that our calculations assume 30% capacity factor which is what the LBNL annual wind reports claim for the US and that all credits are taken. Since not all projects come on line at the beginning of the year, there is going to be some shifting of the credit amounts (revenue losses) between years but the total credits over the 20 years shown in the spreadsheet are in line with what treasury is estimates. Note that according to the Treasury, 98% of the PTC is going to wind.
Mary Jo Parello is correct on all counts.
Aside for all the other logical discussions here about the stupidity of using taxpayer subsidies for useless wind energy, the bad technology involved, biased reports commissioned by the pro-wind industry then used by the pro-wind industry as support, and the fact that the power simply isn’t reliable, green, or sustainable, there is the whole issue of the lies and deceit used by the pro-wind industry to jam their propaganda down the throats of the local farmers and local plan commissioners who innocently believe what they’re told, ultimately destroying people’s lives – stealing the property rights and values of the local ‘non-participant’ population that has to live by the damn things now inside an industrial zone, either by overlay district or variance. What the pro-wind industry does is criminal, no different work than a gang of thieves.
It’s sickening. I don’t know how the people that work for the AWEA or the wind industry can live with themselves or even sleep at night. Shame on them all.
[…] The evidence is unsurprisingly supportive of this view. The PTC was adopted in 1992. In 1998, its cost per year was about $5 million. Today it costs about $1 billion annually. […]
The idea that fossil fuels can power us indefinitely is just as ignorant as claiming that wind power is environmentally benign. Many who are smart enough to see that AGW is real are also against wind turbines for aesthetic reasons, and recognize the serious downsides of nuclear fission.
If you’re going to apply the subsidy angle, apply it to low-EROEI oil, also. For example, kerogen shale extraction is a huge boondoggle, yet that pipe-dream is clung to by oil addicts.
How about discussing human overpopulation and other root causes of endless demand-growth for energy? At least get a baseline for demand and stop planning for perpetual growth.
Jim:
In the Julian Simon view, people ‘create more than they destoy.”
If ‘resources come from the mind and not the ground,’ then more people in market settings (where they have incentives) will find more resources than they consume. There is a positive correlation between people and the means to support people, not a negative one.
Carbon-based energy can easily supply growing world demand for decades if not centuries and beyond. Renewable energy will look very different from today in such a distant time frame.
[…] Lisa Linowes points out, the implicit federal support (via the PTC) for wind has mushroomed over time, rising from $5 million in 1998 to more than $1 […]
[…] Lisa Linowes points out, the implicit federal support (via the PTC) for wind has mushroomed over time, rising from $5 million in 1998 to more than $1 […]