Tax policy can create level playing field

8 April 2014 by Paul Holshouser

A level playing field. The idea of it is synonymous with balance, fairness, and even democracy itself. Americans expect it when we go to see baseball games or when businesses compete in the marketplace. This same principle is needed when it comes to making choices about our homegrown energy needs and sources.

While federal tax policy has helped create the level playing field needed for a surge of wind power growth, regular expiration and renewal of the Production Tax Credit (PTC) has also caused a lot of unnecessary steps backward. All while other forms of energy enjoy long-term policy support.

Opponents of wind energy like to question the tax credit’s effectiveness and affordability, but the PTC is sound tax policy that more than pays for itself. New Department of Energy data even show the eleven states with the most wind power have seen their electricity rates drop while all others have seen theirs rise.

Others like to recommend that clean energy must survive on its own in the free market without receiving support via federal tax policy. However, there has never been a free market in energy.  Energy has always been heavily regulated and incentivized, particularly in the electric power sector.

The fact is, as a 2011 DBL Investors report found, oil and gas companies have historically received more than 75 times the total cumulative dollar amount of federal subsidies that renewables have ($446.96 billion vs. $5.93 billion through 2009). Many incentives for conventional sources have been permanent in the tax code since 1916 (the same year the light switch was invented), and are coming up on their 100-year anniversary.

In its Green Scissors report, the free market think tank R Street Institute found even with the comparably small amount of federal support that renewable energy receives, it still doesn’t compare to the amount received by conventional fuel sources. Their 2012 report estimates the costs of energy subsidies over a 10-year period (2012 – 2022) and found the combined tax policy costs associated with fossil fuels and nuclear to be approximately 8 times more than for renewables, not even in the same ballpark.

Here’s what a level playing field can do for American wind power.

With the tax credit for wind power in place, American wind power today has become a mainstream energy source, providing enough electricity for the equivalent of 15.5 million average American homes.  We’ve improved wind power’s technology and as a result have seen wind's costs drop more than 90 percent since 1980.

As of 2013, 72 percent of a wind turbine’s value was made in the USA as opposed to just 25 percent in 2005. Thus, we’ve created a brand new domestic supply chain supporting 25,000 well-paying jobs in 550 manufacturing facilities across 44 states. And wind power now provides more than 25 percent of the total electricity production in Iowa and South Dakota, and more than 12 percent in nine states.

Wind power fosters economic development in all 50 states by attracting investment. And in just three states, Ohio, Iowa, and Texas, wind power has helped attract billions of dollars into local and state economies. Between these three states alone, wind power has helped attract nearly $34 billion in capital investment. And speaking of Texas, the Lone Star State’s powerful wind resource has set records for the amount of generation its producing; in 2013, in fact, wind power contributed nearly 10 percent to the state’s overall electricity supply on the main grid.

Wind energy’s growth has become a form of community investment that has revitalized economies across the heartland of America. Wind helps farm and ranch families stay on the land thanks to it being a new drought-resistant, worry-free, cash crop for many rural landowners. Farmers, ranchers, and other landowners receive lease payments of up to $120,000 over a 20-year period for each wind turbine installed on their property. Larger amounts of wind power being integrated into a more diverse fuel mix also helps keep money in the pockets of American consumers. Wind energy acts as a hedge against volatility in the price of fossil fuels too; much like a fixed rate mortgage protects consumers from interest rate fluctuations.

Moreover, wind power revitalizes rural America in more ways than one, as it conserves billions of gallons of fresh water every year. Wind now conserves over 37 billion gallons a year - the equivalent of 130 gallons of water per person.

This all equals out to the very definition of an economically viable and flourishing industry—one that’s made possible by the PTC and a level-playing field.

Finally, what puts wind power head and shoulders above all other large-scale sources of electricity is its minimal impact on our land and overall benefit to the environment. And whereas R Street Institute has issued its concern that, “while some government programs can help the environment, enormous numbers of them do harm,” federal support for wind is a perfect example of the former.

Pollution-free, renewable wind energy has the lowest lifecycle impacts of any form of energy generation available today and benefits our health by displacing power plants that emit particulates often associated with heart and lung disease. Altogether, installed wind power helps avoid the emission of 100 million metric tons of carbon dioxide emissions a year – the equivalent of taking 17 million cars off the road. That’s particularly important, given that wildlife experts around the world agree climate change is the single greatest threat to birds and all wildlife. There’s no disputing increasing wind power is one of the cheapest, readily scalable means to achieve the goal of avoiding harmful carbon emissions that threaten our wildlife and even our own way of life.

Common-sense federal policy with bipartisan support that ensures a level playing field within the energy sector is what Americans want, what will clearly benefit Americans the most—and, therefore, what Congress must provide.