Why is Tax Notes failing to fact check on wind power, PTC?
The weekly publication Tax Notes is the flagship publication of Tax Analysts, a nonprofit tax policy commentary collective in existence since 1970. In his article for the Boston Globe about Tax Analysts, Stephen Glain described the men and women of Tax Analysts as “self-described ‘tax geeks’” and commented that most of their peers regarded the outlet as “the epitome of hard-nosed impartiality.”
That was in 2003. Time may be taking its toll on Tax Analysts.
Several times in just over a year, the group has failed to fact-check opinion pieces published in Tax Notes attacking wind power and the highly successful federal and state policies that encourage wind’s growth. These attacks were authored by Diana Furchtgott-Roth, of the fossil-funded Manhattan Institute for Public Policy (a group receiving major funding from ExxonMobil and the Koch brothers) and, surprisingly, Tax Analysts’ own deputy publisher, David Brunori.
Since Tax Analysts chose not to perform a fact check, we’re happy to do one for them.
1) The Production Tax Credit (PTC) and its supposed “cost”
A favorite myth about the PTC’s supposed “cost” is the price tag Ms. Furchtgott-Roth and others narrow-mindedly claim it to be: $12 billion. The estimate brought to us by the Joint Committee on Taxation (JCT) does not factor in any of the economic development that investment in wind power spurs at the local, state, and federal levels. When analyzing your investment in something, it’s important to calculate what that investment’s rate of return has been to get a complete picture.
And American wind power equipped with the PTC has resulted in a fantastic rate of return.
Just last year, the PTC helped the wind industry catalyze $25 billion of private investment into our economy. In fact, according to a NextEra Energy analysis, the PTC more than pays for itself in local, state, and federal taxes over the life of wind power projects.
The economic benefits don’t stop there.
Wind power has created a brand new manufacturing sector supporting over 25,000 well-paying jobs and the industry overall supports 80,000 jobs. The Department of Energy has envisioned the wind industry to be capable of supporting 500,000 domestic jobs by 2030 with smart energy policy in place.
Wind power helps the average ratepayer too. A May 2013 Synapse Energy Economics report found that doubling the use of wind energy in the Mid-Atlantic and Great Lake states would save consumers close to $7 billion per year, and more than a dozen other studies from state governments and grid operators confirm that finding. Because wind energy has no fuel costs, it also protects consumers from volatility in energy prices, much like fixed rate mortgages protect consumers from interest rate fluctuations.
2) Using the tax code to spur domestic energy growth is nothing new
Tax incentives for the energy sector began in 1913, when intangible drilling costs were given to the oil industry and dozens have been added since then, most of which support fossil fuels. Such incentives are mostly ignored in the current energy debate despite their long life spans. Since energy impacts the broader economy, they are generally viewed as successful mechanisms to protect energy customers from high and volatile energy prices.
For example, the Congressional Research Service notes that “[u]ntil the 1970s … energy tax policy had been little used, except to promote domestic fossil fuel…. For more than half a century, federal energy tax policy focused almost exclusively on increasing domestic oil and gas reserves and production.”
The state policies attracting investment in renewables Ms. Furchtgott-Roth decries are also nothing new--states have similar policies for a variety of energy sources, including billions of dollars for natural gas. The state policies attracting wind power’s growth just happen to be for a clean, homegrown energy source that will never run out and has the lowest impact on wildlife and the environment of any of several technologies studied – including coal, oil, natural gas, nuclear, and hydropower – according to a comprehensive report completed for the New York State Energy Research and Development Authority (NYSERDA).
3) With the PTC, American wind power is more affordable, reliable
Wind power’s costs have declined rapidly (over 43 percent since 2008), resulting in more affordable prices for ratepayers and a record amount of reliable wind power being used to power homes and small business all across the country.
A May 2013 Synapse Energy Economics report found doubling the use of wind energy in the Mid-Atlantic and Great Lake states would save consumers close to $7 billion per year. In fact, when the Midwest utility system operator recently obtained more than 25 percent of its electricity from wind (Nov. 23, 2012), it noted, “Wind [is] one of the fuel choices that helps us manage congestion on the system and ultimately helps keep prices low for our customers and the end-use consumer.”
Large amounts of wind energy are being reliably integrated onto our power system today and studies show adding more wind power increases the long-term savings for ratepayers while maintaining our ability to keep the lights on. And grid operators avoid harmful carbon emissions when they replace power generated from the costliest, dirtiest power plants with wind power.
It’s clear. As wind energy prices decline, and electricity consumers and utilities are faced with choices about new electricity generation, wind energy is increasingly a competitive choice.
4) Bipartisan support in Congress for wind power mirrors overwhelming support from the American public
While Mr. Brunori applauds political figures like Senator Ted Cruz (R-TX) and Texas Governor Rick Perry (R) for their support for increasing taxes on wind power, there’s no denying the clean energy source has enjoyed majority support from the American public for years.
A Gallup poll in March 2013 found that 71 percent of Americans want more wind power developed, state polls from Illinois to North Carolina to Michigan demonstrate consumers want more wind power, and a University of Texas poll in October revealed 89 percent of Americans want the federal government to focus on developing renewable energy technology.
With wind farms or factories in 70 percent of congressional districts, it’s no wonder a strong bipartisan collection of congressional and governors have thrown their support behind maintaining tax relief for the wind industry.
5) What a real debate on tax policy supporting domestic energy growth looks like
While the original version of the PTC was enacted in 1992, the tax credit hasn’t been “around” continuously since then. Congress has scheduled the tax relief to expire on nine separate occasions, creating an inefficient boom-and-bust cycle of wind power development that has hampered the industry’s growth. The PTC has been around continuously since 2005, and has galvanized record growth in the amount of wind power available to American consumers in that eight-year period.
If there is going to be a real debate on the tax policy in place supporting energy production in the United States, then we need to put all of our cards on the table. There are 63 House members, including Republicans, who have already endorsed the need for policies to promote renewables as part of tax reform.
Senator Lisa Murkowski (R-AK) summarized this very well last week on Capitol Hill, commenting that an abrupt expiration or another one-year extension at the last minute would provide no certainty for those American businesses. It would make no sense for wind energy to be the only form of energy to lose its primary incentive this year.
Policy stability is critical to continuing this success story for American manufacturing and wind energy development. The industry warned of a downturn in the industry again in 2013 without an extension of the PTC. It happened. Now with tax reform up in the air and expiration of the PTC again imminent at the end of 2013, we need Congress to take action.
Photo credit: First Wind
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