As we’ve said before, the federal wind-energy production tax credit (PTC) is a wasteful and harmful subsidy that has lived far beyond its expiration date. Last week, new comments from Sen. Chuck Grassley, R-Iowa – the original architect of the wind PTC and one of its chief defenders – gave us hope that an end to this boondoggle may be in sight, after all.
From Politico Pro‘s “Morning Energy ” newsletter Friday:
GRASSLEY: NO NEED TO EXTEND WIND TAX CREDIT: Just because the Clean Power Plan has been delayed by the court, Sen. Chuck Grassley sees no need to extend a wind tax credit that will phase out in five years. When the production tax credit was included in the omnibus spending bill last year, some observers saw that its schedule dovetailed neatly with the start of compliance with the [Environmental Protection Agency]’s carbon regulation. With the Supreme Court having delayed the rule until a final decision is reached, some have wondered whether wind will want a longer bridge to the rule. “The wind energy people say they don’t need it,” Grassley told  Pro’s Esther Whieldon Thursday. “At least we agreed that this five-year phase out was going to be it. In other words you can’t come back to a well twice.”
To be clear, we’d like to see the PTC end immediately. Along with our friends at Americans for Prosperity, who have done great work  mobilizing opposition to PTC extensions over the years, R Street was dismayed  when Congress enacted the five-year extension last January. Put simply, it allowed the PTC to continue for five years too long
Every year it continues, the PTC wastes billions of taxpayer dollars and unnecessarily raises the price consumers pay for electricity. But the havoc wreaked by the PTC goes beyond wasted federal funds. The PTC creates market distortions that harm reliable baseload power sources by artificially suppressing prices. It also impedes private-sector innovation.
R Street Associate Fellow George David Banks has explained  that the PTC also facilitates a perverse incentive structure that paradoxically makes the wind industry less economically competitive. Under the PTC, owners have incentives to run their turbines all night, regardless of demand. Because they receive subsidies to generate as much power as possible, owners have little reason to invest in new technologies that would make wind power more competitive and reliable in the long term — for example, technology that would allow us to store the electricity so that wind could one day operate as a stand-alone energy source.
In other words, 2020 couldn’t come soon enough. As the father of the first wind-energy tax credit in 1992, Grassley has said repeatedly that it was never intended to be permanent. In 2003, for example, he was quoted  saying:
I’d say we’re going to have to do it for at least another five years, maybe for 10 years. Sometime we’re going to reach that point where it’s competitive [with other forms of energy].
Yet Grassley has continued to be one of the wind PTC’s biggest proponents every time Congress has discussed its expiration or extension. Grassley’s comments to Politico last week are welcome news; it means that one of the incentive’s leading champions has endorsed its phase-out, regardless what happens in court with the Clean Power Plan challenge.
Here’s to hoping that industry leaders and other politicians from top wind-power states follow Grassley’s lead in honoring their agreement to end federal wind subsidies.
- “Morning Energy”: http://www.politico.com/tipsheets/morning-energy/2016/03/pro-morning-energy-wolff-213296
- “told”: https://mail.google.com/mail/u/1/#912297669999578065_00000153-8631-d728-a5ff-cff3bb7a0001
- “great work”: http://afpscorecard.org/#singleAlert
- “dismayed”: http://www.rstreet.org/2015/01/28/senate-set-to-vote-on-five-year-extension-of-wind-ptc/
- “explained”: http://www.rstreet.org/2014/10/13/how-the-wind-production-tax-credit-undermines-wind-power/
- “quoted”: http://ewweb.com/green-news/wind-energy-rides-roller-coaster-year