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The Wind Cliff: Fossil Fuel Industries Fight to End Wind Subsidies

As politicians wrangle at year’s end over the ‘Fiscal Cliff’, the potential for yet another politically manufactured crisis is right around the corner – the ‘Wind Cliff’. On December 31st, members of Congress could choose to let expire the Wind Production Trade Credit (Wind PTC), a federal subsidy granted to domestic wind energy producers, which since 1992 has had some success increasing wind capacity and recently made wind price competitive with coal.

The Wind PTC allows domestic wind energy producers to claim a tax credit based on the amount of energy produced by turbines in the first couple years of operation.[1] The Wind PTC thereby helps defray initial high costs of turbine production and installation, which are then eventually recouped within a 20-year time frame when costs are minimal [2].

Overall, the effect of the Wind PTC is to lower the cost of energy derived from wind by 2.2 cents/kwh, putting it at parity with energy sources destroying the environment and changing the climate.[3] As the supporters of the Wind PTC say, the wind sector deserves public investment until it at least achieves a critical mass of infrastructure when it can take advantage of economies of scale. Ending the Wind PTC would unnecessarily cripple the wind sector and would result in the loss of tens of thousands of jobs.[3]

Fossil Fuel Industries Defend Privileges

Only in recent years have the subsides for renewable energy come close to matching those for the well-established dirty energy sectors.

But as the wind cliff nears, the PR firms representing the fossil fuel industries – with connections to the Koch brothers and Big Oil – continue to lobby hard to end the wind subsidy. Amazingly, they do so while simultaneously fighting to maintain the billions of dollars of subsides for oil and gas. Without missing a beat, the polluting companies argue that energy companies should be permitted to compete on the “free market” without government intervention, but they conveniently fail to mention the largesse in subsidies granted to them for decades.[3]

The biggest beneficiaries of government subsidy has been the fossil fuel industries, which together have had the benefit of a century head-start upon renewable energy. From 1950 – 2006, the oil industry raked in a whopping $335 billion in government assistance, natural gas secured $100 billion, coal got $94 billion, and nuclear power received $65 billion, totaling $594 billion dollars for polluting sources of energy. This compared with the $52 billion received by renewables in that same period.[4] Another study by Ben Healey, a graduate student at Yale University School of Management and School of Forestry and Environmental Studies, broke it down by year, finding that the oil and gas industry has received on average $4.86 billion yearly from 1918 to 2009, compared to $3.5 billion for nuclear from 1947 to 1999 and $0.37 billion for renewable energy between 1994 and 2009.[5]

Until very recently, the fossil fuel industries continued to receive the bulk of governmental aid and subsidy. According to the Environmental Law Institute, the fossil fuel industries received $70.2 billion in subsidy from 2002-2008, compared to a $12.2 billion for renewable energy in that same period. In these years, as they took governmental assistance, oil companies were profitable to the tune of billions of dollars. [5][6]

Screen shot 2012-12-02 at 6.31.14 PM
[6]

Profits versus People, the Market versus Democracy

A sensible energy policy, at minimum, involves subsidies to clean energy and an end to governmental assistance to polluting industries. The current governmental assistance to the wind sector is just a beginning. Instead of giving taxpayer dollars to industries that threaten our future, the government should also heavily tax industrial carbon emissions as one means to facilitate a transition to clean energy sources.

That transition should, of course, be democratic and always in the public interest, including measures that support workers moving from antiquated industries to new fields, public control of alternative energy sources, the retooling of closed factories for the production of wind turbines and trains, and the sustainable development of deindustrialized areas.[7] In working for that transition, we will also have to oppose Obama’s hyping of natural gas and nuclear power as clean energy sources, as well as market-based cap-and-trade systems.[8]

This year, as environmentalists experienced some success, the fossil fuels industry has bared its fangs in a number of fights, from fracking to the Wind PTC. Always lobbying and buying politicians, they have stepped up their PR now as well.

Never a fan of a free market for themselves, the polluters now invoke it for the wind sector. This rhetoric of the fossil fuels industry – drawing upon the free market fantasies of Econ 101 textbooks stuck in the 19th century – illuminates the failure of the market’s responsiveness to rational human need. The extremely high costs of fossil fuels have never been figured into their market price, but invariably are dumped on society.

The short-term profit-motive of the market, dominated by concentrated business power, would drive our societies to dig up every last lump of coal and pump every last drop of oil out of the ground. Meanwhile, what will be the fate of our planet and ourselves?

The choices are clear: plunder or the planet, profits or the people.

Sources

[1] Clarke, Paul (November 28, 2012). “Extend Wind Production Tax Credit and Preserve Military Biofuels Program”. The Hill. Retrieved December 2, 2012.

[2] “Electricity from Wind Turbines”. ZFacts. Retrieved December 2, 2012.

[3] Cockerham, Sean (November 13, 2012). “As Fiscal Cliff Looms, Wind Industry Works to Protect Tax Break”. The Miami Herald. Retrieved December 5th, 2012.

[4] Williams, Marcel, F. (September 25, 2008). “Federal support for non-carbon dioxide polluting energy technologies”. New Papyrus. Retrieved December 2, 2012.

[5] St. John, Jeff (August 3, 2012). “The Real Deal on U.S. Subsidies: Fossil’s $72 Billion, Renewable Energy’s $12 Billion”. GreenTechMedia. Retrieved December 2, 2012.

[6] Good Infographics, a collaboration between Good and Deep Local: http://awesome.good.is/transparency/web/1012/subsidize-this/flat.html Retrived December 2, 2012.

[7] Davenport, Nick (August, 2009). “‘Climate Justice’ and the Left: The Necessity of a Mass Movement”. Solidarity. Retrieved December 5th, 2012.

[8] Chipman, Kim (December 3, 2012). “Obama Plans for Climate Deal as Fiscal Cliff Talks Rage”. Renewable Energy World.com. Retrieved December 5, 2012.

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