Unnecessary government subsidies promote inefficiency, limit competition, and cost taxpayers more than they get in return.
A prime example is the wind energy Production Tax Credit, or PTC. While this wasteful tax credit is currently expired, President Barack Obama wants to revive the PTC and make it a central component of his harmful “Clean Power Plan.” The American people will pay the price for years to come.
Congress first enacted the PTC in 1992 to encourage growth in nascent forms of energy. Wind energy capacity and production have both increased well over 5,000 percent, and the Department of Energy now classifies wind as a “mature” technology.
Today the wind industry regularly produces more wind energy than the market demands but continues to receive billions of dollars in taxpayer support. In fact, wind producers are generating more profits from the PTC subsidies they take in than from the energy they put out.
Sempra Energy, for example, stated in its 2014 annual shareholder report that “[f]or each of the years ended Dec. 31, 2014, 2013, and 2012, PTCs represented a large portion of our wind farm earnings, often exceeding earnings from operations.”
It’s no surprise that the wind industry’s bottom line has ballooned, considering that federal subsidies for wind have grown from $476 million to more than $4.98 billion per year under Obama. That’s an increase of more than 900 percent.
It’s no surprise the wind industry’s bottom line has ballooned considering that federal subsidies for wind have grown from $476 million to more than $4.98 billion per year under Obama. That’s an increase of more than 900 percent.
The PTC no longer serves an infant industry learning to compete. It’s now corporate welfare that is distorting the free market and leading to higher energy costs for American families.
Instead of bringing the PTC to a long overdue end, the president has made it a critical feature of his economically disastrous Clean Power Plan.
On top of harmful regulations that will destroy jobs and shutter many existing power plants, the president’s Clean Power Plan significantly increases targets for new renewable energy. The plan requires the addition of more wind energy capacity from 2022 to 2030 than the wind industry was able to add over the past 18 years combined. In addition to being completely unrealistic, these targets will make the Clean Power Plan far more expensive and greatly increase dependence on PTC wind subsidies.
Bringing the PTC to an end is an important step toward blocking implementation of the president’s Clean Power Plan and protecting Americans from its harmful impacts. And by taking on wasteful tax handouts like the PTC, Congress can also demonstrate that it is serious about accomplishing pro-growth tax simplification that supports hardworking Americans instead of Washington special interests.
Earlier this year, I introduced the “PTC Elimination Act” to phase out the credit in a sensible fashion and set a clear end date for PTC subsidies. Now with over 50 cosponsors, this legislation will level the economic playing field and save taxpayers nearly $10 billion over the next decade. Most importantly, the bill puts taxpayers first and bolsters our nation’s economic potential—neither of which can be said of the president’s Clean Power Plan.
The question Congress needs to ask itself is simple: Should American families continue to shoulder the tax burden for the fully mature multibillion-dollar wind industry? After more than two decades and billions of dollars in PTC subsidies, Americans have paid the price long enough.
