Unsustainable Subsidies


Grid-scale wind is an industry that would not exist without our government reaching into our pockets and separating us from the money we've earned. It's an industry that lectures us about sustainability which is built on unsustainable subsidies.


Whereas an event like the California gold rush was set in motion by the discovery of a resource, the "wind rush" we are seeing in Maine was set in motion by lobbyists successfully lobbying our federal government to hand out money for wind like Halloween candy. The heightened intensity of this wind rush which we observe today is likely attributable to the fact that the subsidies may run out. In fact, the main federal incentive for the wind industry, the 2.2 cents per kilowatt hour Production Tax Credit, is set to expire on December 31, 2012. The pending expiration of this favorite freebie has the Maine wind companies in a full parasitic mode, along with their coterie of related parasitic companies that also feed off of this gusher of money, that belongs to us. As in many "hurry up offenses", they are making plenty of mistakes and showing signs of desperation.


And while the wind industry would like you to believe that it needs government support to get it to the day it can stand on its own, no changes in technology will ever be able to bring efficacy to wind as it lacks energy density. Stand in a river current producing hydroelectricity and you may drown. Get too close to natural gas combustion producing electricity and you may burn yourself. Stand in the wind quarry of the Maine wind industry and you will likely comment, "that little bit of breeze feels nice". 


Here's a common sense test. Simply observe how many days in Maine are windy over the course of the year.


Wind is far from a developing resource that will one day work for us. Rather it is an old failed energy source that modern society abandoned long ago.


The true quarry of the Maine wind industry is not wind at all but rather that hard earned money in our wallets. They want to extract all they can via their government programs and they care not that they also will drive our already oppressive electricity rates through the roof.


The coterie of parasites, less than 1% of Maine companies, knows full well they are damaging us financially yet as shameless panderers have no problem at all trying to pass themselves off as an economic panacea as they broadcast their message of JOBS - never telling you they are virtually all temporary and often filled with out of state workers. 


As others have said, nothing short of a change in the laws of physics will make wind in Maine viable.

Every single one of the wind projects set up in the USA is created using a single purpose legal/corporate structure that removes all individual legal and financial liability of the developer/owner/investor/lender to the project. If a project fails for any reason the principles just walk away and the local community and/or state are stuck with the project as is.
DOE loan guarantees mean a commercial lender will put up the cash loan for the balance of project cost with the full faith and credit of the US government to pay off the loan if there is a default (a/k/a the Solyndra deal). Most wind deals have been funded using a 50%/50% investor and lender ratio. However, it appears that Record Hill may be close to the maximum 80% debt (too bad for the taxpayers). Commercial lenders have strict credit criteria and are not inclined generally to lend to projects where there are too many unknown risks and little if no collateral value (i.e. if a wind project fails due to mechanical operating failure, low energy generation and/or low prices what value does a project have?)
Investors have little or no project risks because they derive 100% of their return on investment from the tax benefits. As long as a project is "available" to produce power (IRS definition) the investor can claim the tax shelter on its tax return. A project does not have to produce power for the investor to claim the tax deductions. After the first 6 years the investor doesn't care if a project fails because they had their full investment and profit returned. That is why you see many of these projects with partnership agreements between the developer and the investor whereby the developer has the option to buy out the investor at a bargain price the end of year ten if the project remains viable.


This section of the website will take a look at the various government supports that make possible an industry that would positively never otherwise exist.


Table of Contents

9/30/08 - Federal Financial Interventions and Subsidies in Energy Markets 2007

10/20/11 - Subsidies Have Consequences

11/11/11 - A Gold Rush of Subsidies in the Search for Clean Energy

11/11/11 - Before Solyndra, a long history of failed government energy projects

11/20/11 - Database of State Incentives for Renewable and Efficiency

11/21/11 - Wind and Solar Have No Argument

11/26/11 - LABRADOR & POMPEO: Era of energy subsidies is over

11/28/11 - Windpower’s PTC: Secondary to state mandates

11/29/11 - Wind Turbines & “Green” Subsidies Under Fire

12/4/11 - Clean energy powers a revolving door to K Street

12/7/11 - HUFBAUER: Debunking the big-oil subsidy myth

12/24/11 - Keep those subsidies flowing 

1/17/13 - American Taxpayer Investment, Foreign Corporation Benefit




9/30/08 - Federal Financial Interventions and Subsidies in Energy Markets 2007. This executive summary from the U.S. Energy Information Administration within the Department of Energy shows that the cost of electricity subsidies per megawatt hour for wind is 93 times that of oil and natural gas. It also shows that the cost of electricity subsidies per megawatt hour for wind is 3.2 times that of oil and natural gas combined in absolute terms.

Download PDF and see Table ES-5 at:execsum.pdf



Download additional PDF at: chap5.pdf

Source: http://www.eia.gov/oiaf/servicerpt/subsidy2/pdf/chap5.pdf


Please bear in mind that since 2007, the period studied, wind has received tremendous additional government support via the American Recovery and Reinvestment Act of 2009, the federal stimulus program. Therefore, the numbers are likely far worse now.


10/20/11 - Subsidies Have Consequences

By Christopher Chantrill

The trouble with the ruling class is that it doesn't have a clue about business.  To an Obami like Jay Carney, White House press secretary, the failure of corporate crony Solyndra is "just the way business works."  You win some, you lose some.

Only, of course, the way business works is that when you lose, it's supposed to be your money that gets lost.  As Matthew Continetti points out, under Obamian crony capitalism with its subsidies and its loan guarantees, the crony capitalist "privatizes any gain while socializing the risk."  No wonder financiers and CEOs are such enthusiastic campaign contributors.  No wonder the OWS protesters are so confused.

But subsidies have consequences when it's time to start "socializing the risk."  That's what the Meltdown of 2008 was all about.  Politicians had subsidized mortgage credit for decades, and when that wasn't enough, they set goals and timetables to force banks to lend to unqualified buyers.  Higher and higher went the real estate prices; lower and lower went the credit standards.  When the whole thing flushed down the toilet, the politicians and their willing apologists in the media blamed "greedy bankers" and deregulation.

Now the politicians have sent the victims of another subsidy scheme into the streets.  Bigger and bigger went the college grants and loans; higher and higher went the college fees.  Now the whole higher education boondoggle is about to flush down the toilet, and the demonstrators say it's all about corporate greed.  Graduates of liberal "studies" programs are outraged that their $50,000 in government-subsidized college debt plus $5 adds up to a meal at McDonald's.

It's not surprising that these lefties are protesting on Wall Street and blaming the Jews for everything.  Jews are the paradigmatic middle-men, and Wall Streeters are just glorified peddlers.  More than stock pickers or derivative wizards, Wall Streeters are in the business of flogging government debt to the widows and orphans, and to the world's pension funds: federal debt, state debt, development agency debt, school district debt, hospital, county, city -- you name it, they sell it.

Here's news for those naïve lefties: Wall Street didn't create all that debt.  They just flogged it to the rubes, and got handsomely paid for doing the dirty work for the politicians.  "Up north" in England, they have a saying for that: "Where there's muck, there's brass."

Subsidies almost always end in tears.  Remember the Savings and Loans?  They had a special subsidy that allowed them to charge more interest than regular banks.  It paid for a lot of lousy management until the Feds deregulated bank interest rates and the S&Ls started drowning in bad debt.

Remember the auto companies?  Now the government wants to make a dog's breakfast of the electric utility industry with its renewables mandates.  Oregon's Shepherds Flat wind farm is the poster boy for that.

The State of California now mandates 33 percent renewables for electric utilities like SoCal Edison by 2020.  So what does Edison do?  It signs a contract to buy wind power for twenty years from Caithness Energy, owner of the Shepherd's Flat wind farm in northern Oregon.  General Electric, led by friend-of-Obama CEO Jeff Immelt, is supplying the 300-odd wind turbine generators.  But don't worry about SoCal Edison.  Writes Robert Bryce:

The majority of the funding for the $1.9 billion, 845-megawatt Shepherds Flat wind project in Oregon is coming courtesy of federal taxpayers. And that largesse will provide a windfall for General Electric and its partners on the deal who include Google, Sumitomo, and Caithness Energy. Not only is the Energy Department giving GE and its partners a $1.06 billion loan guarantee, but as soon as GE's 338 turbines start turning at Shepherds Flat, the Treasury Department will send the project developers a cash grant of $490 million.  Google paid for a $100 million equity share in the project. 

It's estimated that Shepherds Flat will deliver 22-30 percent return on equity for its owners.  Corporate greed, perhaps, but who can blame them?  In a couple of years, this firestorm of subsidies will have done so much damage that we'll have a complete green meltdown.  The politicians will turn around and blame Wall Street and the corporations for the mess.  Then they will jerk the subsidies away, and everyone will cheer.

After the firestorm dies down, folks like Google who build backup power to keep their server farms up 24-7 will buy the bankrupt wind farms at pennies on the dollar.  They are the folks that could really use wind power -- if it is almost free.  Hey, that is just the way that business works!

Business is really good at doing stuff, and when the political activists are determined to force us to eat our peas, business will always be there to sell the peas to Uncle Sam and make lots of money at it.

To turn around and blame the resulting consequence on corporate personhood or corporate greed is what Big Daddy used to call "mendacity."

Christopher Chantrill is a frequent contributor to American Thinker.  See his usgovernmentspending.com and also usgovernmentdebt.us.  At americanmanifesto.org he is blogging and writing An American Manifesto: Life After Liberalism.


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11/11/11 - A Gold Rush of Subsidies in the Search for Clean Energy



WASHINGTON — Halfway between Los Angeles and San Francisco, on a former cattle ranch and gypsum mine, NRG Energy is building an engineering marvel: a compound of nearly a million solar panels that will produce enough electricity to power about 100,000 homes.

The project is also a marvel in another, less obvious way: Taxpayers and ratepayers are providing subsidies worth almost as much as the entire $1.6 billion cost of the project. Similar subsidy packages have been given to 15 other solar- and wind-power electric plants since 2009.

The government support — which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates — largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG — even Google.

A great deal of attention has been focused on Solyndra, a start-up that received $528 million in federal loans to develop cutting-edge solar technology before it went bankrupt, but nearly 90 percent of the $16 billion in clean-energy loans guaranteed by the federal government since 2009 went to subsidize these lower-risk power plants, which in many cases were backed by big companies with vast resources.

When the Obama administration and Congress expanded the clean-energy incentives in 2009, a gold-rush mentality took over.

As NRG’s chief executive, David W. Crane, put it to Wall Street analysts early this year, the government’s largess was a once-in-a-generation opportunity, and “we intend to do as much of this business as we can get our hands on.” NRG, along with partners, ultimately secured $5.2 billion in federal loan guarantees plus hundreds of millions in other subsidies for four large solar projects.

“I have never seen anything that I have had to do in my 20 years in the power industry that involved less risk than these projects,” he said in a recent interview. “It is just filling the desert with panels.”

From 2007 to 2010, federal subsidies jumped to $14.7 billion from $5.1 billion, according to a recent study.

Most of the surge came from the economic stimulus bill, which was passed in 2009 and financed an Energy Department loan guarantee program and a separate Treasury Department grant program that were promoted as important in creating green jobs.

States like California sweetened the pot by offering their own tax breaks and by approving long-term power-purchase contracts that, while promoting clean energy, will also require ratepayers to pay billions of dollars more for electricity for as long as two decades. The federal loan guarantee program expired on Sept. 30. The Treasury grant program is scheduled to expire at the end of December, although the energy industry is lobbying Congress to extend it. But other subsidies will remain.

The windfall for the industry over the last three years raises questions of whether the Obama administration and state governments went too far in their support of solar and wind power projects, some of which would have been built anyway, according to the companies involved.

Obama administration officials argue that the incentives, which began on a large scale late in the Bush administration but were expanded by the stimulus legislation, make economic and environmental sense. Beyond the short-term increase in construction hiring, they say, the cleaner air and lower carbon emissions will benefit the country for decades.

“Subsidies and government support have been part of many key industries in U.S. history — railroads, oil, gas and coal, aviation,” said Damien LaVera, an Energy Department spokesman.

A Case Study

NRG’s California Valley Solar Ranch project is a case study in the banquet of government subsidies available to the owners of a renewable-energy plant.

The first subsidy is for construction. The plant is expected to cost $1.6 billion to build, with key components made by SunPower at factories in California and Asia. In late September, the Energy Department agreed to guarantee a $1.2 billion construction loan, with the Treasury Department lending the money at an exceptionally low interest rate of about 3.5 percent, compared with the 7 percent that executives said they would otherwise have had to pay.

That support alone is worth about $205 million to NRG over the life of the loan, according to an analysis performed for The New York Times by Booz & Company, a strategic consulting firm that regularly performs such studies for private investors.

When construction is complete, NRG is eligible to receive a $430 million check from the Treasury Department — part of a change made in 2009 that allows clean-energy projects to receive 30 percent of their cost as a cash grant upfront instead of taking other tax breaks gradually over several years.

Californians are also making a big contribution. Under a state law passed to encourage the construction of more solar projects, NRG will not have to pay property taxes to San Luis Obispo County on its solar panels, saving it an estimated $14 million a year.

Assisted by another state law, which mandates that California utilities buy 33 percent of their power from clean-energy sources by 2020, the project’s developers strucklucrative contracts with the local utility, Pacific Gas & Electric, to buy the plant’s power for 25 years.

P.G.& E., and ultimately its electric customers, will pay NRG $150 to $180 a megawatt-hour, according to a person familiar with the project, who asked not to be identified because the price information was confidential. At the time the contract was awarded, that was about 50 percent more than the expected market cost of electricity in California from a newly built gas-powered plant, state officials said.

While neither state regulators nor the companies will divulge all the details, the extra cost to ratepayers amounts to a $462 million subsidy, according to Booz, which calculated the present value of the higher rates over the life of the contracts.

Additional depreciation tax breaks for renewable energy plants could save the company an additional $110 million, according to Christopher Dann, the Booz analyst who examined the project.

The total value of all those subsidies in today’s dollars is about $1.4 billion, leading to an expected rate of return of 25 percent for the project’s equity investors, according to Booz.

Mr. Crane of NRG disputed the Booz estimate, saying that the company’s return on equity was “in the midteens.”

NRG, which initially is investing about $400 million of its own money in the project, expects to get all of its equity back in two to five years, according to a statement it made in August to Wall Street analysts.

By 2015, NRG expects to be earning at least $300 million a year in profits from all of its solar projects combined, making these investments some of the more lucrative pieces in its sprawling portfolio, which includes dozens of power plants fueled by coal, natural gas and oil.

NRG is not the only company gobbling up subsidies. At least 10 of the 16 solar or wind electricity generation projects that secured Energy Department loan guarantees intend to also take the Treasury Department grant, and all but two of the projects have long-term agreements to sell almost all of their power, according to a survey of the companies by The Times.

These projects, in almost all cases, benefit from legislation that has been passed in about 30 states that pushes local utility companies to buy a significant share of their power from renewable sources, like solar or wind power. These mandates often have resulted in contracts with above-market rates for the project developers, and a guarantee of a steady revenue stream.

“It is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years,” said Kevin Smith, chief executive of SolarReserve. HisNevada solar project has secured a 25-year power-purchase agreement with the state’s largest utility and a $737 million Energy Department loan guarantee and is on track to receive a $200 million Treasury grant.

Because the purchase mandates can drive up electricity rates significantly, some states, including New Jersey and Colorado, are considering softening the requirements on utilities.

Brookfield Asset Management, a giant Canadian investment firm, will receive so many subsidies for a New Hampshire wind farm that they are worth 46 percent to 80 percent of the $229 million price of the project, when measured in today’s dollars, according to analyses for The Times performed by Booz and two other two industry financial experts. (The wide range reflects a disagreement between the experts on the future price of electricity in New Hampshire.)

Richard Legault, the chief executive of Brookfield Renewable Power, the division that oversees the Granite Reliable project in New Hampshire, declined to discuss his profit expectations in detail, but said the project may not have happened without government assistance.

“When everything has come together, it is a good investment for Brookfield, it is no doubt,” Mr. Legault said. “We are quite happy with it.” (Brookfield is also the owner of the small park in Manhattan that is home to the Occupy Wall Street protesters.)

Even companies whose business has little to do with energy or finance, like the Internet giant Google, benefit from the public subsidies. Google has invested in several renewable energy projects, including a giant solar plant in the California desert and a wind farm in Oregon, in part to get federal tax breaks that it can use to offset its profits from Web advertising.

Industry executives and other supporters of the subsidies say that the public money was vital to the projects, in part because financing for renewable energy projects dried up during the recession. They also note that more traditional energy sectors, like oil and natural gas, get heavy subsidies of their own. For example, in fiscal 2010, the oil and gas producers got federal tax breaks of $2.7 billion, according to an analysis by the Energy Information Administration.

“These programs just level the playing field for what oil and gas and nuclear industries have enjoyed for the last 50 years,” said Rhone Resch, president of Solar Energy Industries Association. “Do you have to provide more policy support and funding initially? Absolutely. But the result is more energy security, clean energy and domestic jobs.”

Michael E. Webber, associate director of the Center for International Energy and Environmental Policy at the University of Texas, Austin, said renewable energy subsidies were a worthy investment. “It is a form of corporate welfare that is consistent with other social goals like job creation, clean air and boosting a domestic source of energy,” he said.

Overflowing Breaks

Obama administration officials said the subsidies were intended to help renewable-energy plants that were jumbo-sized or used innovative technology, both potential obstacles to getting private financing. But even proponents of the subsidies say the administration may have gone overboard.

Concerns that the government was being too generous reached all the way to President Obama. In an October 2010 memo prepared for the president, Lawrence H. Summers, then his top economic adviser; Carol M. Browner, then his adviser on energy matters, and Ronald A. Klain, then the vice president’s chief of staff, expressed discomfort with the “double dipping” that was starting to take place. They said investors had little “skin in the game.”

Officials involved in reviewing the loan applications said that Treasury Department officials pressed the Energy Department to respond to these concerns.

Officials at both agencies declined to discuss the anticipated financial returns of the clean-energy projects the federal government has agreed to guarantee, saying the information was confidential.

But Energy Department officials said they had carefully evaluated every project to try to calculate how much money the developers and investors stood to make. “They were rejected, if they looked too rich or too risky,” Mr. LaVera, the Energy Department spokesman said.

In at least one instance — NRG’s Agua Caliente solar project in Yuma County, Ariz. — the Energy Department demanded that the company agree not to apply for a Treasury grant it was legally entitled to receive. The government was concerned the extra subsidy would result in excessive profit, NRG executives confirmed.

In other cases, the agency required that companies use most of the Treasury grants that they would get when construction was complete to pay down part of the government-guaranteed construction loans instead of cashing out the equity investors.

“The private sector really has more skin in the game than the public realizes,” said Andy Katell, a spokesman for GE Energy Financial Services, which like Goldman Sachs, Morgan Stanley and other financial firms has large investments in several of these projects.

But there is no doubt that the deals are lucrative for the companies involved.

G.E., for example, lobbied Congress in 2009 to help expand the subsidy programs, and it now profits from every aspect of the boom in renewable-power plant construction.

It is also an investor in one solar and one wind project that have secured about $2 billion in federal loan guarantees and expects to collect nearly $1 billion in Treasury grants. The company has also won hundreds of millions of dollars in contracts to sell its turbines to wind plants built with public subsidies.

Mr. Katell said G.E. and other companies are simply “playing ball” under the rules set by Congress and the Obama administration to promote the industry. “It is good for the country, and good for our company,” he said.

Satya Kumar, an analyst at Credit Suisse who specializes in renewable energy companies, said there is no question the country will see real benefits from the surge in renewable energy projects.

“But the industry could have done a lot more solar for a lot less price, in terms of subsidy,” he said.

Eric Lipton reported from Washington and Clifford Krauss from Houston.



Fair Use Notice: This website may reproduce or have links to copyrighted material the use of which has not been expressly authorized by the copyright owner. We make such material available, without profit, as part of our efforts to advance understanding of environmental, economic, scientific, and related issues. It is our understanding that this constitutes a "fair use" of any such copyrighted material as provided by law. If you wish to use copyrighted material from this site for purposes that go beyond "fair use," you must obtain permission from the copyright owner.


11/11/11 - Before Solyndra, a long history of failed government energy projects



Before Solyndra, a long history of failed government energy projects

 By Steven Mufson, Published: November 11 | Updated: Saturday, November 12, 4:50 PM

Solyndra, the solar-panel maker that received more than half a billion dollars in federal loans from the Obama administration only to go bankrupt this fall, isn’t the first dud for U.S. government officials trying to play venture capitalist in the energy industry.

The Clinch River Breeder Reactor. The Synthetic Fuels Corporation. The hydrogen car. Clean coal. These are but a few examples spanning several decades — a graveyard of costly and failed projects.



Not a single one of these much-ballyhooed initiatives is producing or saving a drop or a watt or a whiff of energy, but they have managed to burn through far more more taxpayer money than the ill-fated Solyndra.An Energy Department report in 2008 estimated that the federal government had spent $172 billion since 1961 on basic research and the development of advanced energy technologies.

What does Washington have to show for these investments? And should the government even be in the business of promoting particular energy technologies?

Some economists, executives and financiers — as well as Energy Secretary Steven Chu — argue that the government must play a role because certain technologies have non-financial benefits, such as producing fewer greenhouse gas emissions or easing U.S. reliance on foreign oil. The semiconductor industry is often held up as a model of how government money can help build a new type of economy.

But others argue that the history of government attempts to reach for the holy grail of new energy technology — a history that features both political parties — is not inspiring. “We’re making very large bets, and the decisions seem to be more grounded in politics and geography than in engineering and science,” said Michael Graetz, a professor at Columbia Law School and the author of “The End of Energy.”

Consider the saga of the Clinch River Breeder Reactor.

In 1971, President Richard Nixon set a goal of building an experimental nuclear power plant. The Clinch River reactor was supposed to be a sort of perpetual motion machine, producing power as well as plutonium that could be used in other plants.

Private utilities agreed to kick in $175 million, less than half of the $400 million that the Atomic Energy Commission estimated it would cost to build. As expenses ballooned, the government covered all the overruns. The project was criticized by activists and scientists worried about the risk of nuclear weapons proliferation. Cheap uranium undercut it.

After President Ronald Reagan was elected, Clinch River survived the first round of his spending cuts, in part out of deference to Senate Majority Leader Howard Baker (R-Tenn.), a strong supporter of the reactor, which was in his home state. But finally, in 1983, with the Congressional Budget Office saying the cost might exceed $4 billion, Congress terminated the program. Blueprints had been drawn up, modeling done, components ordered and some ground cleared, but the reactor was never built. The price tag for the federal government:$1.7 billion ($3.9 billion in today’s dollars).

Then there was the Synthetic Fuels Corporation.

President Jimmy Carter called it the “keystone” of U.S. energy policy; Congress authorized $17 billion for it to act as a sort of investment bank, funding projects that would turn plentiful U.S. coal and shale into oil and gas. Carter set a goal of producing 2 million barrels a day of “synfuels” by 1990.

Not quite. A handful of coal and auto companies tapped the new funds to build a facility that was intended to produce 50,000 barrels a day, the first of what was supposed to be a network of synfuel plants, many on federal lands. But after oil prices leveled off, then fell, in the early 1980s, the project was not economically sound, even with government help. The private partners pulled out.

Congress ousted the corporation’s president in 1983 after the entity was accused of handing out money for political reasons. In 1986 the corporation closed down. It had spent $2 billion (more than $4 billion in today’s dollars).

This sort of industrial policy fell out of favor in the Reagan era and into the 1990s, but then it returned, as fears of climate change spawned new “clean energy” ideas.

President George W. Bush had his own pet projects. In his 2003 State of the Union address, he called for “a new national commitment” to work toward hydrogen-powered vehicles so that “our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom.”

But on the road to the showroom, the hydrogen car made a wrong turn. From 2004 through 2008, the federal government poured $1.2 billion into hydrogen vehicle projects; the Government Accountability Office noted that about a quarter of that money went to “congressionally directed projects” outside the initiative’s original research and development scope. Visitors to General Motors outside Detroit could drive a vehicle powered by hydrogen, but the technology was costly, and there was no infrastructure to support the vehicles. They died in development.

The “clean coal” movement has been no more successful. Politicians on both sides of the aisle have sought to put money into efforts that would make coal more appealing by taking its greenhouse emissions and burying them. After a carbon-capture project in Alaska burned through $117 million during the 1990s, Republican lawmakers tried to give the moribund project another $125 million in 2005. Just this year, the utility AEP, one of the nation’s largest emitters of carbon dioxide, abandoned a pilot project because it was too expensive — even though the Energy Department was willing to kick in $334 million, half the expected cost. A North Dakota project was shelved last December despite a $100 million federal grant.

Bush launched what was supposed to be a $1 billion project to separate carbon dioxide from the emissions of a coal power plant in Illinois and bury the gas underground. Several years later, cost estimates have climbed, the project has been scaled back — and it still hasn’t broken ground.

Despite this track record and the recent Solyndra failure, Energy Secretary Chu remains undeterred. Citing examples from Civil War-era railroads to airplanes to semiconductors, he has defended government’s role in funding new technologies and promising companies.


“Americans have always led by looking ahead. Even in the midst of the Civil War, when our country was under incredible stress, we planned for the future,” Chu said in September. “President Lincoln signed the Pacific Railway Act of 1862, which authorized generous public financing for two private companies — Union Pacific Railroad Company and Central Pacific Railroad Company — to lower the investor risk in building railroads in unsettled territories. In 1869, the first Transcontinental Railroad was completed at Promontory Summit, Utah, revolutionizing transport in this country and opening up a world of possibilities for industry.”

Enter Stanford University professor Richard White, a historian of the American West who wrote “Railroaded: The Transcontinentals and the Making of Modern America.”

 “I admire Steven Chu a great deal, but his knowledge of the Pacific Railway Act unfortunately appears to be about equal to my knowledge of high-energy physics,” White said in an interview. He said the legislation produced a disaster far larger than the lifeless factory that Solyndra has left behind.

White said that Union Pacific and Central Pacific became two of the most hated corporations in the West, spawning political opposition wherever they went. Within 10 years of giving them land grants and loan guarantees, the federal government reversed its policy and eventually sued to recover its investment. The litigation dragged on into the 20th century.

Chu has also argued that the government should help ramp up manufacturing. He says that while the internal-combustion engine was invented in Germany, Henry Ford mastered the assembly line and made the United States the world leader in automaking. However, historians note, Ford did not receive government assistance.

Some experts also question the semiconductor example, in which the government purportedly created an industry through military purchases. Jack Spencer, a nuclear power and energy expert at the Heritage Foundation, said that the Pentagon supported the semiconductor industry because it wanted “to kill people better through innovation, but its goal wasn’t to create commercial enterprises.”

Moreover, he added, if the broader marketplace hasn’t created enough incentives for a new technology such as solar or wind energy to thrive, then loan guarantees or grants will only postpone the death of a company.

But Chu isn’t the only one who thinks the government has a role to play.

David Eaglesham, chief technology officer at First Solar, a leading maker of thin-film solar panels, says government funding for basic research during the 1990s kept the company alive when it comprised about “10 guys working in Toledo.” He said the Energy Department’s National Renewable Energy Laboratory funded “pretty much everything” when it came to technology, but “at low levels.”

Many policy experts say some of government’s biggest energy investment payoffs have come in the small stuff, such as testing the use of magnesium alloys to make lightweight car batteries more efficient or developing ballasts that make compact fluorescent bulbs more efficient.

Still others say that the nearly $40 billion paid out by the federal government so far to subsidize corn-based ethanol is a success story; ethanol has displaced more than half a million barrels a day of petroleum. But that benefit must be weighed against whether ethanol has driven up corn prices, along with evidence that it may be worse than oil from a greenhouse gas perspective.

Energy innovation is simply different from innovation in other industries, argue Edward Steinfeld and Jason Lee of the Massachusetts Institute of Technology. In electronics and information technology, they note in an unpublished article, the end products are cheap, consumers buy new ones every few months or years, and much of the value is captured by the front-end designer rather than the manufacturer. (Think Apple.)

Energy technologies, however, “are more expensive by several orders of magnitude, and they have much longer life cycles,” they say. “A solar panel is expected to last 20 to 25 years. Moreover, for many of these technologies, including thin-film solar, the key knowledge lies not just in upstream design, but also in learning how to produce inexpensively at high volume.” Essentially, Steinfeld and Lee conclude, “to pull off energy innovation successfully, you need scale.”

And, of course, you also need to keep innovating. As First Solar’s Eaglesham says, “there’s never the last word in technology.” Doing all this requires massive sums of money — and an acceptance of the inevitability of frequent failure.

That could be a tough sell in Washington, given the downfall of Solyndra and the unsteady status of some other recipients of Energy Department assistance. Massachusetts-based Beacon Power, maker of a nifty and effective — but unprofitable — method of using flywheels for electricity storage, filed for bankruptcy on Oct. 30. Ener1, a maker of lithium-ion batteries and a recipient of an Energy Department grant, was delisted by the Nasdaq Oct. 28 because of its low stock price.

Perhaps the federal government is, as former Obama economic adviser Lawrence Summers put it, “a crappy VC,” or venture capitalist. Or perhaps it should stick to funding basic research. But if more recipients of Energy Department loan guarantees falter, they will become part of a long, if undistinguished, history of failure.


Steven Mufson covers energy for The Washington Post.




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11/20/11 - Database of State Incentives for Renewable and Efficiency (11/20/11 is the date posted on this site, not the date the information below first became available).  

DSIRE tracks renewable energy incentives and policies established by the federal government, state governments, U.S. territories, local governments, larger utilities and a few non-profit organizations. DSIRE categorizes these incentives and policies into two groups: 

  • Financial Incentives include a variety of tax incentives, grants, loans, rebates, industry recruitment/support, green building incentives, performance-based incentives and other forms of incentives.
  • Rules, Regulations & Policies include public benefits funds, renewable portfolio standards, net metering, interconnection standards, line-extension analysis, contractor licensing, equipment certification, solar/wind access policies, solar/wind permitting standards, construction & design standards (including building energy codes and energy standards for public buildings), mandatory utility green power options, generation disclosure policies and green power purchasing policies.

The DSIRE Glossary provides a description of each incentive type.


The following screen shot shows part of a handy summary chart that is available at the DSIRE site. This chart is interactive and can be found at:





11/21/11 - Wind and Solar Have No Argument

U.S. Energy Subsidies: Wind and Solar Have No Argument

Posted November 21, 2011 | folder icon 
recent report of the U.S. Energy Information Administration (EIA) has put the kaput to the argument that natural gas and coal receive more federal subsidies than politically correct energies (wind, solar, and not much else). In FY 2010, wind’s $5 billion swamped oil and gas’s $654 million. Even tiny solar out-received oil and gas by one third.

But when you look at the subsidies on an energy production basis, the disparity becomes stunning (or scandalous from a taxpayer viewpoint).  Wind’s 5.6 cents per kilowatthour is more than 85 times that of oil and gas combined. And solar … would you believe 13 times that of wind, making the disparity north of a thousand times?

But a second argument of renewable advocates has crept up: that government subsidies over many decades allowed the oil and gas industry to cement its perch atop the energy chain. The implication is that wind and solar may need the same long-lived subsidization to achieve commercial viability too.

Argument from History

This argument from history is errant as well.

The commercial oil industry dates to 1859, the year of the Drake well in Pennsylvania. The U.S.petroleum industry matured in the next decades and then shifted to the southwest with the discovery of the Spindletop gusher in Beaumont,Texas in 1901.

Meanwhile, a commercial petroleum industry developed abroad, a development that would lead to increasing oil imports to the U.S.and price “demoralization” for domestic producers by the late 1920s. From this period through the 1960s, the “problem” was too much oil, not too little.

Does this sound like an infant industry? Hardly! It was an industry that was ‘too good for itself’ in some ways, and certainly not one threatened by a cheaper energy source as, say, electricity was to manufactured (coal) gas in this era.

So when did government oil and gas subsidies begin in the U.S.?

Corporate taxation began in 1909, and the depletion tax writeoff began in 1913. The intangible drilling and development cost deduction began in 1917. So the classic subsidies cited by renewable apologists began a half-century after the industry was born. Direct government subsidies, such as checks written on the U.S. Treasury, were virtually nonexistent in the history of the petroleum industry.

Industry Penalization

The federal government has a long history of penalizing the industry, not only subsidizing it via the tax code. Price ceilings on oil production and the sale of petroleum products during World War II and again in the 1970s are cases in point. Also recall the Windfall Profit Tax of 1980, however short-lived.

On the natural gas side, comprehensive price controls on wellhead gas sold in interstate commerce lasted from the 1950s through the 1970s. Such controls caused predictable shortages for consumers, making not only producers butconsumers victims of federal energy policy.

Moreover, the brunt of special tax favoritism was removed beginning in the 1970s. So an argument can be made that the U.S.government has reverse subsidized oil and gas in the last half-century.

Imagine if electricity from wind and solar were constrained by a federal price ceiling. Imagine is solar and wind companies were subject to an excess profits tax. Imagine if a wind-turbine exploding or a wind worker falling to his death led to a moratorium on new wind projects.

Or imagine if governments around the world suddenly announced a 50-year holiday on taxpayer favor to correspond to the sink-or-swim period of the oil industry.

Say goodbye to virtually all of industrial windpower. And the solar industry would shrink to its rightful off-grid self, where its niche applications would provide bridge energy until the place/area could graduate to (fossil-fuel) grid power.


Wind and solar are consumer-rejected forms of electrical power, pure and simple. They are not infant industries but perennially inferior ones. Government subsidies for any form of energy, and certainly the least economic (most dilute), is an easy budget cut for any democracy in deficit.


Source: Robert L. Bradley Jr., Oil, Gas & Government: The U.S. Experience (Roman & Littlefield, 1996): chapter 5 (wartime price controls); chapter 7 (oil and gas taxation); chapter 8 (natural gas price controls); chapter 9 (crude oil price controls).

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11/26/11 - LABRADOR & POMPEO: Era of energy subsidies is over

LABRADOR & POMPEO: Era of energy subsidies is over

American consumers, not Congress, should choose best power sources

Illustration: Energy distress by Greg Groesch for The Washington TimesIllustration: Energy distress by Greg Groesch for The Washington Times

Bill Clinton famously said, “The era of big government is over.” Well, it didn’t work out that way. But something truly remarkable is happening in our national conversation about energy subsidies: outrage, mounting opposition and, we hope, a swift end. This would be great news for taxpayers and consumers.

Subsidy folly has been bipartisan and commonplace. For the past three decades, both parties have intervened in the energy industry. In 1978, a Democrat-controlled Congress and President Carter created an investment tax credit for solar, wind and other renewable energy sources. In 1992, a Democrat-controlled Congress and Republican President George H.W. Bush passed the production tax credit for electricity produced from wind and biomass. Then in 2005, a Republican-controlled Congress and President George W. Bush passed the Energy Policy Act of 2005, which included massive tax subsidies for seemingly every energy source under the sun, including alternative vehicles, advanced nuclear power and, of course, solar power. The latter legislation created the infamous Department of Energy loan-guarantee programs that produced the ongoing Solyndra scandal.

After three decades, what have we learned?

c Energy subsidies distort the free market by funneling billions in taxpayer dollars to politically favored energy sources and technologies, preventing market prices from signaling the optimal source for particular energy uses.

c Subsidizing energy sectors drains the federal treasury and forces the consumption of higher-cost energy sources.

c Politically allocated capital typically flows to politically connected companies or to large companies that could develop innovative technologies on their own dime. The $535 million Solyndra scandal has reinforced all of these lessons and helped shine a light on the energy-subsidy debate, exposing those who maintain government is the solution to our energy needs.

The good news is that with the support of the American people, politicians now are speaking the truth. At a recent Republican presidential forum, the candidates were in near-unanimous agreement that it is time to end the federal government’s role and allow the free market to bring our nation the next great energy source. Texas Gov. Rick Perry said, “I do not think it is the federal government’s business to be picking winners and losers, frankly, in any of our energy sources.” Rep. Michele Bachmann had similar remarks: “I want to see a [level] federal playing field. We’ve seen what a disaster it is when the federal government picks winners and losers.” In his economic plan, former Massachusetts Gov. Mitt Romney said government “should not be in the business of steering investment toward particular politically favored approaches.” This is progress. Just four years ago, almost every candidate in Iowa was afraid to say that subsidizing politically favored energy technologies had been an enormous policy failure.

Given the shift in the debate, the time to end subsidies is now. This month we introduced the Energy Freedom and Economic Prosperity Act, H.R. 3308, which has garnered support from such conservative organizations as Americans for Prosperity, Americans for Tax Reform, Club for Growth, Council for Citizens Against Government Waste, Freedom Action, Heritage Action for America, National Taxpayers Union and Taxpayers for Common Sense. H.R. 3308 would eliminate all energy tax credits, each of which is nothing more than a taxpayer handout to politically favored industries or companies. From solar to wind, from geothermal to biomass and from ethanol to hydrogen, they all must go. It is equal opportunity - not one single solitary tax credit would survive this bill. The proposal then would use the savings realized from the repeal of these tax credits to lower the corporate tax rate. This is a perfect model for tax reform - close out politically allocated tax favors and loopholes and lower taxes on every business that competes in America.

While we are gaining broad public support to end these energy tax credits, the takers of government largesse seldom go quietly. The pro-subsidy lobby pushes to extend its giveaway from Uncle Sam, seeking to extend the production-tax-credit subsidies for wind, biomass and geothermal energy every four years. This is the umpteenth-and-never-final request for “just four more years.” But a few more years will just lead to a few more years after that. Even before we introduced the legislation that for the first time would provide zero tax credits to any energy source, the American Wind Energy Association howled that Rep. Mike Pompeo “seems to misunderstand how a key federal tax incentive has built a thriving American wind manufacturing sector and tens of thousands of American jobs.” Well, we both understand perfectly - handouts are hard to give up.

After three decades, the tide on energy subsidies has turned. Our nation has squandered hundreds of billions of dollars with these tax credits and has little to show for it. We hold no ill will to any of these energy sources that receive tax credits - some or all of them may well become the next great American energy technologies. But having dozens of energy handouts leads companies to spend resources lobbying Washington rather than tinkering in their garages and labs. Indeed, we are counting on one of these alternatives to succeed. We just know that we have no idea, nor do any of our peers in Congress, which one consumers ultimately will demand. The winner must be determined the old-fashioned way: through hard work, innovation, American moxie and superior skills engaged in competition.

Let’s put a different twist on the old saying “not invented here” by acknowledging that energy technology never has been invented here - on the Potomac - and do away with energy subsidies once and for all.

Rep. Raul R. Labrador is an Idaho Republican. Rep. Mike Pompeo is a Kansas Republican and member of the House Committee on Energy and Commerce.


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11/28/11 - Windpower’s PTC: Secondary to state mandates


WindAction Editorial

Windpower’s PTC: Secondary to state mandates

(Posted November 28, 2011)


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11/29/11 - Wind Turbines & “Green” Subsidies Under Fire



Despite billions in taxpayer subsidies pumped into the so-called “green-energy” industry, almost 15,000 windmills — maybe more — have been left to rot across America. And while the turbines have been abandoned over a period of decades, the growing amount of “green junk” littering the American landscape is back in the headlines again this week.

Across the country, subsidized wind farms are meeting increasing resistance — and not just from taxpayers and electricity consumers forced to foot the bill. "If wind power made sense, why would it need a government subsidy in the first place?” wondered Heritage Foundation policy analyst Ben Lieberman, who deals with energy and environmental issues. “It's a bubble which bursts as soon as the government subsidies end."

It turns out that wind power is expensive and inefficient even in the best wind-farm locations in the world. And regular power plants always need to be on standby in case there is no wind, not enough wind, or even too much of it — a fairly regular occurrence.

That is why, when the tax subsidies run out, the towering metallic structures are often simply abandoned. In their wake: a scarred landscape and dead wildlife — the very same ills offered as justifications by administration officials for preventing oil exploration.

“Wind isn't the most important thing about wind turbines. It is all about the tax subsidies. The blades churn until the money runs out,” noted Charleston Daily Mail columnist Don Surber last week. “If an honest history is written about the turn of the 21st century, it will include a large, harsh chapter on how fears about global warming were overplayed for profit by corporations.”

Even environmentalists are jumping on the anti-wind power bandwagon. In California, where state mandates and subsidies have led to a boom in subsidized “green” energy projects, a San Francisco-based company just announced last week that it was halting plans to build a new wind farm. The scheme was shelved over concerns about the danger it would pose to birds.

The press is starting to ask questions, too. “As Beaufort County [North Carolina] considers the proposal of Pantego Wind Energy, LLC's to build 49 1.6MW wind turbines on 11,000 acres of land, it may be of interest to some that the trend in the industry is to abandon such projects once the tax credits expire,” noted the Beaufort Observer on November 19. The editorial urged county commissioners to attend a seminar exposing the “Big Wind” industry hosted by the John Locke Foundation next month.

Around the world, concern about wind turbines is growing as well. In the UK, the Daily Express reportedon November 28 that government ministers were being urged to abandon the race to build wind farms because they can cause “life-threatening” illnesses.

“The health impacts of wind farms are serious. I have no doubt that many people have suffered serious adverse effects,” said Dr. Chris Hanning, an expert in sleep medicine. “The Japanese government implemented a four-year program of research into the health effects of wind turbine noise. Pressure should be placed on the UK governments to do likewise.”

And in Australia, conservation supporters are battling to stop the wind farms, too. Activists in the nation’s southwest rejoiced over the announcement this week that one windmill project in the area was being shelved. But there are still many battles to fight. “It really is one of the most important breeding areas, but wind turbines just don’t mix with birds unfortunately. We’ve got to keep fighting to keep the brolga,” Susan Dennis, a longtime defender of that breed of bird, told The Standard. “I don’t accept that their endangered population is acceptable collateral damage for green energy.”  

Of course, dead birds, health problems, and massive wealth destruction are not the only reasons to stop subsidizing wind farms. Other environmental concerns exist, too.

“There are many hidden truths about the world of wind turbines from the pollution and environmental damage caused in China by manufacturing bird choppers,” noted environmental blogger Tory Aardvark in a recent post about wind farms, also citing the dangerous noise produced by turbines. He added,

The symbol of Green renewable energy, our savior from the non existent problem of "Global Warming," abandoned wind farms are starting to litter the planet as globally governments cut the subsidies taxes that consumers pay for the privilege of having a very expensive power source that does not work every day for various reasons like it’s too cold or the wind speed is too high.

He called the more than 14,000 abandoned wind turbines in theas  U.S. symbols of a “dying Climate Religion.”

In recent days, a wave of articles and opinion pieces highlighting the wastefulness and destructiveness of wind farms swept the worldwide web. But with so much tax money at stake for the green-power industry, which lobbies intensely for ever more money, it will be hard to end the subsidies which generated the bogus “industry” in the first place.

The Solyndra debacle, however, has created what analysts called a serious public-relations problem for subsidized “green-energy” producers of all stripes. And then there is “Climategate2.0.” The scandal, surrounding a second batch of embarrassing e-mails from “climate scientists” leaked last week, has dealt another serious blow to the foundation of it all — United Nations-backed global-warming alarmism.  

“This whole wind energy mess just further illustrates how the American people have been played by their elected officials who bought into the ‘global warming’ hysteria that spawned the push for wind energy in the first place,” wrote Jonathan Benson for a piece in Natural News dealing with the abandoned wind turbines. “And now that the renewable energy tax subsidies are gradually coming to an end in some places, the true financial and economic viability, or lack of wind energy, is on display for the world to see.”

Analysts have said that if and when tax subsidies to wind power and other green-energy schemes are finally cut, the whole house of cards will come crashing down almost instantly. But then a new question arises: Who will clean up the mess?

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12/4/11 - Clean energy powers a revolving door to K Street

byTimothy P. Carney Senior Political Columnist
Democratic presidential hopeful Sen. Barack Obama (D-IL) (R) listens to former U.S. Energy Secretary Frederico Pena speak at a campaign stop at the Albuquerque Convention Center February 1, 2008 in Albuquerque, New Mexico. (Photo by Chip Somodevilla/Getty Images) "Pena served on the Obama transition team while also working as a senior adviser at Vestar Capital Partners, where he 'pursues investments in the field of alternative energy,' according to the firm's website," writes Examiner columnist Timothy P. Carney. "

Solar panels and windmills have a reputation as unreliable sources of power, but they sure make the revolving door spin.

The steady parade from government to K Street of green energy officials shows that President Obama's furious efforts to subsidize alternative energy undermine his stated goals of reducing special interest influence and shutting the revolving door through which public servants become mercenary lobbyists. Specifically, the Energy Department is churning out lobbyists faster than a coal-fired power plant spews carbon dioxide.

Stephanie Mueller graduated from the Obama campaign to become spokeswoman for Energy Secretary Steven Chu. At Energy, Mueller "served as a strategist and primary spokesperson on energy efficiency, renewable energy sources such as wind, solar and geothermal, clean energy tax credits and grants," according to a current online biography. This was no small portfolio, as the Obama administration repeatedly expanded on the already generous portfolio of green energy subsidies the Bush administration had created.

In November, Mueller cashed out of DOE to run the D.C. office of law firm Berlin Rosen. She is now "Senior Vice President in the National Issue Advocacy Practice." She will also run the firm's "interdisciplinary Energy and Environment practice group." In brief, she gained experience and connections on the taxpayer dime helping justify and defend subsidies to companies like Solyndra and General Electric, and now she's putting those connections and experience to work for private companies profiting from or seeking these subsidies.

Jordan Collins is another DOE alumnus now helping subsidy seekers navigate the world of regulations and handouts. Collins started at DOE under President Bush in 2007 as an "embedded consultant." Specifically, he helped DOE's Office of Energy Efficiency and Renewable Energy craft legislation, and then had a hand in implementing it. This included the stimulus bill's loan guarantees and "tax credits" (they're really handouts) for renewable energy facilities and the manufacture of renewable energy equipment.

Collins cashed out to K Street this fall, helping clients with -- you guessed it -- renewable energy and energy efficiency. As Collins puts it in his online bio, his job is to "advise clean energy clients on issues related to financing, capital markets, tax, technology commercialization, as well as policy and regulatory developments in these areas." Collins' official title is "Director of Government Relations" at ML Strategies.

ML's green energy clients include Capstone Turbine Corp., the Solar Trust of America, BigBelly Solar, Deepwater Wind, the Coalition for Clean and Renewable Energy, and the American Biogas Council. At ML, Collins joins Clinton DOE alumnus David Leiter, who was also an energy staffer for Sen. John Kerry, a leading proponent of restricting greenhouse gas emissions.

The Energy Efficiency and Renewable Energy Office, which produced Collins, is a hub of the DOE-industrial complex. Former EERE head Cathy Zoi now is a partner at Silver Lake Kraftwerk, a venture capital fund co-founded by liberal billionaire and Democratic Party financier George Soros. Kraftwerk, as you might guess, invests in firms specializing in energy efficiency and renewable energy.

While most of the men and women who hand out green energy subsidies are nearly anonymous, you may know the name Steve Spinner. He was the DOE official who administered the loan guarantee program that put taxpayers on the hook for a half-billion loan to now-bankrupt solar panel maker Solyndra. Spinner has returned to private venture capital, where he invests and advises investments in "cleantech" and helps firms with "government initiatives," according to his online resume.

The Energy Department produced energy lobbyists long before Obama was president, of course. The Bush administration famously traded personnel with the coal and oil industry, but also plenty of Bush energy alumni went into green energy lobbying. Most notably, Bush's first energy secretary, Spencer Abraham, runs his own lobbying firm, the Abraham Group, where his old DOE chief of staff lobbies for offshore wind tax credits on behalf of Deepwater Wind.

Bill Clinton's former energy secretary, Federico Pena, served on the Obama transition team while also working as a senior adviser at Vestar Capital Partners, where he "pursues investments in the field of alternative energy," according to the firm's website.

Nobody can blame alternative energy investors like Vestar or green energy developers like Deepwater Wind for hiring DOE officials. After all, the only way to make money with wind and solar these days is by seeking subsidies -- either tax breaks, handouts, government loan guarantees, or mandates that force consumers to use these power sources that are far costlier than coal, natural gas, oil and nuclear.

Although alternative sources are becoming more efficient, it's still true that if you want to generate power, you need fossil fuels. If you just want to generate profits, however, some solar panels and a former government official do nearly as well.

Timothy P.Carney, The Examiner's senior political columnist, can be contacted attcarney@washingtonexaminer.com. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.


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12/7/11 - HUFBAUER: Debunking the big-oil subsidy myth

Energy companies receive same tax treatment as other manufacturers

The late Sen. Daniel Patrick Moynihan used to warn against “semantic infiltration” - employing less-than-accurate words in an effort to shape the debate. Moynihan’s caution is often ignored, but it’s still worth calling out the offenders. Among them is a favorite think tank of the Obama administration, the Center for American Progress (CAP), which regularly insists that taxpayers are “subsidizing big oil companies.”

That’s simply not true.

U.S. energy companies, specifically those in the oil business, are eligible for the same tax treatment as other U.S. industries. To understand this, it’s important to take a close look at the words being used.

CAP shrewdly - but inaccurately - conflates two completely different terms in public finance: subsidy and deduction. A subsidy is a payment made by the government, usually to promote the prospects of a specific technology or action - be it solar energy, ethanol or something else. Subsidies are often equated with handouts - a derisory term for sure.

A business deduction, on the other hand, is designed to ensure that a firm is taxed only on its net income. Deductions allow businesses to write off legitimate expenses from gross revenue to calculate net income. Deductions are widely regarded as proper in a system that taxes income, not revenue.

Properly defined, subsidies and deductions are as different as apples and oranges.

That hasn’t stopped President Obama, Democrats in Congress and even some Republicans from semantic infiltration. For example, Rep. Reid J. Ribble, a first-term Wisconsin Republican, fell into the rhetorical trap when he called deductions for oil companies a “federal subsidy” just last month.

His statement takes us to another important point: Many lawmakers routinely accuse oil and gas companies of dodging their “fair share” of taxes even though those U.S. companies use the same tax provisions that are available to all U.S. manufacturers.

Specifically, some lawmakers bemoan the oil and gas industry’s access to the domestic manufacturing deduction - commonly referred to as Section 199 - which was enacted as a means of keeping jobs in the United States. The deduction cuts the applicable corporate tax rate by about 2 percentage points on manufacturing income broadly defined and is used by a wide range of businesses. There is no reason Section 199 should not be available for refining and processing petroleum products.

Also, some lawmakers seek to alter a provision of the tax code that allows American oil and gas companies operating overseas, like all other U.S. companies, to take a credit for taxes paid to foreign governments in computing their domestic tax bill. This provision prevents American companies from being taxed twice on the same income and enables them to compete on roughly the same tax terms as foreign-owned companies. Again, this is not a subsidy.

The semantically accurate way to describe legislation that would eliminate the manufacturing deduction or curtail the foreign tax credit for oil and gas companies is straightforward: the imposition of tax discrimination, not the removal of federal subsidies. Because most Americans agree that tax discrimination is bad policy - Uncle Sam shouldn’t be picking winners and losers through the tax code - accurate language would diminish enthusiasm for these proposals.

Lawmakers must debate tax and spending policy. In fact, this promises to be the center-stage legislative show of 2013. But the debate should use honest terms in which up is up, down is down, and deductions and subsidies aren’t the same.

Gary Clyde Hufbauer, senior fellow at the Peterson Institute for International Economics, served in the Treasury Department as an international tax expert under Presidents Nixon and Ford.


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Keep those subsidies flowing  

Credit:  By Tracy Warner, Editorial Page Editor, The Wenatchee World, www.wenatcheeworld.com 23 December 2011 ~~

It now is federal policy that we buy electricity we do not need, or pay Californians to take it, while curtailing power made far more cheaply, putting the stability of the regional electrical grid at risk, possibly endangering salmon and violating environmental law, all so owners of windmills not have their federal subsidies diminished.

This is baffling, but the Federal Energy Regulatory Commission ruled this month that not doing all this amounts to wrongful discrimination against windmills. Though inefficient, expensive and intermittent, windmills find favor among those with power over the overpowered, which means us.

This is nature and the green economy at work. Last spring in the Pacific Northwest, on the east slopes of the Cascades and west slope of the Rocky Mountains, the winds blew and snow melted. This is usual. What was abnormal was the depth of the snowpack — deepest in more than a decade — and the number of whirling windmills pushing power into the Northwest grid. Spring being a mild season, power consumption was at a low ebb while power made from melting snow and blowing wind was at a zenith. The Northwest was making more electricity than it could consume.

When this happens something must be done. Power generated must go somewhere and be used. If not the system can weaken or fail. So, the Bonneville Power Administration, the regional administrator of federal energy and its distribution, shut down all thermal power sources — natural gas, nuclear — giving away hydropower in lieu. That was not enough, so it “curtailed” 5 percent of wind power production from mid-May to July. Again, free hydropower was offered in replacement.

This caused the wind industry to spin off its axles. Windmills exist not to profit from power sales but to meet “renewable” quotas and reap federal tax subsidies. Losing power was not the problem. Losing millions in tax credits was. The windmill owners sued. They said BPA breached its promise to distribute their power. They appealed to FERC. This month FERC ruled that BPA polices were favorable to hydropower and biased against windmills. It said BPA must rewrite its rules, to be more evenhanded, to allow the windmills to spin and collect their tax credits.

This creates trouble for BPA, because they as yet are unable to control the climate or negate the persistent effects of gravity. The water will come out of the mountains, FERC policy notwithstanding. It must run through the dams and will generate electricity. The turbines cannot be bypassed without violating the Clean Water Act, the Endangered Species Act and many agreements and edicts, because spilling over dams dissolves nitrogen in the water, which harms tiny salmon migrating in the spring flood. Doing salmon no harm is the prime directive, by federal law.

There will be times, after wet winters and in blustery springs, when we cannot use all the electricity we make. Exports are limited by the western grid, and because in springtime demand for power is usually low. The wind industry suggests BPA use “negative pricing,” which means pay people to take power, or pay for lost subsidies. Or, Bonneville could order us to crank up our hot-water heaters, or hand out 100-watt lightbulbs and clogged furnace filters.

Of course, the price for all this eventually is paid by the users of electricity, the ratepayers, who will pay for power not made or not used, or pay Californians to take it away, or pay the windmill owners for lost subsidies, and eventually pay back the money borrowed by the federal treasury to provide the windmill owners with steady income.

Pray for snow, pray for wind, but not too much. We can’t afford it.


1/17/13 - American Taxpayer Investment, Foreign Corporation Benefit

Foreign Corporations Have Received Approximately One-Quarter of $16 Billion Spent on “Section 1603” Renewable Energy Stimulus Program


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Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power


Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT


(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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Sign up today and lend your voice and presence to the steadily rising tide that will soon sweep the scourge of useless and wretched turbines from our beloved Maine countryside. For many of us, our little pieces of paradise have been hard won. Did the carpetbaggers think they could simply steal them from us?

We have the facts on our side. We have the truth on our side. All we need now is YOU.

“First they ignore you, then they laugh at you, then they fight you, then you win.”

 -- Mahatma Gandhi

"It's not whether you get knocked down: it's whether you get up."
Vince Lombardi 

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."


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