NCPA - National Center for Policy Analysis


October 26, 2007

Democrats in Congress are considering a House energy bill that undermines energy independence by raising taxes on domestic production, says the Wall Street Journal.


  • The bill's worst (and little noticed) provision is a requirement that 15 percent of U.S. electricity be generated from "renewable" sources by 2020.
  • Utilities that can't meet these goals are fined -- taxed, really -- based on how far short they fall.
  • If it's more expensive for some to generate electricity through renewables, those utilities can either buy excess credits from others (as permitted in the bill) or pay the fines.
  • Currently, only about 3 percent of energy is provided by such renewables as wind, solar or "biofuels."

Unfortunately, says the Journal:

  • The fines amount to a tax on low-cost energy producers without generating any environmental benefits.
  • And whether credits are purchased or fines are paid, those added costs will go into the utilities' rate bases, driving up consumer electricity bills.
  • At the same time, utilities would be forced to pour money into pursuing the mandate, rather than investing in badly needed upgrades to the nation's electrical grid.

In any case, as we're discovering with corn-based ethanol, renewables have their own problems, both substantive and political, says the Journal.  Liberals are all for wind power -- as long as it doesn't obstruct the oceanfront views off Nantucket.  Hydro power is alright -- except it kills fish and disrupts their habitat.  Solar requires acres and acres of real estate.  There's plenty of land for solar arrays in the middle of the country, or at least there was before the land was turned over to grow corn for heavily subsidized ethanol.

Source: Editorial, "Renewable Stealth Tax," Wall Street Journal, October 25, 2007.

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