Subsidizing Big Wind: The Real Costs to Taxpayers

October 15, 2012

Compared to other industries, big wind receives the most lavish support from the federal government. In addition to direct subsidies, the industry is given a subsidy at the state level in the form of mandates for renewable energy consumption. Another indirect subsidy: the exemption that the wind industry has been given with regard to enforcement of federal wildlife laws, according to Robert Bryce, a senior fellow at the Manhattan Institute.

The Production Tax Credit (PTC) is the direct subsidy that gives wind energy producers 2.2 cents for every kilowatt-hour of electricity they produce. Compared in terms of per-British thermal unit (BTU) basis as well as total energy produced, the wind industry receives more support than any other energy source in the sector.

  • The oil and gas sector receives $1.9 billion in subsidies per year.
  • This amounts to $0.03 per million BTU of energy.
  • But the wind industry receives a subsidy of $6.44 per million BTU produced.
  • The nuclear industry received $900 million in subsidies in 2011, which works out to $238 per barrel of oil equivalent per day.
  • At that level, the wind industry is getting nearly 6.5 times as much in subsidies as the nuclear industry.

States also mandate that a certain portion of electricity come from renewable sources, which gives wind power an advantage over traditional forms of energy. This imposes higher costs on consumers, who have to pay for the higher costs of new transmission lines that can accommodate wind energy.

Proponents of subsidies for the wind industry often argue that the jobs created by wind companies justify the cost. The American Wind Energy Association has claimed only 37,000 jobs would be lost if the PTC is not extended. Yet the cost of extending the PTC would be $12.18 billion from 2013 to 2022, or $329,000 per job.

The most egregious example of how far the government is willing to go to subsidize the wind industry is in its exemption of prosecuting companies for killing federally protected birds. For example, thousands of birds are killed every year by the wind turbines at Altamont in California without repercussion. Environmental groups are beginning to coalesce around the issue and lobby the government for more protection of animals. However, the Obama administration, like the Bush administration, has not prosecuted the wind industry for violating the laws.

Source: Robert Bryce, "Subsidizing Big Wind: The Real Costs to Taxpayers," Manhattan Institute, October 2012.

 

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