The Wind Production Tax Credit: Corporate Welfare at Its Worst

January 2, 2013

For 20 years, the wind-energy industry has been the beneficiary of a federal subsidy called the Production Tax Credit (PTC). Designed to promote wind power as part of an overall strategy to boost "renewable" energy, the PTC provides producers a tax credit of 2.2 cents per kilowatt-hour of electricity generated. What began as a temporary helping hand to enable wind power to compete with traditional sources of energy has become a permanent fixture of the wind industry's business model. The PTC has faced expiration six times since it was enacted in 1992, only to be extended by Congress under pressure from the wind industry and advocates of renewable energy, says Bonner R. Cohen, a senior fellow at the National Center for Public Policy Research.

The 20-year-old subsidy to the wind industry should be allowed to expire and here are the reasons why:

  • The wind industry does not need the PTC in order to survive.
  • The PTC places an unacceptable burden on wind-poor states and states with no renewable-energy mandates.
  • The PTC undermines and distorts price signals in the wholesale electricity market by giving wind producers an incentive to sell electricity at a loss to earn enormous tax subsidies.
  • Even with taxpayer subsidies, wind is, and always will be, an intermittent and unreliable source of energy.
  • With $16 trillion in debt and rising, the United States cannot afford to continue propping up a non-competitive, unreliable source of energy.

Source: Bonner R. Cohen, "The Wind Production Tax Credit: Corporate Welfare at its Worst," National Center for Public Policy Research, December 2012.

 

Browse more articles on Environment Issues