Guest post by Steve Goreham
The U.S. wind industry is in despair. The Production Tax Credit (PTC), a subsidy of 2.2 cents per kilowatt hour to producers of electricity from wind turbines, is set to expire at the end of this year. The American Wind Energy Association cites a study by Navigant Consulting, claiming that, “…37,000 Americans stand to lose their jobs by the end of the first quarter of 2013 if Congress does not extend the PTC.”
The Natural Resources Defense Council, the Sierra Club, and other environmental groups have rushed to the defense of the PTC. The Sierra Club states, “At a time when we need clean energy more than ever, we simply cannot afford to let the PTC expire.” The PTC is the cornerstone of President Obama’s green energy program and a key measure supported by environmental efforts to fight global warming.
The Production Tax Credit was established by the Energy Policy Act of 1992 to support the nascent wind industry. But twenty years later, is this subsidy still needed? By the end of 2011, 39,000 wind turbine towers were operating in the United States and about 185,000 turbines were in operation worldwide, according to the International Energy Agency. This is no longer an infant industry. Despite the large number of wind towers, wind provides less than one percent of U.S. energy and less than one percent of global energy. A one-year extension of the PTC would cost American taxpayers over $12 billion.
In September, 19 companies sent a letter to the leaders of the U.S. House of Representatives, urging extension of the PTC. Why would Johnson & Johnson, Sprint, Starbucks, and other signers of the letter support subsidies for another industry? They voiced concern that “Failure to extend the PTC for wind would tax our companies and thousands of others like us that purchase significant amounts of renewable energy…”
Never has corporate America been so misguided. Foolish policies like the PTC and proactive company programs to buy “green” renewable energy are based on Climatism, the belief that man-made greenhouse gases are destroying Earth’s climate. An increasing body of science shows that climate change is natural and that human emissions are insignificant. Nevertheless, Johnson & Johnson’s web site claims a reduction of 23 percent in carbon dioxide emissions from 1990‒2010. That emissions reduction and two bucks might get you a cup of Starbuck’s coffee.
While many people would like to power the world with zephyrs, the intermittency of the wind means that wind turbines cannot replace conventional nuclear, natural gas, or coal power plants. The 39,000 U.S. wind turbines generated only 29% of their rated output during 2011. When the wind doesn’t blow, conventional power plants must provide backup power if continuity of electrical supply is to be maintained.
In fact, electricity sourced from wind turbines does not cut CO2 emissions from a power system. Because of the rapid variation in the wind, backup coal or natural gas power plants must frequently and inefficiently cycle on and off to support demand. Studies from electrical power systems in Netherlands, Colorado, and Texas show that combined wind-conventional systems emit more CO2 and use more fuel than conventional systems alone.
Wind is also more costly than conventional systems. Analysis from the U.S. Department of Energy (DOE) shows that electricity from both coal and natural gas is much less expensive than from wind power, without requiring subsidies for operation. The DOE estimates the world has 200 years of technically recoverable reserves of natural gas, thanks to the hydraulic fracturing revolution. If the theory of man-made global warming is wrong, why subsidize another wind turbine?
The government can always provide subsidies to create jobs or to sustain jobs, but this may not be the best public policy. Thomas Jefferson was correct when he said, “It is error alone which requires the support of government. Truth can stand by itself.” Suppose we let the wind industry compete on its own merit?
Steve Goreham is Executive Director of the Climate Science Coalition of America and author of the new book The Mad, Mad, Mad World of Climatism: Mankind and Climate Change Mania
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Interesting numbers – if correct: $12bn/yr buys 37,000 jobs. These jobs pay (to be precise, cost us) an average $324,000 dollars per year. No wonder PTC receivers fight for an extension furiously.
$12 billion for 37,000 jobs is $325,000.00 per job…
Maybe J&J et al believe their customers strongly support climatist fantasies and are pandering to this. If so, it is a form of brand advertising for them.
Or maybe they want to just get on the gravy train themselves.
Economics and logic do not matter. Building and operating windmills gives you a warm, tingly, green feeling. That’s what counts. Dominion Power just sent their users an offer to by RECs for green energy. I can have 100% of my home’s electricity from green sources for only $130/mWh. That’s about twice the residential rate and 3 times the typical spot rate. I’m not all that thrilled to pay twice as much for my power and I know most businesses don’t want their rates significantly increased. So, tell me why wind turbines with subsidies are so wonderful?
, “…37,000 Americans stand to lose their jobs by the end of the first quarter of 2013 if Congress does not extend the PTC.” <- total bull, people need to read "Economics in One Lesson"
Oh yes, and the wind turbines are unsightly. Ask the people of northwestern Ohio who are now …”pitching a fit” over their new landscape. All energy production has its local impacts, and the cost/benefit on wind is the worst of the lot.
Thank you.
I abhor subsidies.
But I also abhor financial step functions.
The mistake, aside from creating the subsidy in the first place, is to terminate it cold turkey. It is therefore much too easy to extend it!
Far better is to sunset any such ill conceived program gradually, say reduce the $0.022/kwhr by $0.002/kwhr per quarter. It is gone in 2.5 years and there is no “cliff” of sudden layoffs. The most inefficient go out of business first leaving the survivors with better economics via lesser competition.
In Oklahoma, OG&E is pushing windpower with a bizarre claim that that the customer will receive Renewable Energy Credits (REC’s) which of course cannot be resold. The cost is quoted (@ur momisugly100% entry) as 0.007/KWH which they claim is only about $7 a month for the average user of 1000 KWH /month. This however is about my base usage and actual is about 2.5 times more @ur momisugly around $18/month (all electric). Not a lot considering, but then when the PTC drops off…..
They also pulled another sneaky in that they failed a rate increase request (probably needed from wind power as natural gas prices have taken a big dip), but then increased their Fuel Factor Adjustment which use to bounce around and typically average negative, to a constant 0.0313 /KWH to make up for it. This is obviously a lot more than 0.007/KWH and amounts to around $75/month average for me. Another 0.022 /KWH would push that up another $55/month. I would say that wind power is already starting to make a significant impact.
Well I for one am looking forward to freezing to death during the next LIA waiting for my wind electricity. These morons need to grow a pair and tell them live or die but do it on your own.
Bob says:
November 26, 2012 at 6:03 pm
Economics and logic do not matter. Building and operating windmills gives you a warm, tingly, green feeling. That’s what counts. Dominion Power just sent their users an offer to by RECs for green energy. I can have 100% of my home’s electricity from green sources for only $130/mWh.
=======================================================================
They don’t actually rewire your supply. You get it off the grid, just like your neighbors.
https://www.dom.com/dominion-virginia-power/customer-service/energy-conservation/pdf/renew-energy-cert.pdf
$18B in subsidies to retain 37,000 jobs for a year. Very bad deal. $18B would yield 500,000 jobs paying $16.60/hour ($35k for a year).
As the analysis indicates, wind generated electrical power results in an increase in CO2 emissions and an increase in SO2 and NO2 emission due the cycling of power plants that are not designed to be cycled on and off.
So in addition to increasing the cost of electric power to individuals and industry which is a hidden tax, there is no offsetting “green” benefit.
As many are aware wind turbine construction is moving to China. So the wind jobs are for erection and maintenance of the wind turbines.
“Green” wind power is win-win if one is an AGW fanatic that who has no understanding of basic engineering and economics facts.
The following is an excerpt from one of the studies linked to above.
“This result is shown in the last column of table 2. A reduction of overall efficiency say from 55 to 50% does not appear dramatic. But it does mean that the total wind turbine and auxiliary investment is useless in the sense that no emission reduction or fossil fuel saving has been achieved. This fact, that the investment in the hardware has meant a significant amount of extra fossil energy that will never be recuperated, aggravates the situation.
One can question whether a reduction in conventional generating efficiency by wind turbine involvement has been noticed at all, because this reduction is spread out in a random manner over the many providers and types of power stations.
We like to stress again that our estimate is only concerned with the operational phase of wind turbines. Extra energy and labour costs resulting from the need to have 90 to 100% back-up and the energy and expense required for bringing wind electricity to and on the high tension network have not been considered.
The back-up issue will with high certainty remain below the radar in the Netherlands for as long as the amount of wind power is modest. It certainly has not yet been noticed by the environmental movement nor the Dutch environmental minister Jacqueline Cramer or minister of Economic affairs Maria Van Der Hoeven.”
The following are other independent studies that reach the same conclusion.
http://www.aweo.org/windEon2004.html
Eon Netz, the grid manager for about a third of Germany, discusses the technical problems of connecting large numbers of wind turbines [click here]: Electricity generation from wind fluctuates greatly, requiring additional reserves of “conventional” capacity to compensate; high-demand periods of cold and heat correspond to periods of low wind; only limited forecasting is possible for wind power; wind power needs a corresponding expansion of the high-voltage and extra-high-voltage grid infrastructure; and expansion of wind power makes the grid more unstable.
http://www.aweo.org/windCourtney1.html
This paper is the explanation provided by Richard S Courtney of why it is not possible for electricity from windfarms to be useful to the UK electricity grid. The explanation was presented at the 2004 Conference of “Groups Opposed to Windfarms in the UK.” It includes explanation of why use of windfarms is expensive and increases pollution from electricity generation.
Where was the bailout for the 18,000 Hostess workers about to be out of work? The people who won’t be hired due to Obamacare? The people laid off due to Obamacare? Etc. Jobs are not a good reason for extending subsidies. Jobs are lost every day. To keep paying for an expensive, very useless form of energy to just maintain jobs is not good. However, if one must retain the jobs, pay the workers, pay the wind plant owners and pay for the electricity they would have generated without damaging the planet with more of those spinning bat-killers. It would be better for electric costs, the environment and the grid. It would, of course, be brutally transparent. Right now we can pretend the money is spent on something valuable.
The wind industry has taken advantage of the public’s ignorance about utility operations and costs and have produced simplistic and misleading “analyses” of wind energy costs and carbon reductions. One point made in the article above, however is misleading and irrelevant per se : the
low output capacity of wind turbines. The turbine’s capacity is only relevant when it is proves
distinctly lower than the capacity planned and expected. 29% (for land based turbines) is not much lower than that typically expected (usually around 33%) . While a much lower capacity certainly would drive up the cost of wind power, the actual economics are determined by much broader considerations than wind proponents admit. That is where they mislead – since wind cannot replace a single megawatt of reliable power capacity, you end up with near duplication of capacity, which drives up costs enormously. And the need for backing upwind requires fossil fuel burning (with no power output),and that accounts for wind’s inability to reduce CO2 . The subsidy
amount, interestingly enough, is about the same as the cost of producing nuclear power..
Ethanol has lost its direct subsidy – so too should wind and solar both. I’d be ok with allowing renewable fuel credits in some fashion for wind and solar, but the subsidies have produced no real benefit in reducing fossil fuel use.
Worse – the vast majority of the money is going overseas – for both solar and wind equipment.
Worse yet is crap like this – DOWN-RATING wind generators to take advantage of higher rates for “small” installations – what a load of crap
http://www.spectator.co.uk/features/8766481/the-great-british-wind-scam/
The paper;s link is in the article.
Just a supplemental item for use by the forum.
Ya just don’t hear much about this stuff anymore, why ?
http://web.mit.edu/newsoffice/2010/climate-wind-0312.html
Wind energy is the least green energy on the planet. It’s costs in materials, manufacture, ecological footprint, noise pollution, shadow pollution, ice throwing, maintenance, and seriously limited lifetime means that wind energy is just plain not practical and is indeed unsustainable. It uses resources that are in very short supply—finally, something that fits the UN’s idea of unsustainability!
“Failure to extend the PTC for wind would tax our companies and thousands of others like us that purchase significant amounts of renewable energy…”
>>>>>>>>>>>>>>
LOL. They want to buy green energy, but they want someone else to pay for it.
They are happy to kill hundreds of thousands of jobs in the real economy through their catastrophic advocacy, yet they protest loudly at the loss of a few thousand pseudo-jobs that they ‘created’. Without enormous subsidies those ‘green’ jobs would not exist; they’re dishonest endeavors that add no value to the economy. Let the regular economy thrive once more and for every ‘green’ job lost +2.8 jobs in the real economy will be gained and the taxpayers will save billions in unnecessary taxes, levies, and bureaucracy.
A. Scott, yes, the subsidy for ethanol got dropped, but the trade off for the industry was a planned mandate to increase the % from 10 to 15%, creating a larger volume market. Get the damned government out of both subsidies and mandates! Yes, the loss of the PTC will be a blow to the wind industry, but with the dumb public policy of Renewable Portfolio Standards (RPS) for wind in so many damned states, that will keep the turbines being erected. I live in Maine. Connecticut, which consumes 3 times as much electricity has a 20% by year 2020 RPS. Where do you suppose the wind turbines will go, in the rich gentry countryside of Connecticut or in the poor rural towns in beautiful Maine? The RPS is bad public policy created by pandering politicians kowtowing to the greenwashing mania in this country.
Someone needs to seriously investigate the link between George Soros (the hedge fund manager aka currency manipulator) and Michael E. Mann (data manipulator). Soros’ billions are (1) currently heavily invested in green energy companies and (2) the source of Mann’s legal defense fund. Soros’ green hedge fund even has Cathy Zoi, an ex-undersecretary of Energy under Obama, on staff. Conflict of interest, much? Please, investigative journalists need to look into this. Soros is like an octopus with tentacles up every skirt.
Drill baby drill and you will create many more jobs without any subsides.
So approximately the entire annual salary of 500000 average Americans is wasted on subsidies that keep 37000 people working. Assinine idiotic government controlled BS. My grandfather survived the 1930s Depression and said the words he feared most was I am from the government and I am bere to help.
Bob,
If congress is transparent enough and calls a spade a spade, the correct name for the PTC should have been an Act to repeal the law of supply of and demand for the Wind Power Industry. It will never work in the long run, not after 20 years, 50 years, 100 years. In fact if the Wind Power Industry is to mature and stand on its own two feet, the 20 year subsidy was too long. It is making the industry a spoiled brat. A 20 year subsidy period is not nurturing an emerging industry. This holds true for the other renewable energy industry.