Wind energy subsidies to be discussed in Senate today–opportunity for input

Guest post By John Droz

The matter of how much, if any, federal subsidies that wind energy will get is being discussed (and maybe resolved) today.

Here is a video of the Senate Finance Committee hearing this morning on this (starts at minute 14):

    http://finance.senate.gov/hearings/hearing/?id=0a55f72d-5056-a032-52a2-b1e30188a9c9

This is a sample recent article discussing these subsidies http://www.time.com/time/health/article/0,8599,2102129,00.html

PLEASE call your representatives (especially your two senators) to voice your opinion on 1603 Grants and the PTC (Production Tax Credit).

When you phone, all you have to say is that you have an opinion on renewing the 1603 Grants (which expire in 2 weeks) and on the PTC (which expire at the end of 2012, but could be cancelled sooner). Given our financial situation, continued funding of wind energy may be of dubious value, 10 minutes of your time will let your senators know how you stand.

If you want further information to make an informed decision, please read the position piece I outlined on this matter (below).

An Outline of the Case Against Renewable Energy Subsidies

Renewable energy subsidies came about due to intense political pressure from lobbyists groups like AWEA. Their main arguments are NOT that these expenditures will provide us with reliable and inexpensive energy, but rather that these monies will promote jobs and economic benefits. Of course, as lobbyists they are paid to put the best spin on their client’s products that they can. In these times of more focused financial prudence, we need to look at such outlays in an objective light — especially since we are talking about many Billions of dollars (which still is a lot of money).

The fundamental question is: should the US taxpayer subsidize the renewable energy business? From my perspective as a scientist, I think we should support fledgling alternative energy options, under two criteria:1) if there is solid scientific evidence that they will be better than our conventional choices with regards to technical, economic and environmental considerations, and 2) only during the development cycle [i.e. the pre-grid phase]. Wind and solar are neither of these.

A more complex matter is whether mature technologies should be subsidized. My instinctive response is no, but there is a case to be made that if low cost and reliable energy sources can be made even less expensive to homeowners and businesses, then there can be genuine societal and business benefits to be gained from that. Again, this is not the case for wind or solar.

Renewable energy evangelists tend to confuse these points, saying that their “developing” source should be subsidized, since the mature sources are. This is a classic sales slight-of-hand trick, as this is an apples-to-oranges comparison.

The reality is that no matter which position you take about renewables (they are new, or they are old) they should not qualify for subsidies.

Yet, according to EIA statistics (for 2010, the latest fiscal year), the amount of federal subsidies for wind energy (as an example) exceeded the amounts for all conventional sources of electricity, combined. This is simply an extravagent waste of our resources.

Let’s look at the main assertions of the wind proponents, and see how they stack up:

Claim one: jobs

1) Numerous independent reports have concluded that the cost per job that renewable subsidies fund, is VERY high.*

2) Some independent studies have concluded that when we look at the big picture, that there is actually a net job LOSS from subsidizing renewables. One of the key reasons for this is that the cost of electricity produced by renewables is higher than our conventional sources, which leads to businesses cutting back and laying people off.

3) Some independent studies have shown that many of the jobs created when supporting renewable energy are actually foreign jobs. Is that a good use of our limited funds?

4) If the Billions were spent on other, more reliable forms of energy (e.g. gas or nuclear) MORE jobs would be created.

What we see in this (and their other arguments) is that lobbyists make a false comparison. For example, when they say a billion dollars of subsidy will create x wind jobs, their comparison is versus doing nothing. A more valid question is: what would be the number (and quality) of jobs resulting if we invested that same billion dollars elsewhere? They NEVER accurately answer that critical question!

Consistent with all this, a Federal Oversight Committee recently released their report on the failure of the green jobs program <<http://tinyurl.com/5rmkgxl>>.

Claim two: economic development

The fact is that if this same money went to fund reliable, clean, sustainable energy like nuclear power, that there would be just as much (if not more) economic development that will result. A particular area of importance is mini-nuclear (SMRs: Small Modular Reactors). Providing political and economic support for that one area would be a game-changer in the energy business, and have profoundly beneficial technical and economic results for the US. We need to be the leader in this technology of tomorrow. If we are not, be assured that China will take over that role.

Claim three: energy independence

Funding wind energy with subsidies does not give us energy independence. There are several technical reasons for this. For instance, consider the fact that in every wind turbine there is something like 4000 pounds of rare earth elements. China produces 95±% percent of these rare earth elements, so the more turbines we buy, the more dependent we are on the China. That is not energy independence. Furthermore, the extreme reliance on rare earth elements is not considered sustainable either (which is another green mantra).

Claim four: CO2 reduction

Despite all the claims of the wind lobbyists there is zero independent scientific proof that wind energy makes a consequential reduction in CO2. Zero. One of the reasons for this is that there is no such thing as wind by itself. Wind must ALWAYS be augmented by a conventional source of power, usually by a low cost/low efficiency version of gas. The net CO2 savings of this combination are very low (if any) — significantly less than would be attained by the same amount nuclear or geothermal capacity. Actually wind+gas is likely to save less CO2 than what would result from a high-efficiency gas option by itself! So why have the wind component?

Claim five: they need the handouts

Wind lobbyists are always pleading poverty, which is what they are paid to do. The fact is that wind energy development is one of the most profitable businesses in the country. TB Pickens stated that as a wind developer he would expect to make at least 25% profit per year! We need to subsidize such a business?

Additionally the OMB and Treasury found severe problems with “the economic integrity of government support for renewables.” <<http://tinyurl.com/4amebep>>. Such an assessment should give Congress severe pause for continuing such handouts.

Summary

When all is said and done renewable subsidies (like Production Tax Credits, 1603 Grants, etc.) usually end up supporting a high-cost, low-benefit sources of energy. Clearly we can spend our resources better. We should focus on solutions that have a proper scientific assessment (i.e. technical, economic and environmental) thatproves that they are cos

t-beneficial. No such proof exists for wind or solar.

More Information

*This is intended to be a VERY brief overview. All of the statements above can be supported by references. For example, for a more detailed, science-based assessment of our energy policy, see EnergyPresentation.Info, which has several pages of references.

Here are two pertinent articles of interest:

   A summary of wind economics: <<http://tinyurl.com/343wrzv>>

   Sample critique of 1603 Grants: <<http://tinyurl.com/4c8mz6u>>