Guest essay by Larry Hamlin
The colossal magnitude of renewable energy federal and state government driven subsidies, taxes and higher energy cost impacts has never been systematically revealed to the American public but has instead been secreted away from view by those enjoying the huge financial benefits of this monumental largesse.
The staggering negative financial impacts foisted upon Americans that are associated with all forms of renewable energy flow directly from government mandates, taxes, subsidies and higher cost consequences of an array of outrageously flawed political dictates that falsely claim to offer improved outcomes for the “climate” versus the continued use of fossil fuel energy resources.
These politically contrived and totally absurd “better for the climate” claims are a complete fraud that is easily exposed by addressing the indisputable fact that any reductions in U.S. greenhouse gas emissions are irrelevant to both the growth and absolute levels of global greenhouse gas emissions that are unquestionably controlled by the world’s developing nations.
The EIA data below documents that the U.S. is leading the world’s nations in CO2 emissions reductions and establishes that future U.S. annual emissions remain about 1 billion metric tons of CO2 below peak 2007 emission levels.
As displayed in the graphs below the developing nations clearly dominate the growth and absolute levels of present global CO2 levels both incrementally and cumulatively. U.S. CO2 emissions levels and future reductions are irrelevant to future global growth of CO2 emissions.
EIA data shows the developing nations are totally responsible for all future global growth of the world’s CO2 emissions with U.S. emissions being of no consequence.
Additionally an analysis of the Green New Deal (GND) climate alarmist schemes pretending to establish relevant future emissions reduction goals that are claimed to improve global climate are in fact completely useless in rendering any meaningful global outcomes whatsoever as clearly noted in the analysis summary as follows:
“Moreover, notwithstanding the assertions from GND proponents that it is an essential policy to confront purportedly adverse climate phenomena, the future temperature impacts of the zero-emissions objective would be barely distinguishable from zero: 0.173°C by 2100, under the maximum Intergovernmental Panel on Climate Change parameter (equilibrium climate sensitivity) about the effects of reduced GHG emissions. Under an assumption consistent with the findings reported in the recent peer-reviewed literature, the effect would be 0.083°C by 2100, a policy impact not measurable against normal variation in temperatures. This conclusion is not controversial and suggests strongly that the GND’s real goal is wealth redistribution to favored political interests under the GND social-policy agenda and a dramatic increase in government control of resource allocation more generally”.
It is obvious that the “climate benefit” claims expounded upon by renewable energy advocate political schemers are completely unsupported by actual emissions data and that these flawed claims are pursued for other reasons that are driven by profit, greed and political power by those promoting these programs.
These for profit politically driven renewable energy schemes are fleecing the American public under the completely flawed guise of “benefiting the climate”. These government schemes are extensive and pervasive and involve a wide array of renewable energy money making and political power grabbing concepts and programs.
These schemes include state and federal government mandates requiring use of costly and unreliable renewable energy resources in the electricity sector which grossly distort energy markets and drive up electricity costs while jeopardizing electric system reliability and stability, requirements for tens of billions of dollars in taxpayer funded subsidies supporting profits for renewable energy project owners and builders, the imposition tens of billions of dollars in carbon taxes that create funding pools for government disposition driven purely by the political agendas of those in power, government mandates costing tens of billions of dollars in taxpayer funded ethanol fuel subsidies and much more.
All of these renewable energy schemes fleecing the American public are buried in massive and complex regulations and laws which are virtually impenetrable to full visibility and accountability by ordinary citizens and which the politicians in power have failed to reveal and strive to conceal.
An excellent recent study by the Texas Public Power Foundation (TPPF) exposes the huge multibillion dollar taxpayer funded subsidies which renewable wind energy owners and builders have enjoyed for over a decade and which will continue for another decade into the future.
The study provides the following major conclusions:
“Wind energy is a $14 billion industry made up of wind facilities, turbine manufacturers, and financiers. While the industry grew over the past few decades, the American Wind Energy Association (AWEA) and its corporate members pushed for new and continued subsidies that would enable large energy corporations to profit at the expense of taxpayers.
This study investigates the Production Tax Credit (PTC) and the corporate beneficiaries of billions of taxpayer dollars. The PTC is a federal subsidy for the commercial production of wind energy that provides a $24 tax credit for each megawatt- hour of energy sold. It is scheduled to phase out and expire at the end of 2019.
This report finds:
• The PTC costs taxpayers billions of dollars in revenue. In 2017 the PTC cost $4.2 billion. The PTC will cost at least an additional $48 billion before it fully phases out as currently scheduled.
• The PTC is a subsidy that benefits a few energy corporations. Only 15 parent companies account for more than three-fourths of all PTC eligibility—more than $19 billion in 10 years (2007-2016).
• The PTC distorts electricity markets. The PTC encourages wind energy producers to accept negative prices. The negative prices increase costs for other energy producers and electricity suppliers.
• The PTC operates within a web of wind energy incentives that increase costs to taxpayers, further distort electricity markets, and benefit large corporations. Providing subsidies for wind energy benefits large corporations while distorting electricity markets. To further simplify the tax code, federal legislators should resist calls to renew the PTC and instead allow it to fully expire at the end of 2019.”
The study estimates that wind renewable energy projects have received $33.4 billion dollars in tax payer funded Production Tax Credits (PTC) subsidies through 2020 and will receive another $31.7 billion dollars through 2029 as shown in Table 1 from the study provided below.
The $65.1 billion dollar taxpayer funded renewable wind project subsidies understates the total renewable energy subsidies with this already huge number not addressing the full array of renewable energy projects eligible for such subsidies including solar energy, biomass energy, geothermal energy and small hydro energy. Nor does this huge wind project tax subsidy reflect the billions in renewable fuel ethanol subsidies.
EIA data for year 2018 shows that wind renewable energy projects represent about 70% of total renewable energy produced with all such energy eligible to receive taxpayer funded PTC subsidies. The $65 billion dollar total wind energy subsidy through 2029 will grow significantly when all renewables eligible for PTC’s are accounted for which increases the renewable energy subsidy to more than $92 billion dollars. These absolutely staggering subsidy amounts are never addressed by renewable energy owners or the government politicians promoting these schemes.
The TPPF study documents the fact that these huge taxpayer funded subsidies flow to a relatively small number of wind energy owners and builders who enjoy huge financial business benefits from these handouts paid for by the American public as noted in Table 2.
The TPPF study exposes the significant energy market cost and operating distortions imposed by renewable energy subsidy mandates which are never addressed by politically driven renewable energy advocates as follows:
“Energy subsidies are not only expensive for taxpayers who will see higher taxes or higher government debts to make up for the benefits, it also distorts electricity markets. Because of the $24 per MWh credit and other subsidies, generators that produce wind energy can actually turn a profit while paying their customers to take their energy (Baldick; Huntowski et al.; Schmalensee). Another way of describing this is that wind energy generators are willing to accept negative energy prices. With just the PTC, wind energy generators may be willing to pay a retail electric provider $10 or even $20 per MWh to accept the energy generated by their wind turbines because they will be able to deduct $24 per MWh from their taxes. Add in the incentives they receive at the state level and wind energy generators may be willing to pay even more.”
“The ability to pay to get rid of energy forces prices down and imposes a cost on generators who operate without the high level of subsidies that renewable energy gets. This is especially the case when it comes to generators whose plants are relied on to provide baseline energy needs and balance energy flows, i.e., maintain the reliability of the grid (Peacock and Neeley).”
‘Negative prices, or even low positive prices, mean that other generators lose money. In such a situation, it would seem to make sense for them to shut down their plants until the wind stops blowing and the prices increase. However, deciding whether to stay online is not that simple. Unlike wind turbines, most other generation cannot simply flip a switch to turn their energy off or on. Because these sources may take hours to power on and off—if they can effectively do so at all—these energy producers will need to decide if the cost of paying negative prices outweighs the cost of shutting down and of possibly missing the ability to sell energy when prices surge again during peak demand times (Baldick). ‘
“Absent subsidies, wind energy would not distort the market in this way. Wind energy producers would turn off their wind turbines when it no longer became profitable to operate them—somewhere above $0. Without the subsidies, we would expect prices to work more effectively to keep a mix of energy sources on the grid, which would provide greater flexibility to match electricity demand without increasing costs to non-wind generators or providers.”
The significant increased costs of the non renewable generation required to maintain a reliable and stable electric grid that results from the flawed renewable operating mandates is likely many billions of dollars over the period during which renewables are given operating preference.
These many billions of dollars are of course paid for by the American public and carefully hidden from view by those promoting renewable energy schemes.
Carbon tax schemes are in force in 11 states in the U.S. which create billions of dollars in taxes that one way or another are paid for by the public. These carbon taxes are provided in the 10 state northeast Regional Greenhouse Gas Initiative process and in, of course, California. The total amount of these carbon taxes is presently estimated as about $20 billion dollars with much more to come in the future if climate alarmists have their way.
EIA data for 2018 shows that renewable energy accounted for only abut 6% of total U.S. energy use despite requiring well over $110 billion dollars in subsidies, carbon taxes and increased electric system costs as itemized in the information above
Ethanol fuel subsidies are also huge with the estimated total for these subsidies at over $34 billion dollars over the past 30 years.
In total these politically contrived renewable energy subsides, taxes and resulting energy cost increases rise well above $145 billion dollars being fleeced from the public and yet these massive incurred subsidies foisted upon the American people provide no meaningful impact on global emissions or global climate outcomes.
The TPPF study identifies yet more subsidies programs provided through numerous additional federal and state programs noted as follows:
“The federal production tax credit is not the only program distorting energy generation at the cost of taxpayer money. The PTC operates within a web of other government programs to promote wind energy and other electricity sources. Corporations can use a combination of these tax benefits, grants, loan guarantees, and regulations to pay for a majority of their wind projects with little risk to the company.
The federal government has 11 other federal credits, grants, and loan guarantees to support wind facilities (see Table 6 in Appendix B). Combined, these federal subsidies cost $35.33 for every MWh of wind energy produced in 2013 (see Table 3). Wind energy received the second highest subsidy per MWh of net generation—24 times the subsidy for renewable energy from hydroelectric power.2
States have an additional 265 programs that support wind energy (DSIRE). Unfortunately, we do not know the full cost of these programs. The state incentives consist of:
• Tax incentives, including tax credits, deductions, exemptions, property tax breaks, and sales tax breaks;
• Financing benefits such as bonds, grants, loans, and rebates;
• Renewable portfolio standards and similar programs; and
• Industry recruitment incentives”
This essay only skims the surface of the staggering magnitude of federal and state government renewable energy subsidies, carbon taxes, grants, loans, exemptions, rebates, etc. along with higher energy costs forced upon the American public by politicians that result in hundreds of billions of dollars in increased consumer and tax payer costs that accomplishes absolutely nothing regarding global emissions reductions or global climate outcomes.