By Robert Bradley Jr.
“But nothing is so permanent as a temporary government program.” (Milton and Rose Friedman, Tyranny of the Status Quo, 1983, p. 115)
“The infant industry argument is a smoke screen. The so-called infants never grow up.” (Milton and Rose Friedman, Free to Choose, 1979, p. 49)
What was said in a previous post regarding wind power’s 14 extensions of the Production Tax Credit also applies to solar power’s Investment Tax Credit (ITC) and its preceding tax favors. From 1978 to the present (46 years), 15 extensions belie the industry’s age-old claims of almost being competitive. Remember the New York Times’ declaration in 1994 (per Enron) that solar was “competitive” with fossil fuels? Remember Solyndra? Joe Romm in 2011: “It is clear that solar and wind are competitive in many situations right now.”
Solar is not an infant industry, having been demonstrated as grid electricity in the nineteenth century and again during World War II. But it is dilute and intermittent, fatal qualities as against fossil-fuel-generated electricity.
A legislative review (source: Congressional Research Service) of the solar tax subsidy reveals fifteen (15) legislative extensions from 1978 to 2022 with the current law extending to 2035 (57 years). A dividing point is the Energy Policy Act of 1992, which tripled solar’s credit (and put wind back into business after a short expiration).
Early History [7 laws; 6 extensions]
- The Energy Tax Act of 1978 (P.L. 95-618) created a “temporary” 10 percent tax credit for business property and equipment using energies other than [thought to be rapidly depleting] oil or natural gas. Tax credits for solar (and wind) were refundable (e.g. credits could be received as a payment if the taxpayer could not offset his or her tax liability). Expiration was set for December 31, 1982.
- The Windfall Profit Tax Act of 1980 (P.L. 96-223) expanded the energy credit to subsidize qualifying renewables. The prior tax credits for solar (and wind) were extended for three years (through 1985) and increased to 15 percent. The credit was made nonrefundable.
- The Tax Reform Act of 1986 (P.L. 99-514), extended investment tax credits for solar (and geothermal) with a phase down to 10 percent before being set to expire December 31, 1988. The credit for wind was not extended.
- The Miscellaneous Revenue Act of 1988 (P.L. 100-647) extended the solar, geothermal, and ocean thermal investment credits at their 1988 rates.
- The Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239) again extended the credits for solar (and geothermal and ocean thermal).
- The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) extended the tax credits for solar (and geothermal).
- The Tax Extension Act of 1991 (P.L. 102-227) again extended the solar (and geothermal) tax credits.
Modern History [9 extensions/modifications]
- The Energy Policy Act of 1992 (P.L. 109-58) increased the ITC from 10 percent to 30 percent for commercial/residential solar through 2006.
- The Tax Relief and Health Care Act of 2006 (P.L. 109-432) extended the above credits for one additional year (2007).
- The Emergency Economic Stabilization Act of 2008 (P.L. 110-343) substantially expanded and provided the ITC for solar through 2016 (8 years).
- The Energy Improvement and Extension Act of 2008 expanded the new solar tax credits for Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, and Solar Hybrid Lighting with a home-use cap of $2,000.
- The American Recovery and Reinvestment Act of 2009 (P.L. 111-5) modified and extended the ITC energy tax credit through 2016. The $2,000 cap was removed.
- The Consolidated Appropriations Act of 2016 (P.L. 114-113) extended the credit through 2019. The termination date was changed from a placed-in-service deadline to a construction start-date phaseout, with a 26 percent for construction beginning in 2020, and 22 percent for construction commencing in 2021.
- The Bipartisan Budget Act of 2018 (P.L. 115-123) extended the ITC for five years for fiber-optic solar (as well as fuel cell, small wind, microturbine, CHP, and geothermal heat pumps). These energies were eligible for a 30 percent credit through 2019, with rates declining with construction dates.
- The Taxpayer Certainty and Disaster Tax Relief Act of 2019 (P.L. 116-260) extended the ITC by two years.
- The Inflation Reduction Act of 2022 extended the Residential Clean Energy Credit, previously called the Investment Tax Credit (ITC), through 2034 (12 years). The credit was increased to 30 percent (from 26 percent). Thirty percent of solar panel purchases were deductible from the total cost of federal taxes. The residential solar tax credit is scheduled to drop to 26 percent in 2033 and 22 percent in 2034.
A very old “infant”?
If their ever should have been an abortion, the wind and solar “infants” were two that definitely should have been “terminated” prior to being unleashed upon the world.
Infantry and adultry, needn’t be connected by time!
Isn’t infantry normally armed? Then again, adultery is often weaponized.
Any idea of a $ – dollar figure as to how much wind and solar has been subsidized over the years ?
The alarmists keep saying that oil and gas are being subsidized greatly !
Alarmists always claim that depreciation allowances are subsidies. Which they are not. To report earnings without expensing depreciation would be accounting fraud.
GAAP requires you to take a charge for depreciation when reporting earnings, and people who pretend their earnings are higher than they really are, because they conceal depreciation, end up in jail.
It would be an interesting case study for a company to buy an ev company car and depreciate it at 40% a year to cover the big financial hit on the car after it rolls off the showroom floor. A subsidy to buy and a subsidy to sell into a shrinking market.
After a quick search it looks like the US oil & gas industry takes in about $335 billion per year and the government gets $135 billion in tax revenue. Oil companies do get some tax breaks amounting to about $20 billion. But tax breaks are not the same as cash subsidies that go to wind and solar.
Ronald Reagan said of government policy: “if it moves tax it, if it keeps moving regulate it, if it stops moving subsidize it”. All so called alternative energy businesses would quickly die if subsidies ended.
These so called tax breaks merely allow companies to deduct from their earnings, the cost of doing business.
Yes.
Perplexity.ai says depletion allowances have totalled $470 billion for the (US) oil and gas industry since 1916, as of 2014.
But these are not subsidies. They are reductions in taxable earnings due to taking a charge to account for the fact that when you extract oil or gas you have less of it left. So you have to allow for this in the cost of goods sold somehow. Otherwise you would be overstating earnings, which is fraudulent accounting, and you would be paying tax on profits which you have not made, according to Generally Accepted Accounting Principles.
No different from taking a charge on depreciation of buildings, vehicles, office equipment, furniture etc.
This is complicated, but the depletion allowance went beyond normal depreciation to satisfy the constitutional requirement of not taxing capital, just income.
The extra ‘depreciation’ actually decreased oil prices (via overdrilling) to negate a large part of the ‘benefit’. The big winner in a sea of regulation (a long story) were the small, numerous, politically active independents at the expense of better capitalized majors.
The subsidy is highly negative for fossil fuels when factoring in punitive government intervention. 200 oil and gas disincentives here:
https://www.instituteforenergyresearch.org/regulation/200-ways-the-biden-administration-and-democrats-have-made-it-harder-to-produce-oil-gas/
nothing is so permanent as a temporary government program.”
Indeed, income tax was introduced into Fa Empire as a temporary measure in 1798, to pay for weapons and equipment for the French Revolutionary War
Were still paying it today.
Fa Empire: = The “early modern period” of the Kingdom of France
iPhone typo for da empire
For readers from other countries, who benefits from this arrangement, how many $ per year is it now, where does the money come from and finally, is it a rort or a genuine benefit to all of society overall?
Thanks. Geoff S
If we contintue down the path of wind/solar backed with huge transmission networks and storage, electrical energy will become too expensive for ordinary rate payers. This will lead to something akin to nationalization with subsidies metastasizing into government owned utilities and operations paid out of income, sales and use taxes — i.e. the 90% needlessly subsidized by the 10% or thereabouts.
Its not only that it will become more expensive. It will also become unreliable. This last is going to be the killer. A modern society cannot function without a reliable electricity supply. Still less one that has converted its transport to EVs and its home heating to heat pumps.
More modern than the Garden of Eden?
High rates for conservation! A good thing, right? 🙂
Do any government programs ever go away?
I’m an advocate of sunsetting everything. But I know that in reality, Congress just renews outdated programs because some constituents benefit. The better answer is to not give politicians and bureaucrats so much power over our lives.
Time for the solar SCAM industry to make it on its own or die. Preferably, the latter (since it is wasteful, unreliable, inefficient, and ugly).
Let the solar scammers join the ranks of all those pushing their products on TV. “Buy our slicer-dicer-peeler-chopper does everything but wash your car for
$29.95$59.95 (thanks to the Democrat energy and fiscal policies)!! FREE bottle of Miracle Cleaner if you order by MIDNIGHT!”Who benefits? China.
*** While non-Chinese manufacturing has grown, most new capacity continues to come from China. ***
Sources: Goldman Sachs (12/17/23), PVTech Research, “PV Manufacturing & Technology Quarterly Report – Release 31 – November 2023.”
(Source: https://www.energy.gov/sites/default/files/2024-04/Wed%20AM%20-%20Solar%20industry%20update.pdf at 11)
Solar- a welfare queen.
It couldn’t be more clear, involving government in this business is not sound business rather charity for billionaires and worthless NGOs. It must stop.