Pyle: Congress, kill the production tax credit

Tom Pyle

With Election Day behind us, Congress must now turn its attention to the raft of issues that legislators have ignored over the past year. Chief among them: Whether to revive the Production Tax Credit (PTC), a massive, taxpayer-funded handout that in 2012 gouged Michigan taxpayers for $67 million.

That fact alone should be enough for Congress to kill the PTC. But there’s another reason that Michiganians should want it dead: It’s a central component for President Barack Obama’s destructive climate agenda.

Here’s how it works. The PTC, which was first created by Congress in 1992, subsidizes renewable energy producers—especially wind companies—for the electricity they generate. This cost taxpayers some $1.6 billion in 2012, including Michigan’s $67million share.

The foundation of the president’s climate plan is the Environmental Protection Agency’s (EPA) greenhouse gas emissions rule for existing power plants—the president’s attempt to shut down America’s coal industry. A recent analysis finds that residents in 43 states will face double-digit increases in electricity prices under the rule. For all that pain, the rule would reduce global carbon dioxide emissions by just 1.5 percent by 2050.

One of the central “building blocks” of EPA’s power plant regulation is increased use of wind and solar for electricity generation. But wind and solar are uncompetitive without massive taxpayer subsidies—for wind, that takes the form of the PTC.

Thus, a vote for the PTC is a vote for the president’s climate agenda.

The wind industry’s top lobbyist put it best: “Wind energy is one of the biggest, fastest, cheapest ways states can comply with the forthcoming EPA rule.”

There’s just one problem with this “cheap” wind energy: It isn’t cheap. Wind power is more than 125 percent more expensive than natural gas-generated electricity and more than 90 percent more expensive than coal-generated electricity. The only way wind producers stay in business is with the taxpayer’s help—a la the PTC.

Wind’s recent history bears this out. When the credit is active, new wind installations soar. When it temporarily expires, new installations plummet.

That was the case in 2013 when the PTC expired. New wind installations plunged from an all-time high of 13,000 MW in 2012 to a mere 1,100 MW in 2013—a 92 percent drop in a single year. Similar declines occurred following previous temporary expirations in 2000, 2002, and 2004, when new installations dropped by 92, 76, and 76 percent, respectively.

The lesson is clear: Without government handouts, wind energy doesn’t fly.

Tom Pyle is president of the American Energy Alliance.