Lots of Taxpayer Green Going to Greens

Democrats have a penchant to misconstrue the parlance related to tax credits and subsidies.  They refer to subsidies as tax cuts and tax cuts as subsidies.  They would have you believe that oil companies are completely on the dole, while solar and wind companies are heavily taxed entities in desperate need of some “tax breaks” and loans in order to alleviate the burden of producing their auspicious form of energy.


Yesterday, CBO released a report stating the obvious.  They found that in 2011, federal subsidies for green energy totaled $24 billion.  Also, between 2009 and 2012, the DOE provided $25 billion in loans “primarily to producers of advanced vehicles, generators of solar power, and manufacturers of solar equipment.”  Fossil fuels, on the other hand, received $3.4 billion in “tax preferences.”

However, those numbers don’t tell the full story.  Most of the tax preferences for fossil fuels go towards more universal deductions like expensing for exploration costs.  Green energy receives direct subsidies per kilowatt hour produced – benefits that are awarded solely to the wind and solar industries.  Also, due to the inefficiency and cost of green energy, these companies fail to generate enough revenue to incur a tax liability.  As such, many of these tax preferences are actually refundable.  Fossil fuel companies pay millions in taxes.  To illustrate the point, Heritage scholar David Kreutzer shows how wind companies receive 1,000 times the subsidy that is given to oil companies.


The most important distinction between the two industries is the fact that green energy benefits from a clean-energy mandate in more than half the states.  One cannot possibly quantify the benefit of having government use the force of law to coerce consumers and producers into using your product, even though it is expensive and inefficient.

After all the government-induced tailwinds behind green energy, what have they produced?  n 2010, wind accounted for 0.9% of our energy supply, geothermal 0.2%, and solar 0.1%.  Fossil fuels accounted for 83% of our energy supply.

Despite this egregious display of picking losers in Obama’s Solyndra economy, Republican Senators Boozman, Brown, Grassley, Hoeven, Moran, and Thune penned a letter to Reid and McConnell asking them to renew the 2.2 cent/per kilowatt hour Production Tax Credit for Big Wind.  They had the hubris to demand that taxpayers “provide the wind industry with the stability and predictability to plan for the future,” even as they conceded that “it is clear that the wind industry currently requires tax incentives like the production tax credit to compete.”


No, senators, we don’t owe your industry anything.  And the fact that these companies cannot compete without corporate welfare (not to mention the mandates) is all the more reason to oppose this boondoggle.   Will our party ever learn to draw bold contrasts on the defining issues of our time?

We must fight for the Pompeo/DeMint bill to end all energy tax preferences.  Otherwise, we will be fighting against the renewal of Obama’s subsidies for producers of algae energy in 10 years from now.

Cross-posted from The Madison Project


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