Mitt Romney ran into a political buzzsaw in the battleground state of Iowa when he came out against the wind energy production tax credit in early August, and has mostly avoided talking about the issue since then. But supporters of the Republican presidential nominee are stepping up their opposition to the key subsidy.
Americans For Prosperity, a group founded and backed by the billionaire brothers David and Charles Koch, last week sent a letter to every member of the U.S. Congress urging them to allow the PTC to expire at the end of this year and put a stop to the “deplorable practice of using the tax code to favor certain groups over others.”
Among the businesses under the Koch Industries umbrella are Koch Pipeline Company and the refining and chemical company Flint Hills Resources. The letter targeting the wind power tax credit doesn’t address the question of subsidies for oil or other fossil fuels production – neither present-day subsidies, nor, perhaps more importantly, the substantial subsidies that helped build the fossil fuels industries and give them a dominant position in today’s energy landscape.
As Duke University’s Bill Chameides has argued, “The critical subsidies for oil, gas and coal cannot be found on recent government ledgers — they occurred in the late 19th and early 20th century when these technologies were just getting started.”
Chameides cites the work of Nancy Pfund and Ben Healey, who compared total state and federal subsidies for different energy sources during their formative years:1918-1947 for oil and gas, 1947-1976 for nuclear, 1980-2009 for biofuels, and 1994-2009 for wind and solar.
The result? As a percentage of the federal budget, oil and gas got five times more than renewables (nukes did even better, fetching 10 times what renewables got).
Yet in its letter, signed by 64 organizations in all, AFP argues that “If a new technology truly has worthwhile benefits for American consumers such as lower cost, higher efficiency, or environmental benefits, then that technology will demonstrate its value by competing in the open market for consumers’ dollars—not by living off of special provisions in the tax code.”
The mention of environmental benefits is interesting, since the free market can often fail to capture both such costs and benefits. That’s one of the premises behind a carbon tax, which even some conservative economists favor, yet American For Prosperity says on its website that it is “opposed to a carbon tax in any form.”
Just before Congress took its August recess, the Senate Finance Committee voted — with the support of Iowa Republican Chuck Grassley and Kansas Republican Pat Roberts — to retain the wind PTC as part of a package of tax breaks. Most observers think the chances of further action on the PTC before the election are slim, leaving the matter up to a lame duck Congress. President Obama strongly supports the PTC. The wind industry argues that jobs are already being lost as a result of the lack of certainty about the PTC, and that allowing it to expire will cost the nation tens of thousands of jobs.