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Let wind energy tax breaks expire

November 09, 2013

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Government has given wasteful handouts to the wind industry for over 20 years with little to show for it, yet our elected officials show no signs of stopping. The main federal tax break for wind energy is on track to expire at the end of the year, and special interests are calling on Congress to extend it yet again.

If our federal lawmakers are serious about creating jobs and keeping energy affordable in New Mexico, then they should let the wind production tax credit expire.

One of the biggest downsides of the tax credit is sheer cost; according to a new report from the Joint Committee on Taxation, extending the wind production credit would cost taxpayers $12 billion in 2014 alone.

Given the federal government’s spending problems, it simply doesn’t make sense to give handouts to special interests.

Compared to other forms of electricity generation, wind gets a tremendous amount of subsidy for very little production. Wind generates only 4 percent of our electricity here in New Mexico and less than 3 percent nationwide, yet it receives over 40 percent of the total federal financial support for electrical power.  For more detail on that figure, you can check Table ES4 here: http://www.eia.gov/analysis/requests/subsidy/

In addition to all the support from Washington, wind energy gets an ever-increasing level of support from Santa Fe, too. New Mexico enforces a green energy purchase mandate, called a Renewable Portfolio Standard, which requires power grids to buy certain amounts of electricity from wind power and other renewable energy sources.

In December 2012, the New Mexico Public Regulation Commission raised the requirement for wind energy specifically from 20 to 30 percent of our state’s overall Renewable Portfolio Standard.

The fact that wind power relies so much on government support shows that it simply cannot make it on its own in the marketplace. We continue to fail to see the wind production tax credit bring the long-term job creation, economic activity and energy affordability that the Big Wind lobby promises.

Supporters of the tax break claim that the tax credit creates jobs, but they overlook the unseen cost of the subsidy. Any tax handout will create temporary jobs in the targeted industry, be it wind energy or anything else. But how many jobs would be created if that money went elsewhere in the economy? How much economic activity would it produce if it were returned to taxpayers?

Last month, the American Wind Energy Association, the lobbying arm of the wind energy industry, told a House Oversight subcommittee that the industry needs even more federal support to get off the ground. Apparently two decades of tax breaks and state-based green energy mandates didn’t do the trick.

They called for extending the tax credit for six more years  –  a “phase-down” plan in name only. Congress should ignore this call from a special interest and instead simply let the credit expire.

Taxpayers deserve energy solutions that can make it on their own in the marketplace, not ones that have to be propped up by government forever like wind energy. And New Mexico ratepayers do not need to be paying artificially high electricity prices for sources that aren’t economically viable independently.

Over 21,000 Americans for Prosperity activists live in New Mexico, and our members of Congress should know that we’re watching their actions on this issue. Extending special tax treatment to their special interests in the wind energy industry is not why we elected them.

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