Can Wind Energy Survive Without Tax Subsidies?

wind farm sunset
By John Tarantino

Can the wind energy industry survive on its own? That’s the question that a wind energy report answered when it released its findings on December 12th. Navigant consultants evaluated the two possible outcomes that would come from an expiring subsidy for the wind energy industry. The federal subsidy, called the production tax credit or PTC, would expire at the end of 2012. The study outlines two scenarios with one leading to a positive outcome for the wind energy industry while the other one poses a grim outlook with potentially thousands of jobs lost. Needless to say, the American Wind Energy Association is lobbying hard for congress to choose the first scenario, where thousands of jobs are saved or created by extending the tax credit until the end of 2016.

To assess the success or failure of the current PTC one could search around for various viewpoints and you’re likely to find pros and cons. The basic argument for extending the tax credit is in the numbers. Current projections for 2012 installations of wind power are estimated to be around 8GW or higher. The report also estimated that without the PTC extension, annual installations could drop to just 2 GW in 2013 and wind supported jobs could drop from 78,000 in 2012 to 41,000 in 2013. On the other hand, a 4-year extension is estimated to sustain annual installations of between 8-10 GW every year until 2016 and wind-supported jobs could grow to 95,000.

Larger wind companies like Vestas and Iberdrola have created actual manufacturing and service jobs in the United States. It seems that if the government is in favor of weaning off of the fossil fuel industry, they should be looking at cutting subsidies to those guys while simultaneously boosting subsidies for renewable energy. European countries and the rest of the world are setting their sights high by racing to become leaders in clean technology industry clusters including renewable energy. Germany, a major industrialized country, is already producing more than 16% of its energy from renewable sources like wind energy. In addition, its federal Environment Agency already has studied switching to 100% renewable energy by 2050.

Numbers aside, it’s important to keep the wind energy industry supported while it makes the gains necessary to compete with coal, oil, and natural gas. Pulling the plug on the PTC would not only seriously decimate wind energy jobs in the United States, it could also strengthen the grip the fossil fuel industry has in the US market. In addition to losing ground on making advancements in renewable energy, in our globalized economy, the United States could fall further behind while emerging markets gain even more of a competitive edge.

Am I for the extension of the PTC? You bet I am. Supporting an industry that reduces environmental issues, health problems, and reliance on foreign imports ought to be a no brainer. It takes time and new technologies and innovations to foster a successful new industry. As William Shakespeare said “to climb steep hills requires slow pace at first” and that is exactly the happenings of the wind energy industry. If the industry is cut at the throat, it will never have a chance to thrive.

Photo Credit: Some rights reserved by Charles Cook on Flickr.

John Tarantino is an active volunteer in the environmental movement in Portland, Oregon. He writes for The Environmental Blog and loves sharing examples of sustainable practices to the public at large.

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5 responses

  1. Can wind survive without subsidies; yes with the right technology. Advanced windmills have only so much potential and bigger is not always better. The actual energy cost to produce a 400 ft tower, plus installation in out of the way locations and the power needed to produce all that carbon fiber for the blades, by the time you add it up windmills never end up net positive.

    There is technology coming forward from Windshine Electric that is a true turbine that is much smaller more powerful and scalable to the residential market. This will make the difference in the wind market. The auto unit from windshine will make the EV market the potential it can be with over 400 miles of range and faster recharge.

    Airplanes went from propellers to jet turbines for a reason and so to will wind power production benefit from actual turbine technology rather than advanced windmills.

    No whoosh noise, no bird kills, larger wind profile, better use of gusts, more output, cheaper to produce and they can be instaled on all current towers after they are cut down to a more useable height.

    No matter the industry we are all better off if the government does not get involved, as there is only so much tax money to use and the more that can go to the actual function of what government is supposed to do the better off we all are.

    We should all want to have industry thrive or fail on the strength of what they produce, not who has the best lobbyest.

  2. In their current form, no, which is why there are tens of thousands of wind mills that are not running or maintained anymore. On paper it looked good, in reality they are worth more for metal recycling than what they have produced and cost to put up.

  3. I say that with our National debt at $15 trillion and inability to keep out of deficit spending, the last thing we should be doing with taxpayers’ money is throwing it down the rat hole of useless renewables, whether wind, solar, or ethanol. Even worse are mandates like RPS that force costly, unpredictable, unreliable electricity onto ratepayers. In my world, there would be no mandates and no subsidies of any kind for any sector of energy. If that were to happen, taxpayers would use that money to pay down the debt; energy dense sources would survive and continue to power our economy and our preferred lifestyle; Wind, solar, and ethanol would never happen until technology improvement and market forces bridge the gap between green dream and cost competetive reality.

    1. Solar and Ethanol makes sense because coal and oil prices are going up. It is getting harder to get them. Wind is the only failure. But I do agree that all subsidies need to die.

  4. Author does not make a convincing case that wind power can survive without subsidies and this article was written several years before before the drop in oil prices that make wind power even less competitive.

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