Tax Breaks & Subsidies and USA
"Our government is not good at picking winners and losers in the marketplace but has certainly proved it is good at wasting taxpayer dollars," Jim Jordan, Republican of Ohio and chairman of the House Government Reform and Oversight Committee's subcommittee on regulatory affairs, stimulus oversight and government spending, said on Thursday.
The green energy sector has a lot riding on 2009. Policymakers from Washington to Beijing have pledged billions of dollars in "cleantech" investment to jump-start the depressed global economy and create millions of new low-carbon jobs. ...As with the solar industry, wind power has been hit by a sudden slowdown in private sector investment as credit has dried up and the price of oil has fallen from its mid-2008 high. The industry hopes public spending will help fill the gap until the global economy gets back on its feet.
The government support - which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates - largely eliminated the risk to the private investors and almost guaranteed them large profits for years to come. The beneficiaries include financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG - even Google.
That CBO report said energy-related tax breaks cost $20 billion in 2011 and 68 percent of them went to renewable energy, while only 15 percent went to fossil fuels. ..."we're subsidizing today's relatively mature onshore wind technology by a larger proportion than we did when it was in its infancy. That makes no sense, especially in the current environment."
In a remote desert spot in northern Nevada, there is a geothermal plant run by a politically connected clean energy start-up that has relied heavily on an Obama administration loan guarantee and is now facing financial turmoil.
The company is Nevada Geothermal Power, which like Solyndra, the now-famous California solar company, is struggling with debt after encountering problems at its only operating plant.
Mr. Alexander, who repeated his criticisms in a Senate floor speech later in the day, said extending the tax break, at a time of budget crisis, is fiscally irresponsible.
"Wind gets more breaks than oil," he said.
And the giant turbines don't always turn. When the winds stand still, the energy grid needs the backup power of gas-fueled or coal-fueled power plants.
"The farm bill the Senate is debating provides new loans, new loan guarantees for wind turbines - on top of the $14 billion in federal tax dollars we'll spend over the next five years for them. My amendment to the farm bill simply says: no double dipping - if you take advantage of the wind-production tax credit to build windmills, which I oppose, you can't also take advantage of the subsidy through the farm bill."
“Over the next 10 years, the wind production tax credit will cost the American taxpayers more than $26 billion….In fact, the tax breaks for the five big oil companies we have been debating on the Senate floor this week actually cost less than this one tax credit for Big Wind. The tax breaks for the five big oil companies amount to about $21 billion over 10 years.”
"If extenders are beneficial and are helping the economy, then they should be seriously considered," Camp said in his prepared remarks. "On the other hand, if an extender has outlived its value, and if it is not producing the economic benefits it once was, then we need to determine whether there is merit in continuing that provision."
The alternative-energy sector has run smack into a credit crisis, probably a recession as well, and almost all industry experts think the fourth quarter is going to be worse. ...The reality today is that it's more expensive to produce renewable energy than it is from traditional resources, and consumers suddenly strapped for cash will start moving away, said Jerry Taylor, a senior fellow at Cato Institute.
Even proponents are slowing the move toward alternative energy, at least for the moment.
A panel chaired by U.S. Sen. Max Baucus on Tuesday approved an energy-tax package designed to boost alternative energy production and conservation - partially at the expense of big oil-and-gas producers.
"This is a significant victory in our efforts to become more energy independent," said Baucus, D-Mont., who chairs the Senate Finance Committee. "We have more to do to address climate change, lower gas prices at the pump and wean America off of foreign sources of energy."
The Finance Committee approved the $28.5 billion, 10-year tax package, which is expected to become part of a larger energy bill before the U.S. Senate this week.
The package includes tax credits to encourage production of wind power, solar power, gas-electric hybrid cars, biodiesel fuel and "cellulosic" ethanol, which is produced from agricultural waste products.
Public Utilities Commission members Tuesday had to referee an exchange where the developers' attorney, Peter Richardson, blasted Rocky Mountain Power for suggesting that alternative projects were committing fraud.
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Delaware's two big wind-power initiatives face an uncertain future as millions of dollars in federal subsidies are being held up in Congress. ...In the absence of an extension for the credit, Delmarva would likely have to wait out a delay in construction, or pay more for the power.
The Bluewater project's timeline is longer, making it less susceptible to the short-term political stalemate. But the uneven history of the credit underscores a risk to the Bluewater project, observers say. ...Bluewater spokesman Jim Lanard said it was "unimaginable" that Congress would stop funding the tax credit, and that Bluewater was prepared to move forward with the project even if Congress elects to fund the tax credit on a year-by-year basis.
But Exelon says the tax credit is distorting energy markets because the credit itself is larger than the average value of electricity produced in the Midwest. Surges of wind energy late at night during periods of low electricity demand are driving the market price of electricity below zero, according to independent statistics.
Without federal support from both a long-term commitment to a production tax credit and a federal renewable portfolio standard, the future of wind power may be uncertain.
Developers and investors at the 2007 Wind Power Finance and Investment Summit in San Diego voiced concern for the industry past the end of 2008 when the production tax credit expires. Much of the investment that’s been put into the developing technology has come from the incentives given through the PTC.
Gains in the sector don't necessarily lead to wider employment.
The wind industry, for example, has shed 10,000 jobs since 2009 even as the energy capacity of wind farms has nearly doubled, according to the American Wind Energy Association. Meanwhile, the oil and gas industry has added 75,000 jobs since Obama took office, according to Labor Department statistics.
Britain's booming wind farm industry is grinding to a halt because a lucrative tax break in America is fuelling massive demand for new wind installations across the Atlantic.
Behind the feel-good hype of carbon offsets, some of the deals don't deliver.......................Done carefully, offsets can have a positive effect and raise ecological awareness. But a close look at several transactions-including those involving the Oscar presenters, Vail Resorts, and the Seattle power company-reveals that some deals amount to little more than feel-good hype. When traced to their source, these dubious offsets often encourage climate protection that would have happened regardless of the buying and selling of paper certificates. One danger of largely symbolic deals is that they may divert attention and resources from more expensive and effective measures.
Critics of clean-energy federal programs say it isn't the place of federal government to meddle in markets. "Given the amount of money that was put into this sector via the stimulus and didn't end up having the desired effect, with a lot of money ending up going out of the U.S., it's definitely an area that's seen by Republicans as ripe for being cut," said a Congressional staffer.
"The green bubble is starting to fall apart," said Tom Borelli, a fellow at the tea party group FreedomWorks. "How much longer can we fund things that are not cost-competitive?"
Republican presidential nominee Mitt Romney and Obama prominently collided during the campaign over the fate of the tax credit. ...the last chance to extend it comes in December's lame-duck session.