Wind Energy Needs More Incentives

[irishbobcat]

Wind Energy Needs More Incentives

Washington —
For those wind enthusiasts who didn't care for the Robert Bryce op-ed on wind energy posted yesterday, here's a counterpoint forwarded to me by a friend who works for the KC Star.

(The Manhattan Institute's Robert Bryce authored another anti-wind opinion article in The Wall Street Journal yesterday. Entitled "A Wind Power Boonedoggle," it criticizes billionaire oilman T. Boone Pickens for his effort to promote the use of wind and natural gas to reduce America's dependence on imported oil. The Manhattan Institute receives funding from Exxon Mobil and from Koch Industries, a very large privately-owned oil and gas company. AWEA Manager of Transmission Policy Michael Goggin comments on Mr. Bryce's article below.)

First, for the record, here is what T. Boone Pickens himself said Dec. 15 about the wind portion of his plan: "Together, we made important progress on wind power — Congress included in last year's stimulus bill incentives to help develop more renewable energy and get it online. While my wind farm in Pampa has had delays, I am engaged in wind development initiatives in the US and Canada, and many others have answered the call and started erecting their own turbines. Thanks to what we did as part of the Pickens Plan, there are wind farms already in development from Texas all the way up to North Dakota."

Second, Mr. Bryce fails to mention that our government's permanent subsidies for fossil fuels greatly outweigh the small, short-lived incentives provided for wind energy. Wind energy is being forced to compete against fossil fuels that have received hundreds of billions of dollars in subsidies so far, and that continue to receive subsidies at levels outpacing the incentives awarded to renewables. Between 1950 and 2003, oil and gas garnered 60 percent of an estimated total of $725 billion in federal assistance, with coal taking 13 percent, hydroelectric 11 percent, and nuclear 9 percent (not including nuclear plants' invaluable Price-Anderson liability cap), while all renewables (including biofuels) only received 6%. Renewables' disadvantage has continued in recent years: the Government Accountability Office (GAO) examined federal incentives for electricity between Fiscal Years 2002 and 2007 and concluded that "Tax expenditures largely go to fossil fuels: about $13.7 billion was provided to fossil fuels and $2.8 billion to renewables." These subsidies create an unfair playing field that is strongly slanted against wind energy; rational policies would instead encourage renewable development to account for the major negative public health and environmental externalities of fossil fuels and the positive energy security and economic development benefits of renewable energy.

Third, contrary to Mr. Bryce's assertions, the cost of wind energy (with its incentive included) is cost-competitive with natural gas for new electric generating capacity, and substantially cheaper than new coal or nuclear. See, for example, this recent analysis by investment bank Lazard of comparative energy costs (PDF, see p.3 of report).

However, Mr. Bryce does deserve credit for highlighting one of the biggest advantages of wind energy: its ability to protect American consumers from volatile swings in the price of fossil fuels, particularly natural gas. This past decade has witnessed several extreme swings in the price of natural gas, with the largest occurring in 2005 and 2008, each of which extracted a toll of tens of billions of dollars from those least able to afford it, millions of Americans struggling to heat their homes every winter. The Bush Administration's own Department of Energy, in a 2008 report, concluded that obtaining 20% of America's electricity from wind energy would save consumers around $150 billion over the study period by keeping the price of natural gas low, offsetting the marginally higher cost of the wind energy by a factor of three and thus making consumers better off. Similarly, a December 2010 Georgia Tech study finds the South alone could save $23 billion by 2030 by investing today in renewable energy, with wind the most competitive resource.