Washington gridlock and presidential politics are combining to cripple the nascent sector of wind energy in the United States, leaving the country lagging behind nearly every other industrialized nation and a key source of renewable energy on the brink of deep cuts even as fossil fuels receive billions in taxpayer subsidies.
The fight over wind represents a larger political battle that has made clean energy technology the focus of endless partisan squabbles that threatens to hold vital renewable energy sources hostage as both Democrats, Republicans and the White House seek to score points in a close election year.
At the heart of the debate over clean energy is the question of federal funding and promises of new jobs in a sagging national economy. With conservatives demanding the end to every penny of government funding for renewable power and the Obama administration pulling back from earlier investments in a bid to claim the mantle of reducing government spending, America’s energy future may be in jeopardy.
Wind and other clean energy projects have been among the few industries to see growth during the recession and the subsequent economic slowdown. Thanks to a surge of private investment made possible by the first substantive federal subsidies devoted to technology like wind and solar, at least 70,000 jobs were created in the clean energy sector between 2007 and 2010.
But that explosion in jobs could be lost as federal funds earmarked for investment in renewable begin to dry up. Acutely aware of political stagecraft in a presidential election year and critics who contend green power is a failure in creating jobs, the Obama White House has slashed money for clean energy by more than half, down to a proposed $11 million in fiscal year 2014.
Renewable energy doubled from 2006 to 2011 and prices fell, according to the Brookings-Breakthrough-WRI report.
Construction began on the first nuclear power plant in more than 30 years, and U.S. companies got a share of the market in advanced batteries and vehicles. But nearly all clean-tech industries depend on subsidies or other supports in order to compete with oil and gas.
After spiking to $44.3 billion per year in 2009 with the first year of the stimulus, federal support for clean technology is on track to total $11 billion annually by 2014.
“Judged by the standards of short-term job creation, the energy investments may not have performed brilliantly,” said Mark Muro of Brookings, one of the authors of the report.
“However, over the medium and longer term, these programs will in time be viewed as critical investments in research and development, early-stage deployment and broader scale-up of important new technologies.”
The fight over clean energy has even managed to make its way into the bitter contest between President Obama and Republican challenger Mitt Romney, as well as the fight to control Congress. Not content with victory over federal subsidies for renewable energy, some lawmakers and their allies in the oil and gas industry are taking aim at tax credits and incentives available to clean energy companies.
At stake is a $12 billion tax credit for wind power production, which along with solar is the most visible and healthy sector of the clean energy industry. But renewal of the credit in Congress is facing opposition from lawmakers who want to deny wind power the same benefits that well-established multi-billion dollar oil and gas corporations receive every year.
The White House is hopeful Congress will renew a $12 billion tax credit for wind power production, a senior Obama administration official said, as a government report warned that thousands of U.S. jobs would be lost if the incentive runs out.
Earlier this month, the Senate Finance Committee passed a renewal of the tax break, which has been added to a package of measures known as tax extenders.
Renewing the tax break would likely face a tough battle in the Republican-led House of Representatives. After Solyndra and other government-backed alternative energy companies went bankrupt, many fiscally conservative lawmakers in the House have been hesitant to support renewable energy technologies.
The Energy Department report said low prices for natural gas, which competes with wind power, and uncertainty about the renewal of tax incentives for wind, “threatens to dramatically slow new builds in 2013.”
Wind energy producers are trying to fight back against opponents of tax credits that have received bipartisan support in the past. In the middle of a national jobs crisis and heightened awareness of the need for cheaper and more reliable energy, the wind power industry has created nearly 100,000 jobs and offers the most promising avenue for domestic clean energy production. Some say that half of those jobs are at risk if Congress refuses to renew the tax credit.
(UPDATED) -Threatened by political squabbling is the considerable progress made in the arena of wind energy even without the level of federal assistance available to traditional fossil fuels. Wind power production in the United States just passed the milestone of 50 gigawatts of capacity, equivalent to 44 coal-fired power plants and enough electricity to power more than 13 million homes.
The US wind energy industry is now providing enough capacity to power 13 million homes, equivalent to all of Nevada, Colorado, Wisconsin, Virginia, Alabama, and Connecticut combined.
The American Wind Energy Association (AWEA) used the annual National Clean Energy Summit in Las Vegas last week to confirm that the sector had passed the 50GW installed capacity milestone after yet another quarter of rapid growth.
The trade body said the 50GW of capacity was equivalent to the generating power of 44 coal-fired power stations or 11 nuclear power plants, resulting in emission reductions that would equate to taking 14 million cars off the road.
The milestone was achieved thanks to a surge in new wind farms coming online as developers rush to complete projects before the possible lapsing of the US government’s crucial production tax credit (PTC) at the end of this year. According to AWEA, over 2.8GW of capacity has now been added during the year to date, while total US wind energy capacity has doubled since 2008.
“This milestone for wind-energy production marks continued success for this clean, renewable and domestically produced energy source,” said Republican Senator Chuck Grassley, who helped develop the PTC. “Wind energy has exceeded expectations since I first authored the tax incentive, in 1992, and offers an ideal for expanded production and use of alternative energy sources in the future.”
Taking a stand on the issue is Mitt Romney,the GOP’s presidential nominee and a former staunch supporter of government investment in clean energy as governor of Massachusetts. He has since become a regular contributor to the conservative line of attack against government support for renewables and the idea of clean energy in general.
Romney has specifically announced that he would kill the wind energy tax credit and end even the relatively small sum of remaining federal subsidies for wind and solar projects — the subsidies for oil and gas companies would remain intact. The Republican candidate speaks of a “level playing field” for all forms of energy, but this position has angered many of his GOP colleagues and has hurt his chances at winning key swing states in the November election.
The criticism of wind energy has particularly played poorly in Iowa and Colorado, two states with tens of thousands of wind jobs and a long history of embracing clean energy. Iowa lawmakers slammed Romney’s position on the wind tax credit, calling it the “wrong decision” and promising to “educate” him on the issue.
Monday’s headline in the Des Moines Register seems destined to echo throughout Iowa until Election Day: “Lines now drawn on wind tax credit: Romney opposes it, Obama favors it.”
Rarely in presidential politics can such dichotomic declarations be made without the accompaniment of asterisks galore. But in this case, it was appropriate; the difference is truly cut and dried. On the question of extending the wind production tax credit — an important issue for Iowans because of the roughly 7,000 jobs tied to the state’s wind-energy industry — the two candidates have made their positions perfectly (and diametrically) clear: Obama supports it and Romney does not.
Leaving no discernible wiggle room, Romney’s Iowa spokesperson Shawn McCoy told the Register: “He will allow the wind credit to expire, end the stimulus boondoggles, and create a level playing field on which all sources of energy can compete on their merits. Wind energy will thrive wherever it is economically competitive, and wherever private sector competitors with far more experience than the president believe the investment will produce results.”
That statement, however faithful to free-market principles, puts Romney at odds not only with Obama, but with his own supporters in the state — and they wasted little time in conveying their displeasure. “It’s the wrong decision,” Iowa Republican Rep. Tom Latham told the Register, seething that Romney’s position “shows a lack of full understanding of how important the wind energy tax credit is for Iowa and our nation.”
Republican Gov. Terry Branstad, a staunch supporter of both Romney and the tax credit, hasn’t yet personally weighed in on Romney’s position. But a statement from Branstad’s spokesperson to the Register spoke volumes: “We agree with Governor Romney on most issues and believe there is an opportunity to further educate Governor Romney and his team on the benefits of a short-term wind energy tax credit extension.”
The Obama reelection campaign has used Romney’s opposition to the wind power credit to attack him in Iowa and elsewhere, and has pledged support for the issue. The president and Democrats have not missed many chances to inform Iowa voters of Gov. Romney’s disdain for wind as polls show wide support among Iowans for the largest source of energy produced in the state.
But environmental activists and clean energy producers both are souring on the Obama administration as a means of stable support for substantial investment in clean energy for the future. It’s easy to highlight the rapid decrease in federal support for renewable technology even as the president delivers heated rhetoric in favor of certain kinds of clean power only in locations where it is politically savvy to do so.
Opponents deride wind power as an industry that has received too much federal assistance and is unworthy of government investment. But the facts prove otherwise, with a sustained boom in wind power – ironically created when Republican President George H.W. Bush launched a renewable electricity tax credit in 1992 — making the sector responsible for one-third of all new electricity capacity in the country.
According to a new report from the Department of Energy, wind accounted for about a third of all new electricity capacity installed in the country in 2011. That’s not too far behind natural gas, which accounted for 49 percent of new capacity amid an ongoing boom in hydraulic fracturing, or fracking.
Overall, it still amounts to just 3.3 percent of the nation’s electricity demand—coal and natural gas dominate, followed by nuclear. But it has now been the second-fastest-growing electricity source in six of the past seven years, thanks in part to a renewable electricity production tax credit originally signed into law by George H. W. Bush in 1992.
The spike in wind production has largely occurred in spite of the nation’s energy policy, with the federal support and incentives enjoyed by producers of fossil fuels stunting the rate of growth for wind energy. Even with the recent increase in development, the United States lags well behind other developed nations in wind energy production and clean power technology overall.
Even though America led the world in developing wind technology and producing turbines and other materials in the 1970′s and 1980′s, the current landscape of wind power production is bleak for the U.S. Europe accounts for nearly half of the globe’s total wind energy production, led by countries like Germany and Denmark where almost a third of the energy that powers these modern economies comes from wind — dwarfing the 3 percent share of wind power in the United States.
More troubling is that economic competitors like China are aggressively pursuing all forms of clean energy technology, especially wind. Solar panels used for energy projects in the U.S. are now bing made in China, and the Chinese now lead the world in wind power capacity and market share.
China continues to lead the global clean energy technology manufacturing race, according to a new report commissioned by World Wildlife Fund.
The report says that in terms of total sales value of clean energy technology, China had the largest market, followed by the United States and Germany. Though the US ranks second to China in total sales, relative to the size of its economy the US is well behind leading countries including Denmark, China, Germany and Brazil.
“Other countries are moving on clean technology opportunities and making big investments in the industry, while US policymakers in Washington seem to be content to let all the recent growth in the US wither on the vine by not providing policy certainty and not going after growth opportunities,” said Marty Spitzer, Director of US Climate Policy for WWF. “It’s stable, visionary policy that’s driving the market leaders to the top.”
Perhaps the greatest reason for the disparity in production of future renewable energy sources is government energy policy. While China and European countries devote significant investment resources to clean energy technology, the United States remains committed to a subsidy and incentive program lopsided towards fossil fuels.
No clear national energy policy and the massive influence of lobbyists for the oil, coal and gas industries in Washington has created a system of direct subsidies and tax credits funded by taxpayer dollars that been sustained despite record production and profits within the fossil fuel industry.
While critics complain of government spending on renewable energy technology in the form of one-time investment through measures like the 2009 stimulus, clean energy has been the overwhelming loser i the long-term picture of U.S. energy subsidies.
The boom for wind and solar from the stimulus is already nearing an end, and government spending is projected to nosedive even if the wind tax credit is extended. But thanks to incentives, tax credits and cash subsidies written directly into law by pliant lawmakers on Capitol Hill, fossil fuels enjoy limitless government support.
The numbers are staggering. In the years between 2002-2008, government subsidies for fossil fuel production topped $72 billion, compared to $29 billion for renewable energy.
Federal aid for oil and gas companies that are among the largest and most profitable corporations on the planet have become unpopular, especially as gas prices rise and oil and gas production in the U.S. hits new records. One bill in the Senate attempted to kill subsidies and tax credits for some of the largest oil companies that would total $20 billion over the next decade. The legislation died, however, and efforts to end or cut back fossil fuel subsidies have stalled in Congress.
While government aid to companies like Chevon and BP refuses to die, renewable technologies are still waiting for that “level playing field” promised by their critics. Even if the fight to save the wind power tax credit is successful, clean energy faces a potentially lethal cliff as the rest of their federal assistance threatens to disappear.
Wind and solar companies along with the investment firms that back them say they cannot expand without the same level of government help offered to industries far more established than America’s fledgling clean energy sector. Uncertainty over government policies and action from Congress has already hit the industry hard; one major wind turbine manufacturer has seen a steep dropoff in business thanks to the impending expiration of thew wind tax credit.
Layoffs and contractions have already begun at wind energy producers, which opponents say is proof of its worthlessness but renewable companies say is caused strictly by political haggling over the kind of aid that Washington continues to provide their fossil fuel competitors.`
Assisted by technological innovation and years of subsidies, the cost of wind and solar power has fallen sharply — so much so that the two industries say that they can sometimes deliver cleaner electricity at prices competitive with power made from fossil fuels.
At the same time, wind and solar companies are telling Congress that they cannot be truly competitive and keep creating jobs without a few more years of government support.
Without the new breaks, industry executives warn, they will be forced to scale back production and eliminate jobs in a still-weak economy.
The American division of Iberdrola, a big Spanish producer of wind turbines, is already feeling the impending loss of one tax break that expires this year. “We’ve seen the prospects for new wind farms really fall off,” said Donald Furman, a senior vice president at Iberdrola Renewables, which announced this week that it was laying off 50 employees. “We’re not getting out of the business and we’re not in any financial trouble, but we are doing the prudent thing so that we don’t have issues.”
The tax break that Iberdrola and other wind companies rely on, called the production tax credit, has been in place since 1992 but after repeated extensions is now scheduled to expire at the end of 2012. It allows for a credit of 2.2 cents per kilowatt-hour of electricity generated for the first 10 years of a project’s operation, which the industry says is sometimes enough to eliminate the price difference between wind power and fossil fuels.