The Wind Tax Credit: Green Welfare

Senator Alexander makes a strong and compelling case for not just ending the wind tax credit but also corporate welfare designed to force technologies that either don’t exist or are not commercially viable.

Even if our fiscal condition was significantly better and the government wasn’t borrowing 42 cents of every dollar it spends, there is no justification for an energy industrial policy. As a nation, we have almost 40 years of experience with the government attempting to bring about alternative energy sources with various forms of subsidies and mandates. They have all failed. Attempts to force technological breakthroughs are a fools errand that only enrich those who figure out how to game the system.

It is a well established technological fact that wind is intermittent and not suited forbaseload power generation without transmission, storage, and power conditioning. The technology for storage does not exist and even if it did, the cost of wind power is not economically competitive. The lack of storage and long distance transmission capabilities mean that it can fill a niche, at best.

Many European countries, especially Germany, have traveled the clean energy road and by doing so have put their economies into a ditch. An analysis of Germany’s rush to renewables by the European Institute for Climate and Energy warned of “impending doom for the German economy caused by the lemming like charge to the Green mirage of affordable renewable energy.” The report went on, “The problem is that these energy sources are weather-dependent and thus their sporadic supply is starting to wreak havoc on Germany’s power grid and is even now threatening to destabilize power grids all across Europe! … after tens of billions of euros spent on renewable energy systems and higher prices for consumers, not a single coal or gas-fired power plant has been taken offline. To the contrary, old inefficient German plants have been brought back into service in an effort to stabilize the grid.”

With an economy that increasingly is reliant on electric power generation, we need to focus on abundant, reliable, and affordable sources of electric power generation. For the foreseeable future, that source is natural gas.

There is a clear lesson from 40 years of energy industrial policy initiatives, including the wind tax credit. It is simply not possible to create technological short cuts by throwing money at alternative energy systems.

The process of development is slow and painstaking. As Bruce Everett stated in the Fall 2012 issue of Issues in Science and Technology, ” Successful technologies pass through three distinct stages. In the conceptual phase, we develop a solid understanding of the science… . In the technical phase, we learn how to build machines that actually work. In the final commercial phase, we figure out how to make products whose cost and performance convince consumers to prefer them over competing products.”

Rather than attempting to be a venture capitalist, government should be investing in basic research to advance technology and innovation and create the knowledge that allow promising technologies to complete the first stage of development.

This article appeared in The National Journal’s Energy Experts blog at

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