The “Inequality” of Federal Wind Energy Subsides Distribution

President Obama has been famously outspoken about “a dangerous and growing inequality” in our economy that has “jeopardized middle-class.” He was so adamant about our private sector’s misallocation of income away from a majority of Americans and towards a fortunate few that he proclaimed, “I believe this is the defining challenge of our time: making sure our economy works for every working American. It’s why I ran for President… It drives everything I do in this office.”

Apparently, the President’s concern for fairness in the distribution of public sector benefits across society does not seem to drive his support for federal renewable energy policies, many of which tend to favor some U.S. states at the expense of others.

For example, the Institute for Energy Research (IER) released a study at the end of last year that examines the federal allocation of wind energy subsidies across the country. Their analysis estimates the net value of Wind Production Tax Credits (PTCs) distributed across the states by comparing the federal wind-subsidy tax burdens paid by the citizens of each state to the percent of PTCs received by that state. The IER then examines the allocation of those net PTCs across our fifty states.   

The IER estimates that in 2012, ten states received over 72% of the total PTCs during that time frame, with many states receiving nothing. The table below notes some net winners and some net losers:

Net Losers   Net Gainers  
California

$195,849,979

  Texas

$394,451,907

New York

$162,554,909

  Iowa

$265,448,788

Florida

$138,141,406

  Oklahoma

$150,598,298

New Jersey

$125,585,386

  North Dakota

$110,663,105

Ohio

$103,847,354

  Oregon

$99,483,222

               

These numbers do not correlate with population, per capita incomes or any other characteristic commonly used to justify redistribution efforts. Yet, if one were to ask the President or his Cabinet members to justify this policy of inequitable allocation of federal wind energy subsidies, their response would surely be: in America’s diverse geographic environment, those states that are capable of producing more wind energy for the country will naturally receive a greater share of federal wind subsidies.

The irony is that one might say the exact same thing about the American private sector: in our nation’s diverse business environment, those individuals who are capable of bringing more value to the economy will naturally receive a greater share of our nation’s income. Perhaps meritocracy can justify only public sector benefits allocations, rather than the private sector benefits allocations.

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  1. Energy Curmudgeon says:

    Remember all these you reported? Seems we are continuing to make the same mistakes, DejaVu all over again:

    Bankrupt Green Energy Companies that received substantial federal and/or state subsidies:
    •Beacon Power Corp: Received $43 million in federal loan guaranteed in 2009 and also received $29 million in PA grants – Bankrupt in October 2011
    •Ener1 (parent company of EnerDel): Received $118.5 million in federal loan guarantees — Bankrupt in January 2012 – has since exited bankruptcy
    •Evergreen Solar: Received $58 million in MA loan guarantees (an undisclosed portion sourced from federal ARRA block grant) — Bankrupt in August 2011 with $485.6 million in debt
    •Solyndra: Received $535 million in federal loan guarantees in 2009 and $25.1 million in CA tax credit — Bankrupt in August 2011
    •SpectraWatt: Received $500,000 in federal loan guarantees in 2009 — Bankrupt in August 2011
    •Babcock and Brown: Received $178 million in federal grants in December 2009 (4 months after it went bust) – Bankrupt in early 2009
    •Mountain Plaza Inc.: Received $424,000 in federal grants through TN Department of Transportation in 2009 — Bankrupt in 2003 and again in June 2010
    •Solar Trust of America (parent company: Solar Millennium): Received $2.1 billion loan guarantee in April 2011 – Bankrupt in April 2012

    Other Subsidized Green Energy Companies in decline:
    •A123: Received $300 million in federal grants and $135 million in MI grants — Declining orders and have forced multiple layoffs
    •Amonix, Inc.: Received $5.9 million in federal tax credits in 2009 through ARRA — Laid off 2/3 of work force
    •First Solar: Received $3 billion in federal loan guarantees — Biggest S&P loser in 2011, CEO fired
    •Fisker Automotive: $529 million in federal loan guarantees — Multiple 2012 sales prediction downgrades for first car release, delivery and cash flow troubles; Assembling cars in Finland
    •Johnson Controls: Received $299 million in federal grants in 2009 — Low demand caused cancellation of a new factory, operating at half capacity
    •Nevada Geothermal: Received $98.5 million in federal loan guarantees in 2009 — Defaulting on long-term debt obligations, 85% drop in stock value
    •Sun Power: Received $1.2 billion in federal loan guarantees — Debt exceeds assets; French oil company took over last fall
    •Abound Solar: Received $400 million in federal loans in 2012 — ½ work force laid off
    •BrightSource Energy: $1.6 billion federal loan approved in April 2012 – loan obtained through political connections with the administration; absent the loan, Brightsource’s solar power purchase would have fallen through.

    In the face of these multiple “successes,” the Obama administration wants to double down and throw more good money after bad. It’s never worked before but hey, there’s always a first time, Right?
    – See more at: http://environmentblog.ncpa.org/green-energys-bankruptcy-blackout/#sthash.u2BiRB3W.dpuf

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