by Richard Caperton and Stephen Lacey
The Wall Street Journal released another error-riddled editorial against the wind industry today calling for an end to the production tax credit. The piece is so bad — and features such a broad range of spin and inaccuracies — it deserves a special, point-by-point debunk.
The WSJ starts off by incorrectly describing how renewable energy tax credits work, almost immediately destroying editorial credibility:
Congress finally ended decades of tax credits for ethanol in December, a small triumph for taxpayers. Now comes another test as the wind-power industry lobbies for a $7 billion renewal of its production tax credit.
The renewable energy tax credit—mostly for wind and solar power—started in 1992 as a “temporary” benefit for an infant industry.
Firstly, the production tax credit is not used for solar power — and it never has. Solar and wind power have different characteristics and thus require different tax treatments. This may seem like a small point, but if WSJ editors are going to rail against these tax credits, they should be able to understand what they’re talking about.
Nope. There are more factual errors on these tax credits:
The “1603 grant program” pays up to 30% of the construction costs for renewable energy plants (a subsidy that ended last year but which President Obama calls for reviving in his budget). Billions in Department of Energy grants and loan guarantees also finance the operating costs of these facilities. Wind producers then get the 2.2% tax credit for every kilowatt of electricity generated.
The tax credit is 2.2 cents per kilowatt-hour, not “2.2% … for every kilowatt.” This deserves a correction. Seriously, the WSJ shouldn’t have people writing about these issues who can’t tell cents from percent and kilowatt-hour from kilowatt. This is a joke.
And let’s remember that one justification for the tax credit is to makeup for the fact that taxpayers are bearing the harm from fossil fuels — see Economics Stunner: “Oil and Coal-Fired Power Plants Have Air Pollution Damages Larger Than Their Value Added.” Taxpayers are effectively subsidizing polluting forms of energy through the healthcare system!
The 1603 program is also misrepresented here. The WSJ makes it seem like companies were taking advantage of both the grant program and production tax credits at the same time. In fact, the grant was created to take the place of a tax credit during the height of the economic crisis when the tax financing market imploded.
The characterization of Senator Bingaman’s clean energy standard is also ludicrous:
Twenty years later, the industry wants another four years on the dole, and Senator Jeff Bingaman of New Mexico has introduced a national renewable-energy mandate so consumers will be required to buy wind and solar power no matter how high the cost.
By claiming that a national target will force utilities to buy renewable power “no matter how high the cost” is factually wrong. The CES has an price ceiling of 3 cents per kwh for clean energy credits. The WSJ is intentionally misleading its readers about the facts of this bill. The editorial board should be embarrassed.
But they clearly aren’t: