The Incomprehensible Alternative Energy Debate

Both Sens. Barack and Obama and John McCain have touted the importance of solar and wind energy to our energy future on the campaign trail (although Sen. Obama seems to favor it more while Sen. McCain seems to favor the development of nuclear energy more). Why, then, is there any debate in the Congress about whether to extend the investment credits for solar and wind energy investment?

WASHINGTON – Congress is putting the short-term future of renewable energy companies in jeopardy even as the presidential candidates and most lawmakers hail windmills, solar panels and biofuels as long-term solutions to high gasoline prices and global warming.

Some $500 million in investment and production tax credits will expire Dec. 31 unless Congress renews them. Without that help, solar and wind power companies say they will reverse planned expansions and, in many cases, cut payrolls and capital investment.

The answer to the question appears at the end of the article:

Putting expiration dates on tax breaks is a useful budget gimmick for lawmakers seeking to mask the growing federal budget deficit.

Because they are set to expire at a certain date by law, they do not count as revenue losses after that date even though most people assume Congress eventually will act to extend them. The Bush tax cuts of 2001 and 2003 are the biggest extenders of all in this respect. Trillions of dollars will be added to the federal debt if Congress chooses to make them permanent after they are set to expire in 2010.

Clearly, in the hierarchy of values getting reelected overwhelms the importance of an energy plan that reduces the relative of importance of oil in the energy mix. Politics over policy.

But that’s not the only aspect of the article I found infuriating. Either government incentives are necessary to encourage investment in wind and solar energy or they are not. The wind and solar energy companies seem to think that they are:

Schott Solar has visions of quadrupling its operation in Albuquerque, N.M., to reach 1,500 jobs and $500 million in investment. But the investment tax credit, company spokesman Brian Lynch said, is what makes solar power cost-competitive. Without it, expansion plans must be reconsidered.

Yet in the very next sentence the talisman of the market is waved:

“We don’t want to build a giant factory that the market doesn’t need or want,” Lynch said.

The irony of that sentence seems to be lost on its speaker. If a “giant factory” isn’t economically viable without subsidy then by definition the “market doesn’t need or want” it.

As I’ve said before my own view is that we shouldn’t subsidize solar or wind energy and we shouldn’t be subsidizing oil consumption, either. Get rid of the subsidies first. Then we can speak intelligently about letting the market decide. Having the Congress devote its energies to improving the regulatory environment might be nice, too.

There is an important nugget of truth in the article:

“A big part of the problem is uncertainty,” said Marie Lee, a tax analyst with the American Electronics Association. “Our companies are getting tired of this game.”

While short horizons may be convenient for Congress they make life difficult for companies. However, when you’re a creature of government you should be prepared for the vagaries of your patron.

5 comments… add one
  • Spoker Link

    Congress does not see things as quite desperate enough to do anything about energy. We need to have a real crisis not just the emptying of the consumers pocket books to take action. Remember, Congress is not looking to solve the problem, they are looking to build another buracracy to fee our taxes dollars so it can ‘manage’ the problem and afford them more power over our pocketbooks and daily lives.

    Remember, they believe we are neither smart or responsible enough to take care of ourselves. There is no power that is so absolute as one that is freely given up.

  • PD Shaw Link

    I hope the candidates are asked in a debate to explain the difference between their energy policy proposals and corporate welfare.

    I don’t know if you’ve paid attention to the FutureGen project here in Illinois, but it was a clean coal project begun by Bush in 2003 and the plug was pulled on the construction of a pilot plant in 2008. As the planning proceeded, the design became larger and more expensive. The government exercised its option to pull out from paying half of the construction costs. The private backers offered to eat its share of the cost increase, but the government wasn’t interested in an expensive design. It wanted something replicable by the market.

    I suspect the project will be renewed by the next administration. The President will pose in front of the monument and smile. I fear we are about to do a lot on many fronts on energy and accomplish little.

  • Roy Lofquist Link

    None of these alternate energy sources will reduce our consumption of oil by one drop. Refined petroleum is used in thousands of products – Plastics and asphalt to name just two. There is virtually no waste product from refining. The only way to reduce the consumption of oil is to reduce the consumption of the myriad products made from oil. They’ll just burn off the unwanted gasoline.

  • What do you think T. Boone’s massive ad campaign has been all about? Renewal of those tax credits. They’re essential to his plans to become the utility monopolist of North Texas. Without them his wind farms are marginal, and his HUGE natural gas/pipeline investments less profitable.

    “Clean coal” is at least a decade down the line. Solar and wind have miles to go to become any appreciable fraction of US power production.

  • Paul Spite Link

    Carbon emissions have no discernable effect on climate, but our gullibility nets promoters of this “crisis” billions per year. Meanwhile they change nothing of their own lifestyles, though they also live on the planet they claim we are destroying. Claiming to want to save us from our folly, they seek to strip away our freedoms while destroying our economy. While the climate itself mocks their so-called linkages, and our economy is already on the edge of collapse, a Democratic Congress is still pushing for carbon cap legislation. What will it take to bring this farce to an end?

    Your website leads me to believe we share the concerns about this attempt to sell out our country for profit and power. Would you help me promote a book I have written examining this hoax? It is intended to make readers angry over being played for patsies. If enough people read it, it would create a public backlash against that legislation, but through my own efforts, I have been unable to sufficiently publicize this work. Would you also pass this e-mail on to all your peers you think might agree and help?

    The book is entitled “A Climate Crisis a la Gore” and is organized as follows:

    • Introduction – the motivation behind the assembly of this information for public use.
    • Part 1 – Excerpted ideas from Mr. Gore’s book, The Assault on Reason. regarding the proper and reasonable way to enter an argument or evidence are used to critique his film, where apparently he used all the assault techniques he claims to deplore
    • Part 2 – A claim by claim analysis of Mr. Gore’s documentary, An Inconvenient Truth. These are evaluated with simple logic, claims elsewhere in the documentary; Mr. Gore’s excerpted written principles of reasoning, and scientific research and findings regarding the subjects of his claims.
    • Part 3 – A rather cynical discussion and disclosure of players and special interest groups creating the perception of a global climate crisis. The history of the movement is examined, motives behind involvement, dollar amounts of profit already being reaped by promoters, and what they stand to gain if America enacts carbon legislation.
    • Conclusion – The coming economic storm resulting from enacting this legislation and a plea to readers to contact legislators demanding such laws be reconsidered.

    Excerpts can be reviewed and the book ordered at by entering the title, ISBN# (978-1-4196-8684-9) or by following the link If you are willing to inform your readers of its contents and availability, an informed (and angry) population of voters might be a real, and maybe the only, check and balance system capable of stopping Congress.


    Paul Spite

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