Witnesses Question Effectiveness of Wind Energy Subsidies

Apr 16, 2013

Washington, D.C. – The Subcommittees on Energy and Oversight today held a joint hearing to evaluate the efficiency and effectiveness of federal incentives for onshore and offshore wind technology.  The hearing builds on previous hearings that reviewed the impact of tax policies on the commercialization of energy technology and federal financial support for all energy technologies.

Oversight Subcommittee Chairman Paul Broun (R-Ga.): “Given our current fiscal environment, it is now more important than ever that we learn to accomplish more with less. That means reducing duplication and fragmentation within the federal programs spread out over multiple agencies. And when you consider the shadow of sequestration that hangs over federal agencies, Americans would be better served by an Administration that reins in questionable tax breaks instead of requiring employees to shoulder the burden of furloughs.”

Wind energy currently accounts for approximately three percent of total U.S. electricity generation.  The Obama administration has repeatedly called for increased funding for renewable energy research and development (R&D) as an investment in innovation.  However, the Government Accountability Office (GAO) found that deployment activities—not R&D—account for the largest number of initiatives in the federal government. The GAO further found that of the reported $2.9 billion in obligations for wind-related activities in 2011 alone, 99 percent of that money went to initiatives that support deployment.

Energy Subcommittee Chairman Cynthia Lummis (R-Wyo.): “When the wind industry’s principal subsidy, the Production Tax Credit (PTC), was created in 1992, it was intended as temporary assistance to help an immature energy technology. But here we are, 21 years later and the subsidy is still in effect. It is time for the industry to look beyond tax credits and cash payments.”

Wind projects have also benefited from a loan guarantee program at the Department of Energy (DOE), created in 2005 to support investment in energy technologies and clean-energy facilities. After high-profile bankruptcies of Solyndra, Abound Solar and Beacon Power, the DOE Inspector General placed the Loan Guarantee Program on its official “Watch List” for additional oversight. 

The hearing also examined the sizeable cost differences between offshore and onshore wind energy generation.  Witnesses outlined how offshore wind facilities are extraordinarily expensive to construct and may suffer from significant performance and productivity declines. In fact, offshore wind can be two to three times as expensive as onshore wind production.

The following witnesses testified today:

Mr. Frank Rusco, Director, Natural Resources and the Environment, Government Accountability Office
Dr. Robert Michaels, Professor of Economics, Mihaylo College of Business and Economics, California State University, Fullerton
Ms. Audra Parker, President and Chief Executive Officer, Alliance to Protect Nantucket Sound
Mr. Robert Gramlich, Interim Chief Executive Officer and Senior Vice President for Policy, American Wind Energy Association