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STUDY: Majority of States Losing Millions to Big Wind

WASHINGTON — In a study released today assessing the distributional impacts of federal wind subsidies, analysts from the Institute for Energy Research found that 30 states and the District of Columbia are marking up net losses to fund the wind Production Tax Credit (PTC) and pour millions of their taxpayer dollars into the pockets of wind producers. In fact, producers in the top ten “taking” states received more than 72 percent of the total PTC subsidy transfers in 2012, while entire regions of the country receive zero subsidies but are forced to pay an unfair share of the tax burden related to federal wind subsidies.

According to IER researchers, five U.S. states were net payers of more than $100 million in 2012, meaning that the burden of these states to pay for the wind Production Tax Credit surpassed the subsidy benefit received by producers in those states. Meanwhile, producers in states like Texas, Oklahoma, and Iowa are being paid hundreds of millions of dollars in subsidy transfers from poorer states. On a regional basis, the Northeast and Southeast were the biggest net payers, subsidizing other areas with net losses of $591.8 million and $559.3 million, respectively.

“Federal wind subsidies impact every state and region in the country,” the report states, “and subsidies such as the wind PTC are inefficient policies that distort energy markets, threaten grid reliability, and encourage rent-seeking rather than energy production.”

“A majority of U.S. states — generally states that lack the geography and wind supply to support wind power — unfairly shoulder the burden of these subsidies . . . This report shows that federal wind subsidies are terribly inequitable.”

Highlights from the study:

  • New York is the second biggest net payer state in the country, shouldering net losses of more than $162.5 million in 2012. Despite producing the most electricity from wind of all the states in the Northeast region, New York remains the largest net payer in the region.
  • States in the Southeast paid, in total, $559.3 million more in taxes in 2012 than wind producers in those states received in federal wind subsidies.
  • Florida is the third largest net payer state nationwide and the biggest net payer in the Southeast. Because Florida had zero wind generation in 2012 but a high share of the federal wind subsidy tax burden, federal subsidies to wind power imposed a heavy tax on Floridians without conferring “benefits” to the state.
  • Despite the Midwest region being a net taker of federal wind subsidies, Michigan, Missouri, Ohio and Wisconsin are net payers. Each of these states also has Renewable Portfolio Standards (RPS), though they do not produce much wind and are likely forced to purchase wind energy from net taker states in the region.
  • Ohio taxpayers subsidize wind producers in net taker states not only through their federal tax dollars, but also through the state RPS — which utilities cannot meet without purchasing electricity from wind producers in neighboring states.
  • Texas is the biggest net taker of federal wind subsidies nationwide, raking in $394.5 million more in wind subsidies than its share of the federal wind subsidy-related tax burden.
  • 7 out of 11 Western states are net takers, and wind producers in Oregon are the biggest net takers in the region, hauling in more than $99 million in 2012.
  • California had the second highest installed wind capacity in the country in 2012, and it was also the seventh largest net taker in terms of subsidies. However, because California contributes the largest share of the federal tax burden, the Golden State is actually the biggest net payer of federal wind subsidies with 2012 losses reaching nearly $200 million.

To read the full study, click here.

To register to attend IER’s Wind Welfare Policy Summit hosted on Capitol Hill this Tuesday, click here.

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  • michaelgoggin

    For an explanation of how IER’s latest analysis ignores the economic and environmental benefits of wind energy that accrue to all 50 states, and also ignores the far larger federal support provided to fossil and nuclear energy, please see:

    Michael Goggin,
    American Wind Energy Association

    • josephtoomey

      For an explanation of how AWEA’s latest wind boosterism ignores the devastating,
      disgraceful environmental impact caused by wind turbines, please see:

      For an analysis of how wind farm operators have enjoyed decades of exemption from criminal prosecutions and jail sentences for willful violations of the Migratory Bird Treaty Act, the Bald and Golden Eagle Protection Act and numerous other federal and state laws, please see:

      For an analysis of how subsidies granted to wind farm operators are 20-to-25 times larger, on a per unit of energy produced basis, than “subsidies” granted to fossil fuel companies, please see:

      ‘Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010,’ Energy Information Administration, U.S. Department of Energy, August 1, 2011

  • Dell Stator

    Hmm, In the NE various lets say ” liberal groups “, like environmentalists worried about seagulls, native Americans worried about ancestoral “grounds” flooded over 20,000 years ago after the last ice age, etc. have stopped all off shore wind genertion cold, while in Texas it’s build, build, build – and collect those subsidies! Any imbalance in subsidy payment / collection from state to state has nothing to do with wind not being a good source of energy, it’s politics as usual. Please note TEXAS, home to the US energy industry is the heaviest supporter and building of wind gens, and these tycoons KNOW energy, it’s in their blood, so if they are doing it, big time, well, that pretty much puts THE stamp of approval on wind energy. That they are no doubt funding the very expensive legal battles “liberal” groups around the USA are using to keep wind gen down, while bribing the gov’t for subsidies (just as agri business does for ethanol subsidies and mandates) is just good business.
    Russell Higgins

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