[Congressional Record Volume 165, Number 185 (Tuesday, November 19, 2019)]
[Senate]
[Pages S6638-S6640]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
Wind Production Tax Credit
Mr. ALEXANDER. Mr. President, I have come to the floor to talk about
the wind production tax credit. This is a subject that I've talked
about before. The Senator from Pennsylvania, Mr. Toomey, will, I
believe, come soon to talk on the same subject.
The wind production tax credit is so generous with taxpayers' money
that wind developers can actually give away their electricity for free
and still make a profit. Let me say that again. I am talking today
about the wind production tax credit, which is a tax subsidy--taxpayer
dollars--given to wind developers, and it is so generous that the
developers can actually, in some cases, give away their electricity for
free and still make a profit.
That wind production tax credit has been extended 11 times. It has
been on the books for more than 25 years. This was a tax credit that
was supposed to jump-start a new industry--that's 25 years of jump-
starting. Four years ago, Congress agreed to end it. We thought that
was it. In doing so, Congress asked taxpayers to provide another $24
billion, according to the Joint Committee on Taxation, to extend the
wind production tax credit--$24 billion more in subsidies for another 5
years and gradually phase out the credit. That is what we thought we
did 4 years ago. We would spend $24 billion more in exchange for
phasing out and ending the wind production tax credit. This is on top
of the nearly $10 billion taxpayers paid between 2008 and 2015 and the
billions more the taxpayers have paid since the wind production tax
credit was created in 1992. That was supposed to be the end of the wind
production tax credit 4 years ago. Remember, it
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was supposed to jump-start a new industry. President Obama's Energy
Secretary said years ago that wind is already a mature industry. That
was during the Obama administration.
Now some Members of Congress are trying to break the agreement of 4
years ago to end the wind production tax credit. Earlier this summer,
the House Ways and Means Committee reported legislation that extends
that credit through the end of 2020. This huge amount of money is not
the only thing wrong with that proposal.
First, the wind production tax credit undercuts reliable electricity
like nuclear power. This is called negative pricing, which is when wind
developers have such a big subsidy that they can give away their
electricity and still make money. If you are a wind developer, for
every kilowatt hour of electricity one of these 40-story-high wind
structures produces, the taxpayers will pay you up to 2.3 cents, which
in some markets is more than the cost of the wholesale value of each
kilowatt hour of electricity. Negative pricing such as this distorts
the marketplace. It puts at risk more reliable forms of energy such as
nuclear power, which produces 60 percent of all the carbon-free
electricity in the United States. In contrast, wind produces about 19
percent of all the carbon-free electricity in the United States. I
think it is important to produce carbon-free electricity. I believe
climate change is a problem and that humans are a cause of the problem.
Why would we undercut the production of nuclear power--which is 60
percent of our carbon-free electricity--by the negative pricing of this
big, expensive wind production tax credit? With nuclear power
available, expecting a country the size of the United States to operate
on windmills is the energy equivalent of going to war in sail boats.
Second, in my view, windmills destroy the environment rather than
save it. You could run these 40-story structures from Georgia to Maine
to produce electricity, scarring the entire eastern landscape or you
could produce the same amount of electricity with eight nuclear power
plants. If you did run these giant structures from Georgia to Maine,
you would still need natural gas or nuclear power to produce
electricity when the wind is not blowing, which is most of the time.
There is a much better way to spend the dollars that are available
for clean energy. Instead of subsidizing wind developers, the United
States could use that money to double the nearly $6.6 billion that the
Federal Government spends on basic energy research to make truly bold
breakthroughs that will help us provide cleaner, cheaper energy and
raise family incomes.
Earlier this year, I came to the Senate floor and called for a New
Manhattan Project for Clean Energy, a 5-year project with 10 grand
challenges that will use American research and technology to put our
country and the world firmly on a path toward cleaner, cheaper energy.
Specifically, I encouraged funding breakthroughs in advanced nuclear
reactors, natural gas, carbon capture, better batteries, greener
buildings, electric vehicles, cheaper solar, fusion, advanced
computing, and doubling energy research funding. All of that is a
better use of funding than more funding for wind developers, which is
so generous that in some cases they can give away their electricity and
still make a profit. Let wind energy go where we said it should go in
2015; let it go unsubsidized into the free market. That is where we
thought we sent it 4 years ago, and that is where it should go.
I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. TOOMEY. Mr. President, I want to join my colleague from Tennessee
in explaining why we ought to allow this deal to stand--the deal that
was struck some years ago to phase out these incredibly inefficient
subsidies.
I thank my colleague from Tennessee for his leadership on this issue.
As you know, this is a very large tax subsidy. The government is
already set to spend about $67 billion in energy tax subsidies just
over the next 5 years, and we should be very clear about this: These
subsidies lead to a lower standard of living. When we choose to take an
inefficient form of energy and throw a lot of money at it, it just
lowers the standard of living. We have less resources available for all
the other things we could be doing with that money.
As my colleague from Tennessee mentioned, the wind production tax
credit began in 1992 for the very straightforward, simple reason that
it couldn't compete. It is completely economically uncompetitive. The
idea is, we will have this temporary subsidy to enable the wind
production to reach an economy of scale, reach a maturity in the
industry that would allow it to compete, and the consensus at the time
was that ought to be achieved by about 1999. After about 7 years of
taxpayer subsidies, the industry should be on its feet, should be
competitive, and there would be technological improvements and
everything would be fine. That was 20 years ago. We have been
subsidizing it ever since.
We extended this program 11 times. The wind component of all of our
energy subsidies is about $25 billion over a 5-year period, and they
still can't compete. The reason it can't compete is because it is just
extremely expensive to build the electricity-generating capacity if it
is a windmill. It is much more expensive than alternative forms of
energy. The cost of building wind capacity versus natural gas, for
instance, is pretty stark. It costs less than $1,000 per kilowatt of
capacity for a natural gas-fired powerplant. It costs over $1,600 per
kilowatt for wind production.
Obviously, after the production is done, windmills don't require
ongoing fuel. Amazingly enough, that savings is not enough to ever
recoup the huge amount of capital you have to lay out upfront to build
this very, very expensive technology. You don't have to take my word
for it. Warren Buffett had something to say about this. He knows
something about investments. He knows something about economic
efficiency. Warren Buffett said:
We get a tax credit if we build a lot of wind farms. That
is the only reason to build them. They don't make sense
without the tax credit.
That is the reality we have. It is compounded by the fact, of course,
that wind energy is inherently unreliable. This will come as no
surprise to my colleagues. You don't generate electricity from a
windmill unless the wind is blowing. Unfortunately, it is just a fact
of nature that wind generation tends to peak in the middle of the night
and early morning hours when our energy needs are at their lowest.
It is very hard to store electricity, so we end up with this bizarre
situation that the Senator from Tennessee alluded to, where sometimes
the wind farms are generating tremendous amounts of electricity, when
no one needs electricity, because there is a wind storm in the middle
of the night, but because they are so heavily subsidized by taxpayers,
the wind farm companies are willing to pay the electric grid operator
to take their electricity. Normally, you sell your electricity. They
actually will pay money to have the electrical grid take their
electricity. This is extremely disruptive for the conventional sources
of electricity, whether it is nuclear or gas or coal, because they have
to be there all the time to adjust for the wild fluctuations that come
from wind-generated electricity. It is very hard for them to have a
vehicle business model when occasionally the product they produce has a
negative value. It is just bizarre.
I want to stress another element of this, which is the original
rationale. The original rationale was that this was a new industry. It
was going to need some help getting on its feet and getting
established, and after some period of time, it would be able to compete
on its own. This is no longer even remotely the case. In fact, there is
a tremendous amount of wind-generated electricity in America because
these subsidies have been so big for so long.
In 1999, we had only 4\1/2\ billion kilowatt hours of electricity
generated from wind. In 2018, we had 275 billion kilowatt hours--a
6,000-percent increase in two decades. It is now 7 percent of all U.S.
electricity generation because these subsidies are so expensive.
I think it was, in part, because of the enormous growth of this
industry and the maturity of it--the decades-long history--that
Congress finally decided back in 2015 that we would phase out these
subsidies. We wouldn't do it immediately, but we would phase them
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out by 2019. So 20 years after the subsidies were supposed to end, we
are now on a glide path to phasing this out and having these taxpayer
subsidies expire at the end of this year.
At the time the Wind Energy Association looked at this in 2015, they
said: ``Growth in the wind industry is expected to remain strong when
the PTC is fully phased out.'' PTC is the production tax credit. That
is what we are talking about. Lo and behold, we get to the end of 2019,
or nearly so, and, sure enough, some folks in Congress are saying:
Well, let's not stick to that deal. Let's continue this subsidy even
longer. So we had a markup in the Ways and Means Committee of the other
Chamber to add yet another year's extension to the wind tax credit that
will cost another $2 billion.
I just don't think we should break the deal that we had in 2015. This
is an inefficient use of taxpayers' money. This makes our economy less
efficient. This lowers our standard of living and is disruptive to the
ongoing base sources of electricity that we need across the country.
The last point I want to make is that it is not as though we have an
energy shortage in this country. It is not as though we are going to
have to turn to hostile foreign sources to get the energy to replace if
we don't continue heavily subsidizing wind production. The fact is we
have staggering amounts of natural gas--enough natural gas to serve our
electricity generation needs for the indefinite future. In 2017, the
United States became a net exporter of natural gas. It is a huge,
growing source of electricity generation that is clean, that is
reliable, and that is incredibly abundant. We came to the right
conclusion some years ago. Now is our opportunity to stick to it.
I yield the floor.
The PRESIDING OFFICER (Mr. Cruz). The Senator from Texas.