In the middle of a drought that has affected half the country, the worst since the 1930s, with scientists saying that the likelihood of drought is greatly increased by warming emissions from fossil fuels, oil, coal and natural gas, the Republican presidential candidate is supporting continued tax breaks for these fossil fuels, but opposing tax incentives to help the developing wind power industry.
It appears that some Republican Senators disagree with candidate Romney and several of them joined Democrats in a 19-5 vote in the Senate Finance Committee to renew tax credits for wind power. 81% of installed wind power plants are in Congressional districts that are represented by Republicans, such as Iowa and South Dakota.
A one year extension of a production tax credit for wind would be a step in the right direction if Congress approves it, even though it is tentative, tiny, and late. According to testimony before a Subcommittee last December by a Congressional economic analyst, tax incentives for wind energy has been mostly temporary, extended 7 times since 1992, and allowed to lapse three times. The uncertainty of these provisions discourages investors. There is usually a 3 to 4 year period of planning, siting and permitting before wind equipment is ordered. A tax credit that may expire before it can be used is marginally useful. The credit should be extended for at least 5 years to allow investors and producers some consistent support as the industry scales up.
Wind energy has huge potential for growth and is growing fast, – over 31% last year, providing over a third of all new power generating facilities. Analysts believe that the US can increase the share of electric power coming from wind from 3% now to 20% in 18 years. South Dakota and Iowa are already at about 20% each. Germany now gets 25% of its electricity from renewables.
Consumers will see the cost of solar and wind technology drop as research improves them and increased production reduces prices. Bloomberg analysts estimate that the cost drops 7% for each doubling of wind energy installation.
Oil, coal and natural gas are mature industries that have become powerful with the help of subsidies which have been permanent features of the tax code for over 50 years and have been much larger than the subsidies to renewables according to congressional testimony. Exploration credits, depletion credits, and royalty relief reduce costs and raise profits for the petroleum industry. The Congressional Joint Committee on Taxation has estimated continued direct subsidies for oil and gas or $74 billion over the next couple years unless Congress changes these laws. $75 billion is the average yearly profit of Exxon-Mobil between 2008 and 2011.
It is time for consumers to get some government help for the development of competitive energy production without fossil fuels.