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What Critics of Wind Power's Incentive Miss

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As the prospect of Congress extending wind energy's primary incentive, the federal Production Tax Credit (PTC), has grown in recent weeks, so have both support and criticism.

On the positive side, the Des Moines Register, Denver Post, and Chicago Sun-Times have all editorialized in favor, joining a number of other major newspapers already on record in support (for example, the Daily Oklahoman, the Houston Chronicle, and The New York Times). The Wall Street Journal, meanwhile, on Friday continued its steady drumbeat of broadsides against renewable energy in general and the wind tax credit in particular.

Here is what the Journal and other critics of the PTC miss:

Historically, all energy sources have been encouraged by government, and for good reason. Ensuring a steady supply of domestic energy is vital to the productivity of our national economy.

Traditional energy sources have had a huge head start in government support. A recent study from the Congressional Research Service (CRS) points out that traditional energy sources enjoy an enormous advantage with regard to tax relief and other incentives: "For more than half a century, federal energy tax policy focused almost exclusively on increasing domestic oil and gas reserves and production ... These provisions remain in the tax code in limited form today."

That advantage is permanent, allowing for a stable business environment that wind energy is deprived of because of on-again, off-again federal policies

Renewable energy sources are not receiving excessive support. Another recent report, "What Would Jefferson Do?" from DBL Investors, found that "current renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. For example: ... the federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each [incentive's] life, and it was more than 10 times greater for nuclear."

Wind energy's incentive is tax relief. Wind's incentive is in the form of a federal tax credit. To call tax relief a subsidy is to assume that all money belongs to the government. Rather, a tax credit simply leaves more money in private hands. In this case, anyone who makes renewable energy qualifies. The result has been the creation of over $15 billion a year in private investment and 75,000 privately financed jobs in wind power.

Wind's incentive, the Production Tax Credit, has strong bipartisan support. As Gov. Sam Brownback (R-Kan.) and Senator Jerry Moran (R-Kan.) put it in an op-ed earlier this year in the Wichita Eagle, "If we expect the wind-energy industry to provide for our country's future energy needs and make long-term investments in their businesses, Congress must reauthorize the wind-production tax credit that expires this year. By extending the wind PTC, Congress will allow the wind industry to complete its transformation from being a high-tech startup to becoming cost-competitive in the energy marketplace."

GOP strategist Karl Rove added in June that the Production Tax Credit for wind "is a market mechanism...not picking winners and losers. We're simply saying for some period of time we will provide this incentive as we scale up and get improvements in technology." He called it something Republicans and Democrats can agree on, and I believe it is.

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