Renewable Energy Subsidies Cost Taxpayers — How Does Your State Fare?

Renewable Energy Subsidies Cost Taxpayers — How Does Your State Fare?
May 20, 2014

James H. Rust

James H. Rust is a policy advisor for The Heartland Institute, a retired professor of nuclear... (read full bio)

EUCI, an industry leader in conferences, seminars, and short courses for the energy industry is hosting a two-day course on “An In-Depth Tax Planning for Renewable Energy Projects”. 

The course is June 9-10, 2014 in San Diego, California.  Course overview is, “This course is designed to give investors, users, developers, and their advisers an in-depth understanding of the tax issues involved in the development and structure of renewable energy projects.”

Rewards of tax dollars for the renewable energy industry are so great it takes tax experts days of explanations to locate all possibilities.  Additional subsidies are available from the federal government in forms of tax credits, loan guarantees, grants, and possible mandates for energy source use. 

To add to lucrative federal renewable energy subsidies, many states add to the list and make costs of some projects approach zero.  These subsidies are in the form of tax credits, tax benefits, loans, mandates for energy use (called renewable portfolio standards -RPS), and buybacks of excess electricity produced by renewable systems by local utilities (called net metering).  State subsidies are given by the Database of State Incentives for Renewables & Efficiency (DSIRE).

In August 2013, Ernst & Young published their report "United States Renewable Attractiveness Index Energy" that lists the top 25 states for renewable energy.  Factors applied in the listing are All Renewables Index, Individual Technology Index, Renewable Structure Index, and Infrastructure Index.  The All Renewables Index is scored by Long-term wind index--45%, Long-term Solar index--45%, Biomass index--5%, and Geothermal--5%.

For the Long-term Solar Index, California has a commanding lead over all states followed by Hawaii and Nevada in second and third place.  New Mexico, Colorado, Texas and Arizona round out the top seven with the Southwest the strong market for utility-scale solar developments.

The losers over these subsidies are taxpayers with higher taxes or obligations to pay increased debt and electricity rate payers with higher electricity prices.  California has the highest renewable energy portfolio of 33 percent electricity generated by renewables by 2020.  For February 2014, the CA residential electricity rate is 16.18 cents per kilowatt-hour versus the national average of 11.88 cents per kilowatt-hour—a 36 percent increase.  Georgia which presently has no requirement for renewable energy has a residential rate of 10.89 cents per kilowatt-hour.

It is hard to estimate costs of renewable energy subsidies.  Breitbart wrote in December 2013 renewable energy subsidies since 1973 were $154 billion.  I suspect this figure is direct payments from the federal government and does not include subsidies from state governments or assistance from federal and state tax codes.  Annual subsidies today have to exceed $10 billion.  Renewable energy subsidies support President Obama’s Climate Action Plan to curtail fossil fuel use and replace it with renewable energy sources.

 To give an example of state renewable energy subsidies, Georgia is examined.

GEORGIA’S WATERMELONS

Georgia being a Southern agriculture state, it is hard to resist calling their renewable energy subsidies watermelons—green on the outside and red from bleeding red ink on the inside.

As a Republican state, DSIRE gives a long list of subsidies available to residential and commercial energy users.  Particularly attractive are tax credits for solar energy and alternative-fueled vehicles—tax credits are limited to $5 million per year per category for both residential and commercial ventures.  In addition, Georgia gave a $6.2 million grant to Range Fuels for cellulosic ethanol (company bankrupted in 2012) and $10,000 grants to filling stations for dedicating one pump for E-85 for three years.  The latter subsidy was found from interviews of managers of two Atlanta filling stations carrying E-85 in 2011.

The Georgia Public Service Commission (GAPSC) had no problems promoting use of solar energy in Georgia.  On July 11, 2013, GAPSC implemented a renewable portfolio standard for Georgia by requiring Georgia Power Co. to buy 525 Megawatts of new solar energy by the end of 2016.  As a reward for this mandate, the Georgia Solar Energy Association awarded GAPSC its annual solar advocacy award shown by three smiling commissioners accepting their plaques.    It should be noted Georgia is not on the Ernst & Young list of top 25 states for renewable energy use.

Also add Georgia's government is mute through agencies like GAPSC to EPA's Proposed CO2 Rule for New Power Plants  that allow no future coal plant construction.  On May 26, 2011, the EPA had public hearings in Atlanta on proposed rules on mercury abatement.  This was followed by public hearings on reducing carbon dioxide pollution from new power plants October 23, 2013.  Representing The Heartland Institute, I gave both written and verbal testimony against EPA’s proposed rulings at the May 26 and October 23 public hearings.  No one from GAPSC testified at these public hearing even though their offices are within walking distance.  Silence on President Obama’s attempts to eliminate fossil fuels for electricity generation by Georgia’s officials can be interpreted as acquiescence.  Commissioner Echols did testify in Washington EPA should allow Georgia greater flexibility in enforcing EPA rules.

Georgia has joined Common Core for k-12 education whose science portion is shown corrupted by climate change propaganda.  Unless Common Core is abandoned or modified, Georgia’s children will be trained as advocates for President Obama’s climate action plan.

All these items make a good case Georgia is quite supportive of Obama Administration's efforts to eliminate fossil fuel use and make substitutions of more expensive, unreliable renewable energy sources.  President Obama could ask for no better support for his policies unless one traveled to strong Democrat states.

WHAT ABOUT OTHER STATES?

DSIRE can be used to gather information on financial incentives supporting renewable energy programs of the Obama Administration.  Other means of support by supporting Common Core or failure to make stands in favor of the Keystone XL pipeline and opposing EPA’s onerous air pollution rules to strike down fossil fuel use can be interpreted as support for President Obama’s energy policies.  Other programs to inhibit economic progress are edicts from government agencies to stop oil and natural gas production, logging, and mining on government lands.  Silence can be interpreted as agreement. 

An important national election takes place this fall and voters should assess their candidates to determine if they support energy policies that exploit the nation’s abundance of coal, oil, and natural gas.  Policies to curtail fossil fuel use and replace them with renewable energy sources will keep the nation on a road to economic decline that has been displayed the past half dozen years.

Smart votes need to be cast.

James H. Rust,  Professor of nuclear engineering and policy advisor The Heartland Institute

James H. Rust

James H. Rust is a policy advisor for The Heartland Institute, a retired professor of nuclear... (read full bio)