Rep. Mike Pompeo (R-Kansas) is the Koch brothers’ level man within the House. (AP picture)
As Congress dithers for the umpteenth time over extending a key subsidy for wind energy, the business once again is up in the air. Referred to as the manufacturing tax credit score (PTC), the subsidy helps stage the enjoying discipline between wind and fossil fuels and has proven to be critical for financing new initiatives, serving to to make wind one of many fastest growing electricity sources within the nation. Given the planet needs to transition as shortly as attainable away from coal and pure gasoline to carbon-free vitality to avoid the worst consequences of climate change, who can be towards renewing wind’s tax credit score?
The Koch brothers, that’s who.
Charles G. and David H. Koch — the billionaire house owners of the coal, oil and gas Koch Industries conglomerate — have enlisted their extensive community of think tanks, advocacy groups and associates on Capitol Hill to spearhead a campaign to pull the plug on the PTC. By no means thoughts the truth that the oil and fuel business has averaged 4 instances what the wind tax credit is worth in federal tax breaks and subsidies yearly for the final 95 years.
The Koch network is fighting the wind trade on a lot of fronts. Final month, Koch-funded Congressman Mike Pompeo (R-Kansas) despatched a letter signed by fifty two House members to the chairman of the House Methods and Means Committee, urging him to let the PTC expire. In the meantime, a coalition of some a hundred national and local groups organized by the Koch-founded Individuals for Prosperity despatched a letter to every member of Congress asking them to do the identical. And earlier this month, the Koch-funded Institute for Vitality Research launched an anti-PTC ad campaign and released a report claiming that solely a handful of states actually profit from the subsidy.
Malcolm Gladwell did not include this battle in his new book David and Goliath because, given the odds, it is extra like Bambi versus Godzilla.
The Kochs’ Man in Congress
The fact that Kansas Rep. Mike Pompeo is the Kochs’ level man to scuttle the PTC in the House is a bit ironic given his state is a wind vitality leader. Kansas has the second highest wind potential in the nation, it has already attracted more than $5 billion in wind industry funding, and final 12 months wind generated 11.Four percent of its electricity. With stats like that, the industry has broad bipartisan help. Esterification Reactor Kansas Gov. Sam Brownback and Sens. Jerry Moran and Pat Roberts — all Republicans — are massive fans.
Pompeo, who has been in Congress since solely 2011, would argue that he’s against all vitality tax credits. For the second yr in a row, he has introduced a invoice that would eliminate tax breaks that profit oil, natural gasoline, coal, nuclear, electric automobiles, different fuels, photo voltaic and wind, including the PTC, which provides wind developers a tax credit score of two.Three cents for each kilowatt-hour of electricity they produce.
However there’s a catch. Though it seems evenhanded, Pompeo’s invoice would severely hamper wind and photo voltaic but preserve quite a few oil, gas and coal subsidies, together with the proportion depletion allowance, the ability to expense the costs of exploration, and the accelerated depreciation of sure sorts of “geologic property.” These and different tax breaks he overlooked of his bill can be value about $12.5 billion to the oil and fuel industry from 2011 by means of 2015, in line with a March 2012 Congressional Research Service report.
Why is Pompeo so down on wind? Maybe it’s as a result of Koch Industries is headquartered in Wichita, smack-dab in the middle of his district — and the truth that the corporate is by far and away his biggest marketing campaign contributor. Since 2010, Koch Industries has given him $200,000, more than 4 instances what his second highest contributor kicked in. Besides Koch Industries, three other oil companies are amongst Pompeo’s high five contributors — McCoy Petroleum, Mull Drilling and Richie Exploration — and they’re additionally based in Wichita.
What about the other 51 Home members who signed Pompeo’s letter? Because it seems, sixty five p.c of them received contributions from Koch Industries throughout the final two or three campaign cycles, in line with Federal Election Fee information compiled by the nonpartisan Heart for Responsive Politics. A quarter of them, meanwhile, cashed checks from ExxonMobil. And except for 2 congressmen who did not take any energy trade money, the signatories acquired sizable contributions from a lot of other companies that compete with wind, together with coal barons Arch Coal and Alpha Pure Sources; oil and gasoline giants Chesapeake Energy, Chevron, ConocoPhillips and Valero Power; and Exelon, which owns essentially the most nuclear reactors in the country.
Americans for (Koch) Prosperity Weighs In
Pompeo’s letter came on the heels of a letter from the Kochs’ flagship advocacy group, People for Prosperity, calling for Congress to kill the PTC. AFP’s letter, which was signed by 102 organizations, claims that “the wind business has very little to point out after 20 years of preferential tax therapy” and declares that “Americans deserve energy solutions that can make it on their own within the market — not ones that should be propped up by government indefinitely.”
Is that right? Little to point out? Preferential tax treatment?
Actually, till Congress left the wind trade hanging late final yr, it had been doing fairly effectively. Even with a deep recession and gradual recovery, over the previous 5 years — with the assistance of the PTC, stimulus spending and state renewable electricity standards — the industry doubled its electricity output, employment and personal funding. In 2012, domestic manufacturers produced roughly seventy two percent of the wind turbine gear erected throughout the country — practically triple the share in 2006 — and more than 13,000 megawatts of recent wind technology capability was installed. By the end of final 12 months, there were enough wind turbines to energy 15 million typical American houses — with out toxic pollutants or carbon emissions.
However AFP’s complaint that the wind trade has been on the dole far too lengthy is much more galling. What concerning the oil and gasoline industry? It’s been feeding at the federal trough since 1918! On average, the business has benefited from $4.86 billion in tax breaks and subsidies in right now’s dollars yearly since then, according to a 2011 research by DBL Buyers, a enterprise capital firm. Renewable energy applied sciences, in the meantime, averaged solely $370 million a 12 months in subsidies between 1994 and 2009. The 2009 stimulus bundle did provide $21 billion for wind, photo voltaic and different renewables, however that help barely begins to balance the scales that have tilted towards nuclear power for greater than 50 years, oil and gas for ninety five years, and coal for greater than two centuries.
So who signed the AFP letter? About half of the signatories are native tea occasion affiliates and anti-wind NIMBY teams of indeterminate dimension and funding. The opposite half are, for the most part, comparatively obscure national groups, but there are just a few which have attracted consideration over the years for his or her contrarian views on local weather science and renewable power. Like AFP, these teams are awash in petrodollars. The American Energy Alliance (and its dad or mum, the Institute for Energy Analysis), Aggressive Enterprise Institute, Freedom Works, Frontiers of Freedom and Heritage Action (and its dad or mum, the Heritage Foundation) collectively have obtained thousands and thousands of dollars from Koch family foundations, ExxonMobil and the American Petroleum Institute, the oil and fuel industry’s premier commerce affiliation.
The Institute for Power Research’s Questionable Analysis
On December three, the Institute for Energy Research and its political arm, the American Power Alliance, sponsored what they dubbed the “wind welfare” summit in Washington, D.C., featuring IER founder and CEO Robert Bradley Jr., a Koch network veteran. AEA announced it could spend $forty,000 on print and digital ads calling for an end to the PTC and is flying in anti-PTC advocates for conferences on Capitol Hill.
Bradley presumably highlighted the findings of a report IER launched the day before claiming that a small number of states with wind sources — Iowa, North Dakota, Oklahoma and Texas — are reaping the advantages of the PTC while 30 states and the District of Columbia are “shedding hundreds of thousands” to fund it.
The report’s findings, nonetheless, do not hold up to scrutiny. Mike Jacobs, a senior vitality analyst on the Union of Involved Scientists, pointed out in a recent weblog that IER ignored the truth that a variety of the states it identified as “net payers” are home to wind trade manufacturing services. There are sixty two firms in Ohio making turbine parts, for example, forty in Michigan and 21 in California. Jacobs also found that IER downplayed the truth that “the PTC advantages consumers the place wind-generated electricity adds to the provision and lowers the price of electricity, landowners who obtain lease funds from the wind turbines, and native communities that gather tax funds on put in wind farms.”
Jeff Spross, blogging on the center for American Progress’ ThinkProgress web site, also chided IER, mentioning that almost all industries will not be equally distributed across the nation. “The oil and fuel industries, for instance, profit from a wealth of federal tax carve-outs,” he wrote, “however the economic activity they generate is concentrated in just some key states.”
In other words, it is disingenuous to single out the wind industry.
Twisting in the Wind
Whereas Congress has generously offered the fossil-gasoline and nuclear-energy industries quite a few permanent subsidies, it has typically granted the wind business the PTC on a short-time period basis after which wavered over renewing it. Final 12 months the PTC expired on December 31, but as part of the “fiscal cliff” budget deal the next day, Congress extended it for the seventh time since it debuted in 1992 — for only one 12 months.
This uncertainty over the PTC’s standing has put wind builders at a distinct disadvantage, making it tough to draw buyers and plan forward. Final yr’s cliffhanger, for instance, positively did a quantity on the trade. Wind farm building has fallen off dramatically in contrast with 2012: Only one utility-scale wind turbine was put in in the primary six months of this year. Enterprise picked up somewhat in the third quarter, with sixty eight.3 megawatts installed, in response to the American Wind Power Affiliation, but that’s far below the typical of more than 1,000 megawatts that the industry constructed in most quarters lately.
On condition that it takes years to plan, finance and construct a wind farm, Congress is again undermining the trade’s potential by slow-walking the PTC extension this 12 months. And that potential is super. Wind currently generates about four % of U.S. electricity, however by 2030 it could produce greater than 20 %, in accordance with the U.S. Department of Vitality. The DOE’s Nationwide Renewable Energy Laboratory also is bullish on wind and renewables writ massive. Last yr, it printed a report that concluded immediately’s commercially available renewable applied sciences might simply generate eighty percent of U.S. electricity by 2050, with nearly half coming from wind. If the Koch brothers and their allies have their means, nevertheless, it likely will take a lot longer to get there — and it’ll cost a hell of much more.