A number of the comments supporting extension of the wind production tax credit are based on half truths, illusions, and special interest politics.

One argument is that eliminating it will cost 37,000 jobs or more. There are two flaws in this argument. First, it assumes that there is no difference between jobs created by inefficient subsidies and more efficient allocation of resources. There is literature demonstrating that green subsidies misallocate resources that cost more jobs than they create. A study conducted by Spain’s Universidad Rey Juan Carlos concluded “ we find that for every renewable energy job that the state manages to finance, Spain’s experience…reveals with high confidence…that the U.S. should expect a loss of at least 2.2 jobs on average… .” Second, most of the jobs created by wind energy are in the manufacture of turbine blades and steel for wind towers, most of which are imported.

Another line of argument is that the wind subsidy pales in comparison to subsidies for the oil industry. There are two flaws with this argument, as well. First, it is an inaccurate statement. According to a Wall Street Journal article, in 2010, “The natural gas and oil industry received $2.8 billion in total subsidies. …The biggest winner was wind, with $5 billion. Between 2007 and 2010, total energy subsidies rose 108%, but solar’s subsidies increased six-fold and wind’s were up 10-fold”. Second, the subsidies attributed to oil and gas are tax incentives available to all business—manufacturing tax credit, protection against double taxation, and provisions for expensing operating expenses.

Another Wall Street Journal article reported that according to DOE, “the costs of wind subsidies are extraordinarily high--$52.48 per one million watt hours generated…By contrast the subsidies for generating the same amount of electricity from nuclear power are $3.10, from hydropower 84 cents, from coal 64 cents, and from natural gas 63 cents”. Clearly, subsidies for wind are distorting investments in more cost-effective power generation.

Not surprising, the growth in wind subsidies has blunted incentives for technological breakthroughs and cost efficiencies. DOE in its 2009 Wild Technology Market Report found that average wind power costs were high than they were in 1994.

A major justification for renewable subsidies has been the push to reduce greenhouse gas emissions, primarily CO2. But, the amount of power generated by all renewables is exceedingly small and will remain so for decades to come. At the same time, thanks to the boom in natural gas, CO2 emissions in the US have been declining and according to EIA will not return to 2005 levels before 2035. So, emission reductions are being achieved without large subsidies.

Renewable subsidies have failed to achieve their objectives and have only served to enable rent-seekers to enrich themselves by burdening taxpayers with unnecessary costs. This is clearly demonstrated in the EU experience. Subsidies create and addiction and rarely sunset. This one should fade away at the end of this day.

Senator Alexander makes a strong and compelling case for not just ending the wind tax credit but also corporate welfare designed to force technologies that either don’t exist or are not commercially viable.

Even if our fiscal condition was significantly better and the government wasn’t borrowing 42 cents of every dollar it spends, there is no justification for an energy industrial policy. As a nation, we have almost 40 years of experience with the government attempting to bring about alternative energy sources with various forms of subsidies and mandates. They have all failed. Attempts to force technological breakthroughs are a fools errand that only enrich those who figure out how to game the system.

It is a well established technological fact that wind is intermittent and not suited for baseload power generation without transmission, storage, and power conditioning. The technology for storage does not exist and even if it did, the cost of wind power is not economically competitive. The lack of storage and long distance transmission capabilities mean that it can fill a niche, at best.

Many European countries, especially Germany, have traveled the clean energy road and by doing so have put their economies into a ditch. An analysis of Germany’s rush to renewables by the European Institute for Climate and Energy warned of “impending doom for the German economy caused by the lemming like charge to the Green mirage of affordable renewable energy.” The report went on, “The problem is that these energy sources are weather-dependent and thus their sporadic supply is starting to wreak havoc on Germany’s power grid and is even now threatening to destabilize power grids all across Europe! … after tens of billions of euros spent on renewable energy systems and higher prices for consumers, not a single coal or gas-fired power plant has been taken offline. To the contrary, old inefficient German plants have been brought back into service in an effort to stabilize the grid.”

With an economy that increasingly is reliant on electric power generation, we need to focus on abundant, reliable, and affordable sources of electric power generation. For the foreseeable future, that source is natural gas.

There is a clear lesson from 40 years of energy industrial policy initiatives, including the wind tax credit. It is simply not possible to create technological short cuts by throwing money at alternative energy systems.

The process of development is slow and painstaking. As Bruce Everett stated in the Fall 2012 issue of Issues in Science and Technology, “ Successful technologies pass through three distinct stages. In the conceptual phase, we develop a solid understanding of the science… . In the technical phase, we learn how to build machines that actually work. In the final commercial phase, we figure out how to make products whose cost and performance convince consumers to prefer them over competing products.”

Rather than attempting to be a venture capitalist, government should be investing in basic research to advance technology and innovation and create the knowledge that allow promising technologies to complete the first stage of development.

The question of whether to invest in innovation in the laboratory or to deploy new technologies in the field is too narrowly drawn and presents a false choice. We should do both.

The federal government has an important role in setting long-term goals to accelerate the transition to advanced energy technologies that serve our interrelated economic, security, and environmental objectives. Yet Congress has failed to pass an energy bill since 2007. A national policy should encourage a transformed system deploying domestically available power resources that are cleaner, more reliable, more affordable, and promote domestic job creation and prosperity.

While much smaller than conventional energy subsidies, the production tax credit for wind has been used over the past decade in the emerging clean energy industry. Letting this clean energy tax credit expire would be unfair and unwise, especially while maintaining the tax credits for oil, gas, and nuclear power.

What’s more, the production tax credit is working. It spurs deployment of clean, cost-competitive wind energy. It injects choice into the electricity sector. It provides tens of thousands of jobs. And it positions the United States to compete in one of the growth industries of the 21^st century. Uncertainty surrounding the future of this important tax credit, however, is shaking the confidence of potential investors and keeping private capital on the sidelines. Indeed, as we approach the end of 2012, there are few orders for new wind turbines for the coming year, manufacturing lines are sitting idle, and workers are receiving end-of-year pink slips.

Policymakers should continue and expand U.S. investments that will provide American businesses and consumers with cheaper, cleaner power. Technological advancements have produced hydraulic fracturing, solar photovoltaic panels and energy storage. National laboratories are working more closely than ever with inventors, entrepreneurs, and industry to speed the development of new technologies and to drive down costs. Manufacturers are eager for innovation, because it keeps engineers and jobs in the United States.

Congress should establish a long-term policy that sets national goals for clean energy deployment to create certainty, thereby sending a positive market signal to investors, spurring job growth and strengthening our global competitiveness.

The United States must seize the opportunity to be the world’s leader in the rapidly expanding clean energy sector for our economic, environmental, and security future.

This year has been a record year for the wind industry. More than 12,000 megawatts of new installed wind capacity have been added, surpassing all other electricity generation sources in new installations for the first time ever. This growth comes on the heels of wind accounting for 35 percent of new generation during the last five years. Ironically, the wind industry is trumpeting its success at the same time it is telling Congress that it still needs the production tax credit (PTC) for the industry to survive. Wind’s success this year proves that it is a mature industry and should compete on its own merits. The time for federal support to prop up wind is long past. It’s time for wind to step out of the nest and fly - or fail – on its own.

The wind PTC has achieved its goal of jumpstarting the industry and is no longer necessary. The subsidy is distorting today’swholesale electricity markets, putting at risk the operation of more reliable clean generation. In order to collect the PTC, wind producers sell their power. They often pay the market to take that power and still profit because of the subsidy’s steep $35 per megawatt hour (mWh) (pre-tax) payout. A wind producer could pay the market $10 per mWh and still make $25 because of the value of the PTC. This threatens around-the-clock baseload power producers, forcing them to pay to run their plants or to shut down for long periods of the day when their power is needed most. In Texas, where new generation is needed, investors are reluctant to build new power plants – even low-cost natural gas – because subsidized wind has so distorted the market that generators face negative prices during an increasing number of hours each year.

Artificially lowering prices through government intervention undermines the market and stops the development of new generation, as well as retrofits of existing fossil units and uprates of nuclear plants. The artificial pricing also threatens to drive other reliable and clean competitors from the market. These market distortions lead to serious electricity reliability problems, costing electric consumers more.

Proponents of the PTC argue that negative prices are a good thing because such pricing drives consumer electricity prices lower. This simplistic reasoning doesn’t hold up when one considers what is not included in the market price, including the cost of back-up generation needed for when the wind doesn’t blow, transmission costs to get the power where it is needed and the taxpayer cost of the PTC.

According to the Congressional Joint Committee on Taxation, the one year extension of the PTC approved by the Senate Finance Committee would cost taxpayers more than $12 billion. This is more money than our country can afford to support a mature, thriving technology. To support this unnecessary subsidy, over 4 million American families earning the median income of $50,000 would have to dedicate their entire tax burden to support this one industry. The PTC is costly and unnecessary.

Further, the wind lobby claims that a $12 billion extension of the PTC is necessary to save 37,000 wind jobs. That amounts to $322,000 per job. In actuality, many of these jobs are at risk regardless of whether the PTC is extended. With the PTC solidly in place, the wind industry lost 10,000 jobs between 2009 and 2010, and employment stagnated between 2010 and 2011. The record wind energy growth in 2012 is largely due to companies building wind farms only to qualify for the subsidy. The Congressional Research Service (CRS) has stated that even with a permanent wind PTC extension, the industry will lose jobs.

Wind energy will survive and continue to grow without the PTC. Since enactment of the PTC, 29 states have adopted renewable portfolio standards requiring utilities to get a minimum portion of their power from renewable resources. According to CRS, 92 percent of the renewables built to comply with these mandates are wind turbines. In fact, a study by Lawrence Berkley National Laboratory estimates that an additional 60 gigawatts of renewables will need to be built by 2035 to meet existing state mandates.

Exelon operates one of cleanest power generation fleets in the country and is a strong advocate for clean energy policies and the competitive markets that have enabled clean generation technologies to advance. We are the 11^th largest wind producer in the United States. We are also a leading producer of other clean sources, like solar, hydroelectric and nuclear. The Natural Resources Defense Council named Exelon the cleanest large generation company, and Exelon has been named to the Dow Jones Sustainability Index for the last seven years. However, we oppose all subsidies, including the PTC.

Exelon’s business strategy is built on the fundamental principle that a clean, reliable and affordable energy portfolio is essential to sustainable customer and investor value. We have long believed that there is no need to promote subsidies for proven technologies -- like wind -- at any cost, and that there is no need for either electricity consumers or taxpayers to pay more than required for a clean electricity supply. It is time for the PTC to expire and for wind to compete in the marketplace on its own merits.

This post was co-authored by Alex Trembath, Policy Analyst at the Breakthrough Institute, and Mark Muro, Director of Policy at the Brookings Metropolitan Policy Program.

In no other industry are the conflicts over subsidies as zero-sum and fever-pitched as they are in the energy sector.

Almost always, it seems, energy producers fight tooth and nail for the rote extension of their support even as opponents—whether green or fossil-fueled—fight for its end. And the disputes go on and on.

And yet, last week something extraordinary happened. The American Wind Energy Association (AWEA) — embroiled in a high-stakes negotiation over the future of a key federal tax credit — took the unprecedented step ofproposing to phase out its own subsidy. In short, a significant US industry has “taken the pledge” of subsidy independence, prioritized innovation and cost declines, and pointed the way beyond the “boom and bust” syndrome that has plagued the renewable energy industry for 20 years. The upshot: An important industry has set a refreshing standard for other industries in a time of fiscal constraint and concerns about U.S. vitality.

The production tax credit, or PTC, has been the dominant public policy support for the wind industry since 1992 and is scheduled to expire at the end of the year. The credit provides a subsidy worth 2.2 cents per kilowatt-hour (adjusted annually for inflation) to wind generators. In the last four years, when combined with an option to convert the tax credit into a cash grant from the Treasury, the PTC has helped double the installed wind capacity in the United States — over 50 gigawatts of wind turbines now populate the rolling hills and farmlands across the American countryside.

The PTC allows wind power, which has seen declining prices but still costs more than conventional power, to remain competitive with fossil fuels like coal and natural gas. But perhaps more importantly, the credit has become the industry’s primary source of finance for new projects. Since wind developers generally lack the tax appetite required to “monetize” the tax credit, they have partnered with large financial institutions — typically investment banks — that exchange part of the value of the tax credits for project development capital.

These transactions have enabled robust wind deployment, but the wind industry may have grown overly dependent on this single source of finance. Tax equity swaps require complex bureaucratic dealings and carry heavy transaction costs. The impermanent PTC has also made the wind industry vulnerable to a boom-and-bust syndrome, with yearly wind deployment having fallen by 75-90% in years when Congress failed to extend the credit.

It is with these and other reasons in mind that we published a report earlier this year urging policymakers and clean energy industries to seek accelerated paths to subsidy independence. In our report, “Beyond Boom and Bust,” we recommended phasing deployment subsidies out gradually as technologies score cost improvements, and maximizing the impact of taxpayer resources by providing ready access to affordable private capital. Smart reforms, we wrote, are desperately needed if wind and other clean energy industries hope to grow out of the niche markets they have established to date and to compete with entrenched conventional industries.

Many in the wind industry had hoped for a full-value extension of the PTC, but perpetuating the cycle of subsidy dependence is no way to nurture a dynamic and competitive market.

So we applaud AWEA’s proposal, presented to the Senate Finance Committee last week, that the PTC be phased out over 6 years, declining in value by 10% annually as of 2014. The proposal represents a compromise on the part of the wind industry, but it is a compromise in the right direction. Over that time, analysts at the National Renewable Energy Laboratory expect wind costs to continue to decline. A phase-out will also encourage developers to seek alternate sources of project finance among new pools of institutional investors, such as insurance companies, pension funds, and bond markets.

Of course, there are perhaps better ways to structure the phase-out. A step-down of the credit value along technology deployment milestones, rather than arbitrary calendar dates, would better match the industry’s historic learning curve improvements. Likewise, the PTC could be made more efficient by converting it into a taxable cash grant.

Still, AWEA’s proposal is an excellent starting point for a new, more intelligent debate over energy policy. Moving beyond boom-and-bust also means moving beyond reductive fights over energy policy that pay little mind to market transformations, technology development, or budgetary efficiency.

And so, as the wind industry seeks a path to subsidy independence, other sectors — whether cleantech, fossil energy, or of other sorts — should follow its example. They, too, should “take the pledge” on subsidies (via phase-outs linked to their specific technology and market readiness), and lobby for policy reforms that prioritize innovation, cost declines, market competition, and robust investor activity in large-scale clean energy deployment.

In that way lies true economic vitality and fiscal efficiency.

Incentivizing individual taxpayers and businesses to embrace measures that save energy and strengthen America’s quest for energy independence is smart policy – but only if Congress sets a course and sticks to it.

I can only speak for CNAIMA’s membership – the manufacturers and suppliers of insulation – but any credit that’s in the tax code one year, but may not be there the next, is counterproductive. To make decisions about production lines, personnel, marketing, distribution, and all the rest, business executives need a degree of certainty. If a business knows for sure that tax credits are definitely going to be there, then they can make informed choices. Without that certainty, companies are reluctant to commit capital and resources – and job growth suffers as a result.

Especially when it comes to incentives encouraging the greater installation of insulation, Congress needs to make up its mind. The piecemeal, now-the-credits-are-in, now-they’re-not approach that Congress has pursued in recent years is not in our economy’s best interest. How can a business make plans if tax credits are done retroactively, which is the way Congress has been operating of late?

There’s no time like the present to do the right thing. The current lame duck session provides Congress with a welcome opportunity to make energy efficiency incentives a long-term part of the tax code. As I told the Senate Subcommittee on Energy, Natural Resources, and Infrastructure in testimony last week, energy efficiency’s greatest attribute is that America does not need to locate new reserves or develop new technologies: High quality insulation is available today and can be installed tomorrow. The challenge is incentivizing people the right way.

Congress should extend three tax credits that reward home and business owners: the tax code provisions known as 25C, 45L, and 179D. The 25C provision has helped tens of thousands of homeowners across the country save substantial amounts of money on monthly energy bills. In 2011, it provided a tax credit of 10 percent – up to $500 – for insulation and other energy-saving products.

The 45L provision allows homebuilders to receive a $2,000 credit for every new home they build that is 50 percent more energy efficient than code. Twice Congress has allowed 45L to expire, which has not exactly been helpful to an industry still struggling to dig itself out of the Great Recession.

The 179D provision offers an incentive for retrofitting existing commercial buildings. Regrettably, 179D is little-used due to its complexity. The Administration has recently taken steps to improve 179D, but legislation is required to completely address its shortcomings.

Both 25C and 45L expired at the end of 2011, triggering marketplace uncertainty and undermining the cause of energy conservation. I fully appreciate the tight budgetary environment in which Congress finds itself. Competing priorities demand that difficult choices be made. But energy efficiency is the ultimate renewable. Congress should renew energy efficiency tax credits – and let the world know they’re doing it.

Kate Offringa is the CEO and President of the Council of the North American Insulation Manufacturers Association (CNAIMA).

Congress should make extending the Production Tax Credit for wind energy a top priority. If this tax incentive for wind energy is allowed to expire at the end of the year, thousands of jobs across the nation could be lost and the progress we’ve made in building a clean energy future would be put at risk.

Since it was enacted in 1992 by President George H.W. Bush, this incentive for wind energy has been a rare exception to the partisan divides on Capitol Hill. Presidents from Bill Clinton to George W. Bush to Barack Obama have all worked with Republicans and Democrats in Congress to renew this incentive and keep workers on the job.

Unfortunately, the PTC became a political football in the last election and fell victim to election-year politics. But now that the campaigning is over, the time has come for Congress to renew this tax credit. In fact, a broad coalition has come together in support of continuing the PTC, including the United Steel Workers, the US Chamber of Commerce and legislators like Rep. Earl Blumenauer (D-OR) and Rep. Steve King (R-IA).

There’s a reason both parties have come together in support of the PTC – it’s good for our environment and our economy. The wind industry alone has created more than 75,000 jobs while helping move our nation towards a clean energy economy. But these jobs would be put at risk if Congress fails to act. The American Wind Energy Association estimates that letting the PTC expire will cost 37,000 jobs nationwide.

Some of the same voices on Capitol Hill who say we can’t afford to continue the PTC want to continue sending billions of our tax dollars to some of the most profitable companies on the planet, the oil companies. If we continue those subsidies, Big Oil would receive more than $40 billion in taxpayer subsidies over the next decade alone. If we’re looking for new sources of revenue, ending oil subsidies is the place to start.

We cannot allow Congress to take us backwards and bring an end to the PTC after more than 20 years of success. Republicans and Democrats should come together and keep the Production Tax Credit for wind energy on the books.

Thank you for your thoughtful responses. Many focused on wind industry jobs, so I’ll respond briefly.

The American Wind Energy Association cites a study that projects a loss of 37,000 jobs if the Production Tax Credit isn’t extended. If we extended the credit by just one year, through the bill that passed out of the Senate Finance Committee, Robert Bryce estimates that each of those jobs would cost federal taxpayers $32,900 per year. Put another way, it would require the entire federal income-tax payments of one million American families making $100,000 a year to cover the total cost of these jobs. Those are expensive jobs.

But the purpose of the federal wind subsidy was not to create jobs building wind turbines. It was to jumpstart a clean energy technology. After 20 years, billions of subsidies, and seven extensions, that task should be complete.

The real way to create jobs is to support energy research and then to allow the marketplace to produce large amounts of reliable, clean, and cheap electricity. America’s experience with new supplies of unconventional natural gas is an excellent example. These new supplies are the result of the uniquely American blend of entrepreneurship, private ownership of land, and federal research and development. These cheap supplies of gas are reducing our balance of payments; attracting manufacturing and chemical plants from overseas; and lowering costs for homes, farms, and businesses—in short, creating an environment that makes it easier to create private sector jobs.

Even before the new natural gas boom was underway, the Section 29 tax credit for shale gas had expired. After 20 years and billions of dollars in subsidies, it is time for the wind credit to do the same. Instead of tens of billions more in subsidies to "phase out" the wind tax credit, let’s use the money instead to boost clean energy research and to reduce the federal debt.

I believe we SHOULD extend the wind production tax credit, and I disagree with many of Senator Alexander’s assertions as well as his conclusion. There are so many problems and inconsistencies in his arguments it is hard to know where to start.

Senator Alexander argued that we shouldn’t extend the credit because we have a deficit. In doing so, he fails to recognize the positive economic aspect wind energy has on the United States. Seventy percent of a wind turbine’s components are made here in the US at 500 manufacturing facilities located in nearly every state, providing a boost to our domestic manufacturing sector. Navigant Consulting projects that 37,000 jobs will be lost as of the first quarter of next year if the production tax credit is not extended, which will be felt across the country. As we work towards a 20% wind power benchmark in 2030, the wind industry could support roughly 500,000 jobs between 2020 and 2030 and industry payments to rural landowners could grow to more than $600 million in 2030. This economic activity will generate tax revenue to offset the cost of the credit.

Senator Alexander also claims that wind is not worthy of incentives because it is a mature technology and that incentives distort the marketplace, yet he then goes on to tout coal and nuclear, which have received and continue to receive far more in subsidies than wind. Oil, gas, and coal are also mature technologies, and yet they have received over $500 billion dollars in subsidies over nearly a century and continue to receive permanent subsidies that dwarf the value of the wind tax credit. Examining the issue during the Bush Administration, the Government Accountability Office concluded that fossil fuels continue to receive nearly five times the tax incentives as renewable energy.

Nuclear energy, too, has been with us for decades as well, and yet the industry still receives incentives in the form of loan guarantees, accelerated depreciation, and production tax credits of its own, along with the Price-Anderson indemnification the nuclear energy industry receives from the federal government. If the nuclear industry had to actually pay for its own liability insurance all of the insurance it needs to operate its reactors, there is no way it would be cost competitive. In 2008, the Congressional Budget Office calculated the Price-Anderson subsidy at $600,000 per reactor per year – for 100 reactors that is $60 million per year in subsidies, and the Energy Policy Act extended this program for 20 years, which adds up to $1.2 billion worth of subsidies just for insurance for the nuclear industry over the next few decades, not including the rest of the incentives that industry receives. I guess mature industries aren’t worthy of incentives unless they are Senator Alexander’s pet industries.

Let’s face the facts. The reason the coal and nuclear industries are not competitive today is the low cost and easy supply natural gas; industry officials readily admit that, and yet Senator Alexander is obfuscating this because he wants to try to make a point about the wind credit. But one of the problems shared by coal, nuclear, and gas is that they all require lots of water to operate. As the world’s population rises, it is placing greater demands on our water supplies, supplies that are already becoming scarcer due to climate change. Wind is a renewable energy source that does not rely upon water, making it a powerful tool to meet our current and future energy needs. We can’t just wait until we are in dire need to install it, however, and that is why we need incentives like the production tax credit to put the wind infrastructure in place today to position us for our renewable energy future.

Senator Alexander goes on to suggest that “giant turbines and power lines strung along scenic mountaintops destroy the environment.” I would counter that there are far more damaging things to our environment than obstructed views, things such as toxic coal ash pools breaching and contaminating rivers, oil spills destroying fishing grounds and killing waterfowl, and emissions from smokestacks and tailpipes driving up asthma rates, all of which come with significant economic costs of their own.

I agree that we need to increase funding for research for solar, batteries, more energy-efficient buildings, and advanced biofuels, but we cannot do so at the expense of building our current renewable energy infrastructure base. Research in the past into wind energy has produced dramatic results, so that it is now one of the most cost-effective sources of new electricity generation, which is a big reason why wind has accounted for 35% of all new electricity generating capacity since 2007. Similar research on battery technology will help minimize the intermittency of wind power and enable wind to shoulder a greater portion of the base load demand.

The American public agrees – 89% of American voters believe increasing the amount of energy the nation gets from wind is a good idea, and 71% of younger voters, our future, believe that American energy policy should focus more on alternative energy sources as opposed to oil, coal, and natural gas. Extending the wind production tax credit will provide the short term incentive needed to ensure the deployment of utility scale wind generation and the demand for wind turbines made in the US today, and the manufacturing and installation jobs that go along with those projects, which is building the foundation for an even more widespread wind energy future.

So Senator Alexander is against subsidizing wind - which has been commercialized in the 1990's because of the deficit, yet why isn't Senator Alexander complaining against $1 billion a year in oil and gas expensing, or even better the foreign tax credit waiver for petroleum and gas which costs taxpayers $2.3 billion a year which go on forever ? And that's the point -- oil, gas, and his home state coal subsidies are for technologies and resources that have been around 100 years, not 22 years. And that's not including the $4 billion per year for accelerated depreciation for fossil equipment. A November 2011 study by An analysis by Citizens for Tax Justice and the Institute on Taxation and Economic Policy found dozens of companies that had a negative tax balance between 2008 and 2010, while making billions in profits. Because of tax breaks and questionable tax dodging, these companies reported higher post-tax profits than pretax profits, often actually getting checks from the Internal Revenue Service. During these years of negative taxation, 32 companies in the fossil-fuel industry -- from Exon Mobil and Peabody Energy to ConEd and PG&E -- transformed a tax responsibility of $17.3 billion on $49.4 billion in pretax profits into tax benefits of $6.5 billion, a $24 billion windfall.

And then lets focus on the subsidies taxpayers give the coal industry primaruy benfitting the states of Tennessee, West Virginia and Wyoming.

Credit for Production of Nonconventional Fuels ($14.1 billion)- IRC Section 45K. This provision provides a tax credit for the production of certain fuels. Qualifying fuels include: oil from shale, tar sands; gas from geopressurized brine, Devonian shale, coal seams, tight formations, biomass, and coal-based synthetic fuels. This credit has historically primarily benefited coal producers.

Characterizing Coal Royalty Payments as Capital Gains ($986 million) – IRC Section 631(c). Income from the sale of coal under royalty contract may be treated as a capital gain rather than ordinary income for qualifying individualsx

Exclusion of Benefit Payments to Disabled Miners ($438 million) – 30 U.S.C. 922(c). Disability payments out of the Black Lung Disability Trust Fund are not treated as income to the recipients.

Other-Fuel Excess of Percentage over Cost Depletion ($323 million)- IRC Section 613. Taxpayers may deduct 10 percent of gross income from coal production.

Credit for Clean Coal Investment ($186 million)- IRC Sections 48A and 48B. Available for 20 percent of the basis of integrated gasification combined cycle property and 15 percent of the basis for other advanced coal-based generation technologies.

Special Rules for Mining Reclamation Reserves ($159 million) – IRC Section 468. This deduction is available for early payments into reserve trusts, with eligibility determined by the Surface Mining Control and Reclamation Act and the Solid Waste Management Act. The amounts attributable to mines rather than solid-waste facilities are conservatively assumed to be one-half of the total.

84-month Amortization Period for Coal Pollution Control ($102 million) – IRC Section 169(d)(5). Extends the amortization period used in calculating the deduction from the generally applicable 60-month period available for other types of pollution control facilities.

Expensing Advanced Mine Safety Equipment ($32 million) – IRC Section 179E. The costs of qualifying mine safety equipment may be expensed rather than recovered through depreciation.

Black Lung Disability Trust Fund ($1 billion)- As industry excise tax payments did not sufficiently cover early benefits payments, the BLDTF was given "indefinite authority to borrow" from the U.S. General Fund, and bailed out for $6.498 billion, 13 percent of which is relevant to the 2002-2008 period.

Now if the Senator really cares about the federal deficit, let's get rid of all these subsidies of mature technologies, by mature companies, in mature (100+ year old) markets. The wind industry, unlike the oil, coal, nuclear, and natural gas industries have publicly offered to ramp down their tax credit in a predictable manner over this decade. That shows public responsibility.

But playing this policy shell game against wind, while blindly looking the other way on much larger subsidies given to the conventional energy industries, is just downright silly, poor public policy, and should be roundly rejected for what it is -- a political diversion drawing attention away from the real energy issues effecting our deficit and market choice.

Of all the lame arguments used to sell Americans on the proposition that wind power, an industry propped up by Soviet-style production quota in 29 states and numerous other policy privileges, deserves another renewal of the 20-year old production tax credit (PTC), the lamest is the claim that the PTC helps protect us from extreme weather.

PTC advocates talk as if Hurricane Sandy and the Midwest drought were obvious consequences of anthropogenic global warming, and that subsidizing wind energy is a cost-effective way to mitigate climate change.

They are wrong on both counts.

Neither economic analyses nor meteorological investigations validate the asserted link between recent extreme weather events and global warming. When weather-related damages are adjusted (“normalized”) to account for changes in population, per capita income, and the consumer price index, there is no there is no long-term trend such as might indicate an increase in the frequency or severity of extreme weather related to global climate change.

A 2012 study in the journal Climate Change examined 370 years of tropical cyclone data from the Lesser Antilles, the eastern Caribbean island chain bisecting the main development region for landfalling U.S. hurricanes. The study found no long-term trend in either the power or frequency of tropical cyclones from 1638 to 2009. It did however find a 50- to 70-year wave pattern associated with the Atlantic Multidecadal Oscillation, a mode of natural climate variability.

A recent study in the Journal of Climate similarly found no long-term trend in the strength or frequency of landfalling hurricanes in the world’s five main hurricane basins. The data extend back to 1944 for the North Atlantic, to 1950 for the northeastern Pacific, and to 1970 for the western North Pacific, northern Indian Ocean, and Southern Hemisphere. Among other inconvenient findings: “The U.S. is currently in the midst of the longest streak ever recorded without an intense [category 3-5] hurricane landfall.”

Sandy was not even a category 1 hurricane by the time it made landfall. New York has been hit with more powerful storms at least as far back as the 17^th century. For example, the New England Hurricane of 1938 was a category 3 that killed 600 people. Carbon dioxide (CO2) concentrations in 1938 were about 310 parts per million (ppm), well below the level (350 ppm) advocated by NASA scientist James Hansen, activist Bill McKibben, and Al Gore as the upper limit consistent with climate stability.

What made Sandy so destructive was the hurricane’s merging with a winter frontal storm to produce what MIT climatologist Kerry Emanuel calls a “hybrid” storm. The usual suspects, of course, were quick to suggest that any such ‘freak of nature’ must be man-made. That is speculation, not science. In Emanuel’s words: “We don’t have very good theoretical or modeling guidance on how hybrid storms might be expected to change with climate. So this is a fancy way of saying my profession doesn’t know how hybrid storms will respond to climate [change]. I feel strongly about that. I think that anyone who says we do know that is not giving you a straight answer. We don’t know.”

As for the Midwest drought, if it were a symptom of global climate change, then there should be a long-term positive trend in the Palmer Drought Severity Index (PDSI). Instead, as Cato Institute scholars Patrick Michaels and Chip Knappenberger point out, the PDSI from 1895 through 2011 is slightly negative, i.e., the trend is towards a wetter climate.

But here’s the kicker. Even if one assumes fossil fuel emissions revved up Sandy and the Midwest drought, extending the PTC for another year -- or even another six, as advocated by the American Wind Energy Association – would provide no protection from climate-related risk.

Using IPCC climate sensitivity assumptions, Knappenberger calculates that even if the U.S. eliminated all CO2 emissions tomorrow, the impact on global temperatures would be a reduction ”of approximately 0.08°C by the year 2050 and 0.17°C by the year 2100 — amounts that are, for all intents and purposes, negligible.”

The U.S. will continue to emit billions of tons of CO2 annually for decades whether Congress extends the PTC or not. So claims that the PTC will provide meaningful protection from extreme weather events are ludicrous.

Extending the PTC for one year could increase the national debt by $12.1 billion. A six-year extension could add more than $50 billion to the debt. As global warming policy, the PTC is all taxpayer pain for no climate gain.

The wind power production tax credit is a smartly designed policy tool that has worked extremely well in a down economy, producing rapid growth in clean, reliable energy; new quality jobs in manufacturing, design, installation and maintenance; and expansion of private investment.

In making a case to prematurely end this highly effective policy, Sen. Lamar Alexander fails to recognize that notable performance, overstates the cost of federal support for wind power tax credits, and ignores the fact that Congress historically has spent substantially more to encourage fossil fuels and nuclear power than carbon-free renewable technologies.

Based on the facts, Congress should renew the wind production tax credit.

The tax credit provides a credit of 2.2 cents per kilowatt-hour of electricity produced by wind turbines—as well as geothermal, biomass and underwater turbines—for the first 10 years of production, which helps level the playing field between wind and coal and natural gas. Its “cost” is in lost revenue to the Treasury, estimated at $1.36 billion a year between now and 2015 if renewed by Congress, according to the Congressional Joint Committee on Taxation.

The credit, in turn, leverages $15.5 billion in private investment each year, according to the American Wind Energy Association, and has led to extraordinary results. Over the last five years—with the help of the tax credit, state renewable electricity standards and stimulus spending—U.S. wind capacity has more than tripled. And that growth has powered a rebirth of American manufacturing: U.S.-based wind turbine, blade, tower and gearbox manufacturing has nearly doubled from 35 to 67 percent since 2005.

Unlike a number of fossil-fuel and nuclear-power subsidies that are decades-old and permanent, the tax credit, which debuted in 1992, has to be renewed by Congress every few years. That puts the relatively new wind industry at a distinct disadvantage, making it difficult to attract investors and plan years in advance.

If Congress doesn’t extend the tax credit, tens of thousands of wind industry employees will lose their jobs. A December 2011 study by Navigant Consulting estimated that investment in wind projects will drop 65 percent and the industry will have to lay off nearly half of its workforce—some 37,000 people—next year. Given the uncertainty, layoffs already have begun across the country.

Sen. Alexander’s contention that the wind tax credit “distorts” the marketplace by making coal and nuclear uncompetitive is puzzling, given how much both of those industries receive annually in federal subsidies, and how long they have been getting them.

According to a 2011 study by DBL Investors, a venture capital firm, the nuclear industry benefited from an average of $3.5 billion in subsidies a year (in today’s dollars) from 1947 to 1999 that continue to this day. Coal, which has been receiving government subsidies since the early 1800s, currently receives $3.2 billion, according to the Energy Information Administration. Meanwhile, the oil and gas industry, according to DBL, has benefited from nearly $5 billion in annual subsidies in today’s dollars since 1918, nearly 100 years ago.

Compared with oil and gas, coal and nuclear, wind power is a fledgling technology that deserves a similar sustained commitment by U.S. policymakers, especially given the co-benefits of cleaner air, less global warming pollution, and greater energy security that wind power contributes.

Sen. Alexander’s argument about reliability is equally without merit. In 2011, wind power provided 22 percent of South Dakota’s annual electricity needs, 19 percent of Iowa’s, and more than 10 percent of North Dakota’s, Minnesota’s and Wyoming’s, without compromising reliability, according to researchers from Lawrence Berkeley National Laboratory. And on April 15 of this year, Xcel Energy—the largest U.S. retail wind power provider—set a new U.S. record when it generated more than 57 percent of the electricity needed to supply its customers in Colorado on a night when the winds were strong and electricity demand was low. According to Steve Mudd, product manager for Xcel Energy’s Windsource program, “What each of our world records shows is that while wind is intermittent, it can be relied upon.”

Finally, the potential for wind and other non-hydro renewables is tremendous. They currently generate only about 5 percent of U.S. electricity, but by 2030 they could produce more than 40 percent, according to a 2009 UCS study. That would more than replace the share currently generated by coal, which is still responsible for roughly 75 percent of U.S. utility sector carbon emissions. Looking even further down the road, the National Renewable Energy Laboratory concluded earlier this year that today’s commercially available renewable technologies could adequately generate 80 percent of U.S. electricity by 2050.

We cannot let the “market decide” which technology is best unless we are sure that there are no major distortions or imbalances in the market. The PTC is a subsidy, and is one of these so-called market distortions. The basic idea, for those that don’t know, is that the PTC unfairly advantages the wind industry, when compared, presumably, to traditional sources of electricity, such as coal generation. The reality is that the coal industry, and all other fossil fuel industries for that matter, has been receiving subsidies for years as well, the difference being that the wind industry receives a transparent subsidy directly from the government while coal industry receives an indirect subsidy from society.

How is coal receiving a subsidy from society? It comes from the fact that increasing levels of CO2 (there are other harmful greenhouse-gases but for simplicity lets stick to CO2) have negative impacts on human well-being. These impacts include increased storm ferocity (a la Sandy, Katrina, etc…), increased pest prevalence, and disease migration, to name just a few. These impacts are considered part of the “social cost of carbon,” and have real dollar expenditures associated with them, but since they are external to the coal market they are not included in the cost of electricity production.

But there is a solution! Recent research has estimated the social cost of carbon (in fact there is a whole body of literature providing estimates) and although the estimates vary widely, we can make a conservative guess and say that the marginal cost of carbon (i.e. the cost of the next unit of carbon emitted) will be $25 per metric ton (Tol 2005).

Now that we know the cost of a unit of carbon dioxide, we can do a simple back-of-the-envelope calculation to estimate the subsidy that our current society is paying to the coal industry. According to the IEA (2012), bituminous coal emits roughly 860 grams of CO2 per kilowatt-hour (kWh) of electricity produced. The subsidy is then equivalent to $0.022 per kWh (860 g/kWh * $25/ton, adjusting for units). In other words the fossil fuel industry is receiving a subsidy from society that is at least equal (roughly) to the current PTC.

It is also worth mentioning that much of the coal produced in the U.S. is sub-bituminous or lignite, both of which result in higher CO2 emissions per kWh and are receiving therefore an even higher subsidy from society.

So - how about this for a policy initiative to address market imbalance, decrease the deficit, and increase spending for energy research: ditch the PTC and replace it with a carbon tax or a cap and trade program? We can do another back-of-the-envelope calculation to see the impact of such a policy. Just for simplicity, let’s place the tax at the same rate as the subsidy above, i.e. $0.02 per kWh. The Energy Information Administration estimates that the U.S. produced 1.5 trillion kWh of electricity from coal in 2012, which equals roughly $30 billion dollars all of which could be used to reduce the deficit and increase spending on energy research. Furthermore, these values would increase even more if we include electricity generated from natural gas.

To be sure, I am not actually advocating for a $0.02 per kWh tax on coal generated electricity, I just wanted to show that traditional generation has large costs (i.e. externalities) that are generally unaccounted for in traditional market economics, and that the inclusion of these externalities through taxes or a cap and trade policy is another option that can aid in improving our environment and reducing the deficit. Ending the PTC without any measures to justify the subsidy we are currently paying to the fossil fuel industry should not be an option.

Lastly, I find the claim that wind power destroys beautiful vistas particularly ironic since it is coal extraction that destroys beautiful mountains, let alone the vistas, but I digress...

Tol, Richard S.J. 2005. The marginal damage costs of carbon dioxide emissions: an assessment of the uncertainties. Energy Policy: 33, pp 2064-2074

(These comments were submitted by Margie Alt, executive director of Environment America.)

Congress should immediately extend the wind production tax credit and offshore wind investment tax credit. With wind power on the line, there's a lot at stake for our environment, our health, and the future of our planet.

We need only look back at the past year to see just how badly our nation needs to take advantage of our vast wind energy potential.

Much of America spent 2012 in the grips of the deepest drought since the 1950s – the U.S. Department of Agriculture recently found that 80 percent of our agricultural land was impaired by drought this year. This type of extreme weather has been linked to global warming. Heat-trapping gasses released by burning fossil fuels including coal, oil, and natural gas drive up temperatures and accelerate evaporation. To make matters worse, the United States withdraws more water from lakes, rivers, streams and aquifers in order to cool power plants than for any other purpose.

By replacing the need for new fossil-fuel power plants, America's current wind energy generation saves enough water to supply the annual water needs of a city the size of Boston. Over the next three years, at the current rate of growth, these benefits would almost double, according to Environment America Research and Policy Center's recent report, "Wind Power for a Cleaner America."

Wind energy also helps Americans breathe easier. Our current wind energy generation prevents 137,000 pounds of smog-forming emissions and 91,000 pounds of soot-forming emissions every year that otherwise would have been emitted from fossil-fuel power plants. This is good news for the almost 30 million Americans suffering from asthma, and many more suffering from other respiratory conditions triggered by air pollution.

And of course, this past year's record temperatures, raging wildfires, and extreme weather events have brought home the reality of global warming for far too many Americans.

As our nation continues to heal from Hurricane Sandy and the $62 billion in damages it wrought, we should be looking to increased wind energy as one of the critical steps we need to take to avert global warming. Warmer ocean temperatures and sea-level rise caused by melting polar ice caps are leading to more intense hurricanes accompanied by greater storm surges. Wind power already prevents as much global warming pollution as taking 13 million cars off the road each year. If wind growth continues at a rate similar to recent years through 2016 -- much more likely with an extension of the PTC and offshore wind ITC -- wind energy would nearly double these benefits as well by that time.

Wind energy already powers nearly 13 million homes across the country, and the U.S. Department of Energy estimates that 20 percent of the nation's electricity could be supplied by wind power by 2030, meaning cleaner air for all Americans and taking a bigger bite out of our global warming emissions.

There is real bipartisan support and a broad coalition of unions, businesses, outdoors enthusiasts, health professionals and faith leaders who want to make sure Congress doesn’t let the clock run out on wind energy incentives.

With just days before the wind credits expire, we urge Congress to act without delay to extend the wind energy Production Tax Credit and the offshore wind Investment Tax Credit. Wind energy has already helped America to make significant strides for our health and environment, and those benefits will only increase as we increase our use of wind power.

One large wind farm can create nearly 1,200 jobs over course of its development, from engineering to construction to manufacturing to administration. That’s what NRDC and a group of independent economic consultants found when we studied the job impact of wind farms. We also found that American companies—small wind resource measurement operations, large manufacturers, assemblers in the Midwest, construction farms in the Northeast—are driving and benefiting from this growth at every step of the way. And those benefits spread through the community, boosting local tax revenue by several million dollars and providing extra income for farmers (up to $8,000 per year per turbine) and much more.

The production tax credit been critical in giving companies the confidence they needed to make long-term investments and create this growth. In the process, the incentive has helped nearly triple the amount of wind power generated in the United States in the past five years and has helped bring down the cost by 40 percent.

Killing the tax incentive now would stall this growth and put 37,000 wind industry jobs at risk, according to Navigant Consulting. It would also disrupt a new domestic supply chain of over 400 manufacturers in over 40 states – one of the reasons extending the credit has bipartisan support.

I share Senator Alexander’s concern that long-term subsidies of mature energy technologies are problematic. But that’s not where we are yet with wind energy. It’s still working to compete against the hundreds of billions of dollars in subsidies and multi-decade head-start that has locked our country into fossil and nuclear power. If we are going to eliminate energy subsidies, let’s start with the handouts oil companies have enjoyed for nearly a century or the nuclear industry has counted on since World War II.

While fossil fuel companies howl at the thought of anyone ending their subsidies, the main wind industry trade group AWEA recently released a proposal to phase down the PTC. It is a cost-effective alternative to a long-term extension that would provide certainty for the still maturing wind sector, enabling it to compete on a level playing field.

I also share Senator Alexander’s concern about the environmental impact of energy development, and NRDC has worked hard to ensure wind projects follow careful citing guidelines and environmental reviews. But make no mistake; fossil fuels reap more far-reaching destruction than any wind farm can. Consider the mountaintops removed by the coal industry. Or the hundreds of millions of gallons of water laced with toxic chemicals used to frack for natural gas. Or the asthma, heart attacks, and premature deaths and the climate disruption caused by burning fossil fuels.

The vast majority of Americans favor cleaner, safer energy production. Nearly three-quarters of voters support increasing wind power in the United States. Congress should honor that mandate and extend the production tax credit.

Back in October, the Wall Street Journal 's Ben Casselman and Russell Gold reported that "the sudden abundance of cheap energy is pushing down manufacturing costs and giving companies reason to stay in the U.S." Cheap energy means more jobs, means lower utility and transportation costs, and that results in lower consumer prices all around.

But cheap energy is anathema to people like Energy Secretary Stephen Chu and MSNBC's on-air ethicist Chris Hayes, who hosts the appropriately titled program, "Up!" That's where Hayes thinks energy prices should go, and so does CNBC financial correspondent Dan Dicker, who says, "You would want the prices to go up a lot because it would drive the next stage towards renewables, and make that at least cost-effective."

Even the U.S. Navy is "on board" with wind energy, authorizing a 100-turbine wind farm just 11 miles from its Kingsville (TX) Naval Air Station even though research to determine ways to protect aircraft from the radar-disrupting turbines has not yet begun. Turbine blades create "clutter" that can obscure radar coverage over wind farms and can "shadow" low-flying aircraft to prevent radar operators from determining the flight pattern, speed and altitude and even the airplane's identity.

CFACT, by contrast, supports an all-of-the-above energy policy that seeks to get the most reliable, most affordable energy to the most people in both the U.S. and the world's poorest nations. Cheap energy saves lives -- through access to health care, education, communications, transportation, and a host of other networks that more prosperous peoples today take for granted.

On the surface, the $22 per megawatt-hour wind power production tax credit seems to be a way to lower consumer prices for this very expensive energy. Yet this incentive, which expires on December 31, instead provides a false sense of economy that encourages more high-cost wind farms, resulting in still higher utility bills that cripple the budgets of working class families and the elderly.

The brand-new proposal for a six-year phase-out of the PTC, put forward by the American Wind Power Association, is clearly a calculated response to try to win over the few votes needed to keep the greenbacks coming. But anyone who believes the AWPA will be satisfied with just six years is just as wise as the guy who "knew" that unemployment checks would always stop after 13 weeks.

Around the world, other nations are coping with the same issues. There is a hue and cry in India to restore expired incentives for wind power that once included an accelerated depreciation tax benefit and a generation-based incentive that boosted wind farm project returns. What this means is that wind is still not economically viable without such a crutch.

Australia, which today gets 75% of its energy from coal, is providing heavy financial support to "clean technologies," which rely on mining operations for turbine construction and operation, for transmission lines, and for backup conventional generation when the wind either dies down or blows too hard. Erica Rex reported in The Independent that a growing number of British politicians now consider wind turbines to be "as welcome as nettles," noting that the turbines are blamed for migraines, tinnitus, heart attacks and hearing loss (among other ailments).

Benjamin Zycher of the American Enterprise Institute, writing in The Hill, explained that the PTC enables wind power producers to profit from under-pricing their output by paying system operators to take their power when demand is low at night and in winter. This in turn reduces the efficiency of conventional generating facilities who must therefore also under-price their outputs when engineering constraints make it difficult or dangerous to cycle up and down. Simply put, these incentives skew the real market and hurt everybody else, particularly residential consumers.

Now there is some good news, and that provides ample encouragement for using some federal dollars to foster basic research that over time could lead to much lower costs for alternative energy. General Electric Co. says that "materials science breakthroughs in wind turbine blade technology could drive down the costs of building wind farms," but this research is still in its early stages. Then again, electric cars were going to be the next big thing a century ago.

The bottom line is that the U.S. today has a $16 trillion official national debt that is growing nearly exponentially. Precious federal dollars ought not be wasted to promote production of high-cost energy; any such outlays should be for basic research, not political skewing (and skewering) of the market. Instead, the U.S. would be wise to encourage expanded production of low-cost energy from conventional sources, especially on federal lands, so as to enrich the federal treasury through lease payments, increased tax revenues from both primary and spinoff jobs creation, and lower payouts for social services due to lower unemployment and greater self-reliance.

With Duggan Flanakin

Congress should avoid posing this issue as a choice between tax credits and spending on research and development. To achieve the complex goal of energy security – stable, affordable energy supplies – public-private partnerships on both research and commercialization are needed to fully bring new technologies to the marketplace. In a sector as highly regulated as energy, the market is neither entirely free, nor efficient and forward-thinking enough to bring innovation to the market.

For instance, a recent study in the journal Environmental Science & Technology shows that it could take 131 years for markets to redirect capital to alternative energies rather than oil. Global oil would run out years before needed alternatives are fully developed, according to the study.

Government policy has effectively guided the development and commercialization of many new technologies in the past. Hydro-fracking, the technology behind the recent boom in natural gas, is one example. It should be noted that tax credits for the natural gas industry are permanently written into U.S. tax code and not subject to semi-annual renewal by Congress. That difference – as noted in other responses – tends to drive investments in commercialization.

Recent reports by the International Energy Agency and the U.S. Energy Information Administration project an American energy renaissance in coming decades. The United States has the resources necessary to follow through on this potential. What is needed is a stable, consistent and long-term set of national policies.

The tax credit for the wind industry is not the only one set to expire this year. The cellulosic biofuel production tax credit is also set to expire. The Senate has already written language to extend that credit and make it available to algae fuels. And Senator Stabenow has proposed extending credits to additional renewable technologies that can make a significant contribution to energy security. Congress should create a policy environment designed to achieve that goal.

Charles F. Brush built the first wind turbine in 1888 to power his home in Cleveland, Ohio. His system was reportedly quite successful, without the benefit of any mandates or subsidies. When an industry is 125 years old and insists it needs "just" six more years to make it in the marketplace, it deserves skepticism.

This is a mature technology with very difficult economics due its high fixed costs and its inherent intermittency. It also enjoys the same double-blessing from government that ethanol did until recently: a lavish tax credit layered on top of a mandate. In this case the mandate is from 28 state governments with various renewable portfolio standards. More than 75 percent of wind deployment has been in the last five years as the RPS requirements have taken hold, indicating that it is the mandates, not the subsidies, driving deployment.

All states lose in this scheme. The non-RPS states see their tax dollars flow into RPS states with nothing to show for it. But the RPS states lose too, because the PTC is so lavish that it causes negative pricing episodes in which wind generators actually pay the electric grid to take their power just to earn more federal subsidies. Nuclear and coal plants that can't be easily ramped down are forced to pay, resulting in early retirement of generating assets and undermining the economic incentive to build out conventional capacity. Given wind's inherent intermittency, this poses enormous reliability challenges in the RPS states.

So it's reasonable to conclude that the PTC actually rips off the non-RPS states in order to undermine the effectiveness of the RPS in the other states. It's a lose-lose. Or really a lose-lose-lose when you consider this havoc wreaked on electricity markets costs taxpayers $12 billion per year.

Which raises another question: why are so many Democrats insistent on extending this particular "tax cut for the rich" contrary to what is otherwise their central political talking point?

Enough is enough. After 20 years of federal subsidies this 125 year-old technology can, if not stand on its own, at least stand on mandated use in more than half the states.

Senator Lamar Alexander undermines the Production Tax Credit (PTC) by overlooking its many benefits to our economy.

Wind has added billions of dollars of new investment into the nation’s economy, provided local communities with millions in new-found tax revenue, and allowed electric utilities to lock in costs for years in advance and protect themselves and consumers against volatile fossil-fuel prices with a clean, affordable energy source.

Along the way, wind power has created tens of thousands of jobs and helped spur an American manufacturing renaissance. Today nearly 500 U.S. manufacturing plants located in all regions of the country serve the industry.

And contrary to what Sen. Alexander claims, the PTC more than pays for itself in local, state, and federal taxes over the life of the project.

Last August in a bipartisan 19-5 vote, Senator Alexander’s colleagues on the Senate Finance Committee agreed that extending the PTC credit for all projects that start construction in 2013 would be good for America, sending the bill out of committee.

Others are following their lead - and have even recommended ways to improve the PTC.

In a Dec. 7 letter to Congressional leaders, the Western Governors' Association, representing 13 Republican and six Democratic governors, called for an immediate extension of the PTC and, specifically, one that includes the under-construction language that came out of the Senate Finance Committee.

Making the credit available for projects that start construction by the end of the year is crucial to the extension’s efficacy. That’s because of the 18-24 months to complete projects.

“Extending the credit now is critical to maintain and increase U.S. manufacturing jobs given that any continued policy uncertainty results in developers stopping turbine orders for installation beyond 2012,” the governors wrote.

“In turn, the uncertainty and lack of supply chain orders is already causing wind manufacturing companies to layoff American workers. Given the late date in the year, it is important for Congress to make the PTC extension effective, particularly given the typical 18-month project development timeline. Taking this consideration into account would, for example, allow for all projects that start construction in 2013 to qualify for the credit.”

Congressional action to extend the PTC using the “start construction” criterion would allow wind energy to reestablish a stable base market in the U.S. that the industry can build on, with further market and technology innovation. If the wind industry’s domestic supply chain is lost now, we risk the possibility that it will never again be restored to its current level in the United States—not to mention grow to the potential that it can reach.

America can be proud of its success in wind energy development and the brand new manufacturing sector it has built in practically every state in the union. With a stable policy path, American wind power will provide clean, affordable, homegrown energy for as long as the wind blows.

This bipartisan plan is something the majority of Americans—and their elected leaders—can agree on.

Calling the Section 45 Production Tax Credit (PTC) the "wind" credit ignores the fact that is has been extended to cover most renewable power technologies. The PTC has been the incentive behind recent growth in these industries. Geothermal energy has seen a period of resurgence since 2005, when the Energy Policy Act expanded the production tax credit to include new geothermal power projects. If the credit is extended, as has been proposed on a bi-partisan basis by the Senate Finance Committee, next year there will be continued growth. Otherwise, expect to see a downturn.

Prior to 2005, geothermal power in the US had seen a decade of stagnation. The period of rapid growth for geothermal and other renewables spurred by the Public Utilities Regulatory Policy Act of 1978 (PURPA) had ended in the early 90s as cheap natural gas prices undercut new renewable development. Geothermal had expanded by this time to provide 2,500 MW of power in four states – California, Nevada, Utah and Hawaii. But the 90s saw the infrastructure and industries supporting geothermal development move overseas or wither.

But, the 2005 Energy Policy Act gave geothermal power some new momentum. The Production Tax Credit had been created in 1992 to spur wind technology deployment, and despite its on-again, off-again nature was clearly effective at fueling wind expansion. In 2005 when Congress was looking for a way to stimulate geothermal power, it expanded the PTC to include geothermal power. This gave investors an incentive to take on the risk and expense of a geothermal power project.

The 2005 Energy Policy Act worked: the PTC incentive renewed geothermal project development and technology innovation, and since 2005 there have been additions to both the number of states with geothermal power on-line and under development. Geothermal power has transformed from a limited four–state anomaly to a commodity being pursued from the Gulf Coast to Alaska for both distributed generation and utility-scale power.

Geothermal, like other renewable resources, offers a virtually unlimited source of energy. The heat of the earth is an enormous resource; the problem is learning how to tap it economically. The challenges geothermal technology faces are similar to those we have faced with wind and solar resources, and the sustained efforts the federal government has put behind wind and solar development have without question produced the robust growth we see today in those technologies. Geothermal may be a decade behind, but with continued support it can quickly catch up to achieve the same double digit growth rates of other renewable technologies.

It’s important to make that investment because geothermal power offers some important attributes, particularly as we face up to the urgent need to reduce greenhouse gas emissions. Geothermal power technology today can provide both firm and flexible power, depending on plant design and resource characteristics. That means that geothermal power can supply base load power, displacing coal plants without sacrificing system reliability or adding the issues surrounding expanding nuclear power. And it means that geothermal power can provide flexible power to support and enhance the reliability of an electricity system using larger amounts of intermittent solar and wind generation.

The key to achieving geothermal energy's potential is sustained growth and technological innovation, which are inextricably linked. Extending the production tax credit to support that growth is a worthwhile investment in developing the technologies that will help power our future. As long as the environmental costs of power technologies are not being adequately recognized in the market place, incentives for clean energy technologies will be needed to sustain their growth and address the urgent need for the development and deployment of clean, carbon-free energy sources.

It is important to address our country’s fiscal issues by promoting economic productivity in the short term while reducing the deficit over the long term as I mentioned in my last week’s Energy Experts blog post. It’s fundamental to an overall healthy economy to extend key tax credits that create American jobs and generate private investment, and the PTC is one of the important tax credit programs.

In the past four years, the wind industry, which has benefited from the Production Tax Credit (PTC), has witnessed an annual average growth rate of 35%. Since 1980, the price of wind power in America has dropped 90%, directly benefiting American consumers and utility companies. The boost wind energy provides to the American manufacturing sector is evident in the 400 manufacturing facilities across 43 states, providing good jobs to many Americans. Including wind turbine installation, wind turbine manufacturing, and the whole wind energy value chain, the industry employs over 80,000 Americans—a significant contribution by a growing energy business sector.

Unfortunately, during the past two decades there have been many years when an on again/off again extension of the Production Tax Credit (PTC) was handled in a manner that simply caused market uncertainty, creating a boom and bust cycle for the wind industry. When the PTC has expired in the past, wind turbine installation has dropped between 73%-93%, leaving thousands of Americans out of work. The wind industry has not benefited from the long-term and stable tax credits or subsidies like fossil fuel sources have. In total dollar amounts the oil, coal, gas, and nuclear industries have received $630 billion in U.S. government subsidies while renewable energy has received $50 billion, about 13 times less in government support.

This country needs to adopt long-term energy policy that utilizes America’s potential of producing more affordable and cleaner, renewable energy. If elected politicians listen to the voices of the American people they will extend the PTC and support tax credits for other clean sources of energy. A Wall Street Journal/NBC poll found that 74% of the American people want to eliminate tax credits for fossil fuel to fix our deficit, yet post-election polls showed that a majority of Americans in swing states(Iowa: 77%, Virginia: 76%, Ohio: 75%, Colorado: 72%) are more supportive of candidates who advocate for continued government investment in clean energy. Congress should support the extension of the PTC with bipartisan support to continue the strong growth of a homegrown American industry that has strong, bipartisan American support.

Simple clarity is a commodity both valuable and rare inside the Beltway, but Senator Lamar Alexander provides a healthy dose of it in his introductory observations on the proposed extension of the production tax credit (PTC) for wind power. Particularly useful is his point about the large market distortions created by the PTC, which yield electricity far more costly than necessary and longer-term investment in a mix of generating units far less efficient than possible.

The PTC already has been extended six times. Since its creation, the cost of the PTC to taxpayers has increased consistently; even a single year extension will cost U.S. taxpayers more than $12 billion according to the Congressional Joint Committee on Taxation. Despite repeated promises that just one more extension will make wind power competitive with conventional electricity, the opposite is the reality: Until all forms of power production are allowed to compete on an equal basis, the PTC creates powerful incentives for wind producers to underprice their electricity. Indeed, because of the PTC ($22 per megawatt-hour), they often find it profitable to charge negative prices by paying system operators to take their power, particularly when demand is relatively low at night and in the winter. In the short run, this underpricing phenomenon means that conventional generating facilities---coal, gas, and nuclear---cannot be operated efficiently because they must be cycled up and down, and also must underprice their outputs when engineering constraints make such cycling difficult or dangerous.

“Underpricing” may sound great for consumers, but, sadly, there are no free lunches. Operating costs for the conventional generators must rise with less efficient operation, and consumers must pay them. Wind power requires substantial backup capacity in order to prevent brownouts and blackouts---the winds often refuse to cooperate with the demands of consumers---and that backup insurance does not come cheap, a factor made worse by the PTC. Transmission costs are higher for wind power, and the PTC exacerbates that effect by distorting generation investment toward wind farms. Again: Consumers must pay these costs, whether directly or indirectly; they are real but hidden by the PTC.

In the longer run, the PTC reduces expected returns for conventional power and increases them for wind farms, thus distorting investment in the electric power sector. The result is a mix of generating capacity more costly and less reliable than otherwise would be the case, and an artificial barrier for efficient technological advance. In addition, the PTC allows individual states to shift part of their bills for wind power onto federal taxpayers, thus increasing the adoption of state policies subsidizing wind investment. This means that the narrow budget cost of the PTC, while itself not small, understates the larger economic cost of the PTC. Renewable portfolio standards---guaranteed market shares---are a prominent example of this effect. Over time, regional economies and the U.S. economy in the aggregate will be burdened increasingly with a power generation mix substantially less efficientthan otherwise would be the case.

At a time in which the need for fiscal discipline is recognized with a rare degree of unanimity, such federal favors as the PTC are inconsistent with an effort to impose broad-based spending reform. And make no mistake about it: The PTC is a form of spending, and if it is preserved, other interest groups will be less willing to accept reductions in their favored programs. Thus does the PTC help to distort the larger federal budget process, in a way perhaps more subtle but no less damaging than the more-obvious distortions that it creates for the electric power sector. One way to achieve greater fiscal discipline is to subject programs both broad and narrow to serious scrutiny. The PTC would not survive that kind of critical attention, and the time has come to end it.

The PTC is a government giveaway that has run its course. If Congress acts to extend the PTC for just one more year, it will cost $12 billion – more borrowing against our future. With our national debt now over $16 trillion and climbing, our country can’t continue the path of unsustainable spending. It’s time to end corporate welfare for the wind industry.

The wind lobby claims a PTC extension will create 37,000 jobs. At a $12 billion price tag, that’s $327,000 taxpayer dollars for every job. But even with the PTC, the industry lost 10,000 jobs between 2009 and 2010 – a 12 percent drop.

Facts are stubborn things. In this case, states with renewable mandates have already met their targets, and no extension of the PTC can change the basic laws of economics. Lower demand and more competition will mean a contraction in the industry, with or without the PTC.

And states that don’t have renewable mandates are the biggest losers. The federal government is taking their tax dollars and redistributing them to other states that have mandated more expensive and less reliable sources of energy – like wind and solar.

Another fact: we’ve already subsidized this so-called “infant industry” to the tune of $20 billion over the last two decades. And today, the PTC is so lavish that wind producers are actually paying the electricity grid to take their power, just so they can collect more taxpayer money.

Yesterday, the wind lobby officially endorsed a phase out of the PTC. In our view, this is an admission that the PTC is no longer necessary for the industry to survive. Much worse, their plan amounts to another $50 billion -- at least -- of taxpayer subsidies. We like our plan better, which is for Congress to do nothing and let the PTC expire as scheduled.

Our country is suffering from a protracted crisis of unemployment. But if the last four years have taught us anything, it is that massive government borrowing and spending – with annual trillion dollar deficits – doesn’t create jobs.

The era of the stimulus is over. We are going bankrupt, yet Big Wind still wants another entitlement.

It’s time to end corporate welfare for wind. Allowing the PTC to expire this month should be a litmus test for Congress. Are they serious about tackling our debt and economic crisis by ending Washington’s wasteful spending spree or will it be business as usual for the special interests?

It’s time. It’s time to let the 20-year failed experiment in federally subsidized wind energy come to an end. I agree with many of Senator Alexander’s rationales for ending the subsidy but there is an important one he left out. The answer to the question of whether Congress will allow a targeted, parochial handout for a politically favored industry to expire will give us an insight into whether they are serious about tax reform. Appropriately, much of the debate over the wind PTC has centered on distorted markets, expensive electricity and the follies of government supporting an economically unviable industry. But there is another side to this debate.

While everyone able to find a microphone trumpets the virtues of ending deductions, loopholes and subsidies and at the same lowering rates, a phalanx of wind lobbyists have been valiantly standing astride the growing tide of opposition to extension of their favorite provision. This is the real story of the wind PTC and the looming debate over myriad other tax provisions. For each special carve out in the code there is powerful lobby waiting in the wings to foist studies, talking points and millions of advertising dollars to protect their privileged status.

Of course they have the right to lobby for their provision’s extension, even though we all know that without the handout they would no longer be able to disguise the true costs of their unsustainable energy source. Congress must see through all this and stand up to the vocal minority that would dupe the rest of us in order to stay in business. Congress will face this task numerous times over the next year or two, if they ever get around to the hard task of real tax reform. If Congress cannot stand up to this one special interest group on this one tax provision, when will they ever?

It’s time.

With some qualifications, I agree with the Senator that the wind production tax credit should not be renewed. This is going to be unpopular with my friends in the wind industry, and of course it is self-serving because I work in solar and waste-to-energy technology, but that is exactly the point.

During 2012, as PTC renewal has become less likely, I’ve seen a distinct shift happen: Investors who had put their money in wind and were not interested—at all—in solar projects over the last decade, began asking me to find projects for them to fund. Given the political climate, the smart money was leaving wind and going into solar (or other technology or leaving renewables altogether). From my particular vantage point—I don’t work with wind—this was a good thing.

But from the perspective of a robust renewables sector—essential if we are going to make real progress competing in the new global energy economy and mitigating climate change—this is an example of what should not be happening. Capital, with a little help from Washington because it is a vital national interest, needs to support this sector with intelligent, long-range consistency. Having it constantly flowing from technology to technology, and from region to region, based on shifting political and legislative whims, is reckless and short-sighted and hurts everyone in the industry.

Watching NextEra and Exelon (see the National Journal Power Play column last week), two companies with large portfolios of renewables spending millions lobbying at cross purposes over this issue, provides a great example of money and time that should be going into building our sector but is instead directed into conflicting political machinations. Of course, the nature of civilization has always been and will always be that different stakeholders build and wield influence in a way that benefits them. But our sector needs to get harnessed behind a new paradigm that applies resources to benefiting the industry as a whole and dedicates our efforts first to improving our technology and business models, secondly to building consensus in our society that a non-carbon-based economy is essential, and—very last on the list but inevitable—to playing pork barrel politics to gain specific bottom line advantage.

I can’t argue with the Senator’s support for more research funding for “solar, batteries, carbon capture from coal plants, more energy-efficient buildings, advanced biofuels and disposing of nuclear waste.” But what we really need is a highly-focused conversation about how to change the way we support the advanced energy economy with a consistent tax policy that allows the marketplace to choose winners and losers, provides consistency over decades, and fits into a coherent national energy policy.

Additionally, we need to find ways to allow the clean energy sector to thrive without requiring additional federal expenditures. To wit, I have three suggestions:

1. Incentivize utilities to invest in a more advanced future. Vast regulated utilities have their rates set by state utility commissions using specific formulas regarding profit levels for various activities. As rate cases are decided, activities that support more distributed generation, particularly smart-grid and other infrastructure upgrades, should be set to receive a high profit margin. Activities that support carbon-based generation should have very low profit margins.

2. Allow the market to work. In regulated markets, anachronistic regulations do not allow a group of investors to install renewable power production facility “behind the meter and behind the fence” on the site of a large power user. Allowing such an arrangement would not affect the quality or dependability of our power system, would not cost the government a dime (indeed would generate a flurry of taxable economic activity and build the local tax base), and would unleash pure capitalism to generate more renewables free of burdensome government regulations. Surely that is bipartisan!

3. Finally, the “avoided cost”—the amount that a utility must pay for renewables of a certain size by federal regulation—has become an absurd barrier to project implementation. By lowering this price, utilities are able to make projects by independent developers unviable. At the very least, avoided cost should be coupled to rate requests—do not let utilities claim that they need to charge customers substantially more because their costs are higher while simultaneously claiming they need to lower avoided cost because their costs are lower. Another great idea I heard recently was to change federal rules so that avoided cost becomes a national average of utilities rather than a function of one utility’s success at convincing a local commission to go along. This would eliminate the dizzying flow of capital from one state to another as a result of these filings and create regional consistency.

Three things we could do this year to completely change the renewables landscape in the United States that would not require any funding and would decrease government interference in the marketplace. Let’s move in that direction, while also building a federal system of incentives that makes more sense, instead of spending our resources fighting for or against the specific tax credit treat of the day.

Last week, the American Wind Energy Association (AWEA) showed their disregard for America’s fiscal challenges, opting instead to ask for continued taxpayer support of an industry that cannot stand on its own – despite two decades of government support. The wind lobby is asking for a six-year extension of the wind production tax credit (PTC) that would ramp down from 100 percent of the current 2.2 cents per kilowatt-hour for projects started in 2013 to 60 percent by 2018. Projects placed in service that last year would continue to get about 1.3 cents a kilowatt-hour for the next ten years – or until 2028.

For months, Congressional officials had been pushing AWEA to propose a compromise that addressed the country’s growing fiscal concerns. The tax credit is due to expire at the end of this month if Congress does not act.

AWEA, however, dragged its feet, with some of its members hoping that a favorable election outcome would give the lobby more leverage. After all, in August, the Senate Finance Committee paved the way for Senate approval when it adopted a bi-partisan amendment that would extend the PTC for one year for projects that simply started construction (i.e. a shovel hole dug on December 31, 2013 might suffice). According to the Senate Joint Committee on Taxation, that proposal would cost the American treasury over $12 billion.

Certainly, Governor Romney had surprised observers by rejecting the PTC, and President Obama campaigned on the issue, particularly in Iowa and Colorado. The President’s reelection, nonetheless, did not pave the way for greater PTC support.

In fact, the opposite occurred with conservative and libertarian groups steadfastly opposing the extension and framing the issue as a litmus test for fiscal responsibility. Last Thursday, a coalition of roughly one dozen groups rejected AWEA’s proposal at a press conference in the Senate. FreedomWorks, in particular, laid down the gauntlet, warning Congress that the group would “score” any activity that would extend the PTC and would “keep a close eye” on Members. As part of this effort, an on-line petition to block the PTC was launched by the group at https://secure.freedomworks.org/site/Advocacy?cmd=display&page=UserAction&id=633.

Republicans, many of whom have traditionally supported the measure, have been abandoning the tax credit with new revelations that the PTC deters investment in the country’s energy sector and undermines grid reliability. Senator Tom Coburn from Oklahoma, for example, announced his opposition to an extension the same day of AWEA’s announcement.

One would hope that all Republicans would see the PTC for what it is – a poster child of corporate cronyism. For instance, NextEra, one of the biggest proponents of extending the PTC, spent almost $3 million in lobbying during the first three quarters of this year – with much of that effort focused on the tax credit. It’s interesting to note that NextEra did not pay any federal taxes during 2008-2010 while the utility received $139 million in tax rebates and made a profit of $6.4 billion.

The wind lobby claims that 37,000 jobs will be lost without an extension of the tax credit. But at a cost of over $12 billion, each job “saved” for one year would cost the American taxpayer $327,000. According to the Bureau of Labor Statistics, the median annual wage of a wind assembly worker was roughly $27,000 in 2009 – a tenth of the average cost of the jobs saved by the extension. That gap undoubtedly raises eyebrows.

Such job creation is phony. Real jobs don’t evaporate by the thousands when government support ends. If Congress handed a $12-billion check to a unicorn farm, we could be certain that more than 37,000 jobs could be created under the “right” management. And at the end of the day, that farm would probably be as productive in creating unicorns as wind is in generating electricity when it’s demanded by the market. About 85% of total wind capacity does not operate during peak hours on the highest demand days of the year – a fact that the wind lobby does not want you to know.

In reality, there are no valid policy reasons for extending the wind production tax credit. The PTC does not create real jobs, generate significant electricity when needed and accordingly reduce emissions, or improve our energy security by displacing foreign oil. The only real goal that the PTC achieves is padding the pockets of executives in investment banks and big business, like GE and NextEra.

Republicans in the House and the Senate also need to understand another incredibly important point that resonates across the country and the political spectrum – they can’t ask Americans to accept entitlement cuts, no matter the shape and form, while funding corporate cronyism. Such behavior is and always will be a losing political strategy. Plain and simple.

Every politician faces tough decisions from time to time. But it doesn’t get much easier than this. The Production Tax Credit is about to expire, taking an estimated 37,000 jobs and a true clean energy investment opportunity with it over the fiscal cliff. Unless Congress wants the blame for further job losses and sending our electricity grid back to the 20^th century, they need to get their act together—and quickly—to extend the PTC.

The evidence is clear: American investment in wind power technology is paying off. Over the past five years, more than a third of the new power plant capacity in the U.S. has come from wind. Wind farm operating costs are down almost 40 percent since 2008, and the average turbine today generates seven times more power than a 1990 model could. Is it windier? No, the technology—much of it homegrown here in the U.S.—is just better.

There are over 8,000 precision parts in a single wind turbine, and those parts are manufactured across the 50 states. Encouraged by the PTC, nearly 500 American factories have become important links in the wind power supply chain, and there’s one of these facilities in almost every state. That’s one of the reasons that the PTC has generated such strong bipartisan support, with governors, veterans, even hunters and anglers coming out in support of the credit. And don’t forget investors: Dozens managing over $800 billion in assets sent a letter to Congress this fall urging support of the PTC.

For any Congressional fence sitters concerned about greenlighting being some “Solyndra 2.0” scheme, remember that the PTC is no speculative investment. It pays for performance. Wind farms only receive the tax credit for the power they actually produce. This isn’t some hand out to wind farm operators whose turbines never spin. It’s a policy that George H.W. Bush first signed into law so that we could build the nation’s next generation electricity system. We can’t get there if the industry is repeatedly threatened with boom-and-bust cycles tied to the PTC.

American companies also want more wind power. Corporations are the demand side of the energy equation, and they’re clamoring for more renewable energy. Last week, Ceres issued a report with Calvert Investments and WWF showing that a majority of Fortune 100 companies have set renewable energy goals and greenhouse gas reduction goals. They need strong policies like the PTC, state renewable portfolio standards, and open access to third-party power purchase agreements to achieve these goals that create jobs and reduce their reliance on fossil fuels. Twenty of the biggest consumer brands from Sprint to Starbucks – many of them part of Ceres’ Business for Innovative Climate & Energy Policy (BICEP) - have reached out to Congress on this important issue. Let’s help them get there.