Renewable Subsidies Leading America Toward European-Style Energy Poverty

This commentary originally ran on Real Clear Energy

Recent headlines have touted the record $55 billion renewable sector investments last year.

Yet these headlines hide the fact that the renewable energy industry has been engaged in a world-class scam for more than 20 years. If we don’t do something about it, it won’t be long before Americans find themselves living in European-style energy poverty.

Built on promises of clean, affordable, and reliable energy that can’t be kept, today’s renewable energy industry would not otherwise exist but for subsidies—a burden placed on the backs taxpayers and consumers. At the same time, the traditional energy sources that have helped make the United States one of the most prosperous nations in history are rapidly being forced out of the marketplace.

To keep the renewable industry afloat, Americans will pony up more than $120 billion from 2006 through 2029 in the form of direct subsidies, tax credits, and mandates for generation and transmission. Rather than benefit taxpayers, these funds will primarily boost the profits of multi-billion-dollar generators and Wall Street bankers who invested the $55 billion last year, along with providing for generous donations to “non-profit” advocates of renewables in capitols across the country (who then lobby for even more subsidies).

The biggest subsidy for renewables is the federal production tax credit (PTC), which Congress first adopted in 1992—and renewed once again last December. The PTC largely benefits wind generation, and will cost taxpayers more than $51 billion through 2029—money that’s going to companies with combined market caps of more than $300 billion.

The solar industry also gets it share of subsidies. Though solar power is highly inefficient and extremely expensive to produce, that hasn’t stopped the federal government from giving investment tax credits (ITC) to the industry that will exceed $25 billion.

Making Americans pay extra for their electricity is not just a federal priority, however. States have been doing the same thing.

Texas is the nation’s leading producer of wind energy. Yet most of the thousands of wind turbines littering the Texas landscape would not exist if Texas had not built subsidized transmission lines. These “CREZ” lines were needed because while the wind blows best in West Texas, most Texans live far to the east and along the Gulf Coast. The CREZ lines will cost Texans around $19 billion over their estimated useful life. Wind and solar farms also benefit from more than $3.5 billion in abatements offered by Texas counties and school districts.

Other states have joined Texas in handing the hard-earned money of their residents over to companies like NextEra (Florida Power and Light), BP (British Petroleum), and EDF Renewables (Electricité de France). Most states have done this by adopting renewable portfolio standards (RPS), which mandate that a certain percentage of electricity used be generated by renewables.

Maryland, for instance, last year upped its RPS to 50% by 2030. On the opposite coast, California is even more ambitious, with a goal of 100% “clean power” by 2045. The size of its market and its large geographic footprint means that California’s goal “will soon result in increased costs and reliability issues throughout the 13 states in the Western Interconnection as California’s aggressive policies undercut reliable power plants and put them out of business,” according to former California Assemblyman Chuck DeVore.

This highlights the most devastating effect of renewable subsidies. Just as the United States has regained its economic mojo, the energy sources needed to power our growth are being sidelined.

The Trump administration has recognized this problem and responded. Recently, the Federal Energy Regulatory Commission mandated that the northeastern grid operator PJM set minimum price offers for renewable generators so they can’t use the subsidies to undercut their competition.

States have acted as well. Ohio, for instance, has taken steps to subsidize certain nuclear and coal-fired generation. Texans last year paid a hidden $3.9 billion electricity tax, imposed by the Public Utility Commission of Texas, that goes directly to generators.

In other words, because of the harm caused by the $120 billion that Americans are forced to pay to the renewable industry, we are now being forced to pay billions more to keep traditional generators afloat.

There is only one way out of this madness; America must eliminate renewable subsidies before we find ourselves paying European energy prices, riding around in European-style mini-cars, and living on top of each other in European-sized apartments.

As the policies of the Trump administration and the move toward competitive electricity markets have proven, energy markets work. American can be energy independent with an affordable and reliable energy supply. Americans just need to convince our politicians of what the rest of us already know.