Lawmakers on Capitol Hill have emphasized the environmental angle of their so-called “Build Back Better” Act. Many of these provisions, however, amount to little more than taxpayer-funded giveaways to renewable energy companies. No provision epitomizes this sad reality than the possible extension of the investment tax credit (ITC) and production tax credit (PTC) for wind and solar power. These subsidies cost the federal taxpayers with billions on top of an already over-bloated package. They also continue policies that have not been necessary for years – if they ever were.
The ITC was established by Congress in 1978. In the over four decades since, this policy has supported almost exclusively solar power projects. Likewise, the PTC, passed in 1992, has been a bolster for the wind power industry. Both tax credits had an expiration date attached to them. However, as the late economist Milton Friedman often said, “There is nothing so permanent as a ‘temporary’ government program.” The expiration deadlines for the ITC and PTC have been extended a whopping 24 times since initially set to expire.
In the time since, almost 40 states have adopted mandates to require a benchmark for renewable energy generation within their borders. These mandates, on top of the ITC and PTC create artificial demand for wind and solar power. Further proposals to decarbonize electric power will continue to add to this artificial demand and increase the costs to taxpayers across the nation.
Government officials at all levels have been rushing to prop up these industries for years. These policies have helped sufficiently insulate wind and solar from open competition and have prevented them from failing due to lack of organic demand. If the wind and solar power industries are unable to stand after decades of such support, it is clear they are not as efficient or desirable as their proponents claim them to be. It is time the government unshackle the taxpayer from these technologies and let them succeed or fail on their own.
The cost to the taxpayers over this period has been enormous. Over the last four decades, renewable subsidies have cost Americans over $100 billion. Shockingly, $70 billion of that came in the last decade alone. Another extension of these policies does not paint a brighter picture for taxpayers. The Joint Committee on Taxation estimates another decade would cost another $106 billion, with estimates ranging as high as $260 billion. Wind and solar have bled hard-working Americans dry for long enough.
When the government picks winners and losers, it neglects to mention that there will be “losers” who face very real consequences. American manufacturers of raw materials will be damaged as wind and solar technologies create demand they cannot fill. China produces roughly 75% of the world’s solar panels, whereas the U.S. accounts for just 1%. Artificially increasing demand will have massive job implications for those here at home.
Further, roughly half of the world’s polysilicon – the primary material in solar panels – comes from the Xinjiang region of China. In that region, ethnic minorities are allegedly subject to torture and human rights abuses. There is, at present, no good way to verify whether or not these materials being imported are the product of slave labor. The potential geopolitical consequences of such a reality cannot be overlooked.
With rising prices due to runaway inflation lately, heating your home has become more expensive in America. This is why the fixation on these subsidies is particularly harmful for American families. They will accelerate the phase-out of dependable energy sources like coal and nuclear power. They also prop up alternatives that are already more expensive. Creating a less reliable, more expensive power grid at a time like this is especially irresponsible. The distortions created by the continuation of these credits will continue to get worse, as will the potential consequences.
Given that American taxpayers have already footed the bill for trillions in record levels of spending over the last two years, no one deserves a break more than they do. The last thing the country needs is to use its hard-working families to prop up the bottom lines of special interest groups. They have been doing so for four decades. It is long past time to end this pattern. In deliberations on the social spending reconciliation package, these tax credits ought to be left out entirely.