Broken Promises of Green Energy Programs

Member Group : PA Manufacturers' Assn.

As lawmakers hold firm against the Wolf tax increase proposals they are also warding off some bad actors that go along with them. A proposed increase in the tax on Marcellus Shale drilling would fund a retread of a failed Rendell Administration attempt to muscle green energy into the marketplace.

The evidence keeps piling up that government subsidies, state or federal, of green energy projects deliver nothing but empty promises – on jobs, affordable energy, and claims of spectacular innovations.

"If alternative energy sources could compete in the market place, they wouldn’t need subsidies in the first place," said PMA President David N. Taylor. "Job creators end up paying three-fold: in higher taxes, in escalated energy costs, and in inflated prices for goods and services. New energy technologies must earn their success in the marketplace – it is wasteful and counterproductive to try to subsidize them into existence."

Three years ago, California voters approved a ballot measure to raise taxes on corporations and generate clean-energy jobs by funding energy-efficiency projects in schools. A recent review of the program by the Associated Press discovered that to date barely one-tenth of the promised jobs have been created. State officials aren’t even bothering to examine how much work has been done or how much energy has been saved. No doubt, judging from the AP’s review, because there isn’t much to show for the investment.

The review of state and local records found that not one project for which the state allocated $12.6 million has been completed in the Los Angeles Unified School District. The Los Angeles district has nearly 1,000 schools.
In Pennsylvania, a former official with the Corbett administration said they didn’t bother to review the results of the Rendell alternative energy programs (an independent comprehensive review was never required) because they knew the numbers "…weren’t very impressive."

A later review by the PMA showed that the big numbers amounted to these:
• From 2002 to 2010, the taxpayer dollars to subsidize wind and solar projects amounted to $530,244,247.00.
• Created in return were 8,703 mostly temporary jobs and a scant 44,958 megawatts of power; less than one percent of PA’s.
• The cost to the taxpayers per "green energy job" in Pennsylvania is more than $300,000.00.
Business decisions motivated by political agendas rarely make for good business. A few weeks ago, the Inspector General (IG) for the US Department of Energy (DOE) released the results of its investigation into the Department’s earlier $535 million support of Solyndra, the now bankrupt solar cell manufacturer President Obama once boasted was "leading the way toward a brighter and more prosperous future." Prosperous perhaps for Solyndra executives, but not for the taxpayers who ended up losing nearly all of the $535 million.

It’s troubling enough that IG report describes how Solyndra engaged in a "pattern of false and misleading assertions," including inflating the value of corporate contracts and sales, to that over the top low interest loan guarantee in 2009. But even more troubling, as an August 30 Wall Street Journal opinion piece "Big Solar’s Subsidy Bubble" points out, the DOE was a willing victim in the scheme.

"The IG notes that DOE loan officers felt ‘tremendous pressure’ from the White House and Congress to rush through loan-guarantee applications. In their haste DOE officials failed ‘to ask specific questions, and require specific assurances’ and overlooked major red flags."

Yet the green energy charade continues. Just a few weeks ago at the National Clean Energy Summit in Las Vegas the President stated thanks to "government investments" in the solar industry, they now employ twice as many American workers as coal and has added jobs.

The WSJ notes that the increase in jobs is partly due to a run up to the end of a 30 percent federal investment tax credit – another subsidy. When the government support is withdrawn, the market will collapse. On the hook are not Goldman Sachs, Citigroups and the other big investment houses that benefit down the line from the tax credits, but the average homeowner.

Robert Bryce, a scholar with the Manhattan Institute For Policy Research, has written extensively on government’s attempts to bully the energy market. The rationale, he says, is now even more dubious than it was just a few years ago.

"In 2008, energy prices were higher and we were in the depths of a recession, so that the promise of more jobs would sound more enticing." Bryce said. "Since then the economy has improved and the change in the energy market with the shale gas has been remarkable. We have billions of dollars on investment, tens of thousands of jobs. All with no government subsidies."

The investment risk by the private sector has also resulted in innovation that is trumping the green energy movement by exponential degrees. Figures from the U.S. Energy Information Association (EIA) show that in 2010 the new well gas production per rig in the Marcellus Shale was 1.5 million cubic feet per day. By 2014 the productivity jumped to 8 million cubic feet per day. "It’s breathtaking," Bryce said.

Last year, the Texas Comptroller’s office released the results of an investigation, "Texas Power Challenge," into a subsidy program for wind energy. The title of the commentary sums up the investigation by then Comptroller Susan Coombs says it all: "Time For Wind To Stand On Its Own."

"Texas has an economic development program that the wind industry has used extensively to limit property tax value on wind farms," Coombs wrote. "For example, my office estimated in 2011 that wind projects qualified at that time under the property tax value limitation statute would receive nearly $850 million in total tax savings. Those wind projects were expected to create 480 jobs, which equates to about a $1.7 million tax benefit per job. That contrasts sharply with non-energy projects in the same program where the tax benefit per job was $195,565 — for 5,552 jobs. So instead of generating jobs and providing a reliable and consistent energy source, wind projects just generate higher costs."

Subsidies are not the answer. In Pennsylvania, thwarting a thriving industry to artificially prop one that is failing is a dangerous proposition. But, that’s exactly what the Wolf Administration is proposing and they are clearly not letting up as we are now on month three of a budget standoff with no end in sight.

As President Obama likes to say when called on a failed economic or foreign policy decision, "It’s time to move on from that."