Warren Buffett can do without a tax break for wind energy.
By Peter Roff
Does the “Oracle of Omaha” really need another tax break? It’s a fair question, given the way billionaire Warren Buffet made headlines several years ago with his complaints that his secretary paid more in taxes to the federal government than he did.
Of course, that was back when he was campaigning in support of higher taxes on the so-called “wealthiest Americans” in furtherance of the class envy strategy Democrats like himself, President Barack Obama and their allies in Washington have honed to a razor sharp edge. But now he’s got his hand out for corporate tax breaks that improve the bottom line for his Berkshire Hathaway company and the stock price of all the companies he’s invested in.
Buffet is one of many who is pushing for the reintroduction of the federal Wind Production Tax Credit that expired at the end of 2013. Senate Democrats made sure to add it to the “extenders” package of tax break renewals, but that effort just hit the rocks because Senate Majority Leader Harry Reid “filled the tree” and wouldn’t let the Republicans offer any amendments. So the credit remains dead, for the moment at least, but it’s sure to come up again. Without it, nothing about wind energy makes any sense.
There are very few people in the environmental movement that seem to care about the number of birds and other species of flying animals who are being decapitated in mid-flight by giant turbines spinning in the breeze. They also don’t seem to care that wind, which is already unreliable because it doesn’t blow all the time, is also more costly to generate than electricity produced though already proven means, such as natural gas and nuclear power. What they care about is the way the Wind Production Tax Credit makes wind energy attractive on the bottom line, not because it is profitable but because of the way the profits and losses line up against the tax credits.
As my TJS bloleague Nancy Pfotenhauer recently pointed out, Buffet is big on big wind because it helps reduce the corporate tax liability of some companies. “On wind energy we get a tax credit if we build a lot of wind farms,” the billionaire Democrat recently told a Nebraska audience. “That’s the only reason to build them. They don’t make sense without the tax credit.”
That’s quite an admission. We don’t build wind farms because they reduce America’s reliance on energy being imported from unstable regions of the world or because they produce fewer carbon emissions than natural gas or coal-fired electricity plants. And we don’t build them because it’s good public policy leading to the creation of good jobs in America at good wages. The only reason to build them, Buffet said, is the tax breaks given to folks in the business of producing big wind.
This may help explain why Senate Democrats are so keen on the idea of bringing back the tax credit. It will generate profits for wealthy party members in the green energy business, some of which will find their way into campaign ads bashing Republicans for being insensitive to environmental concerns because the support the Keystone XL pipeline and oppose government subsidized wind and solar power. Funny how the world works, isn’t it?
Everywhere you look, the market is giving signals that wind energy is an economically-specious idea. In order to move ahead with these projects, especially the offshore wind farms that are the latest rage, business is asking for tax breaks, subsidies and federal loan guarantees. They understand that without them the math doesn’t work – so why don’t the politicians in Washington?
Riding to the rescue is the U.S. Department of Energy which, through its Office of Energy Efficiency and Renewable Energy, recently announced it would spend more than $120 million on three new offshore wind projects in Oregon, New Jersey and Virginia. DOE’s goal, the agency said, is to “deploy innovative, grid-connected systems in federal and state waters off the coasts” of the three states. And what fascinating projects they are.
Here’s what you’re getting for your money – the Clean Technica web site reported – at $47 million per project:
In Oregon, the plan is to have the Principle Power company build five 6 megawatt direct-drive wind turbines that will sit in water more than 1,000 feet deep, 18 miles offshore;
In Virginia, Dominion Power is putting in two 6 megawatt turbines 26 miles off Virginia Beach, Virginia. DOE says they will be “hurricane resilient” in order to prove that wind power and Atlantic Coast storms are not incompatible as many people believe; and,
In New Jersey, Fishermen’s Energy is constructing five 5 megawatt wind turbines about three miles offshore from Atlantic City, which, while providing a lot of power to video poker and slot machines, won’t do much to add to the city’s overall energy portfolio.
The whole business isn’t so much a gamble as it is a proven sucker’s bet for anyone putting up the money – in this case you and I. Wind technology is just not sufficiently developed to allow it to take over anything close to base-load power requirements. Instead of trying to pretend it is, and using very expensive examples to do it, why not put the same resources toward producing gains in efficiency in proven power sources? Or, frankly, just not do anything at all?
America is or will soon be, depending on whose analysis you read, a net energy exporter for the first time in decades. There’s no need anymore for subsidies or special tax breaks for any kind of energy, be it wind, solar, natural gas, coal or oil. Warren Buffet doesn’t need another tax break, which is what a restored Wind Production Tax Credit would be to him. If he believes in big wind, let him spend his money and put his capital at risk without you and I having to back his play through tax credits and subsidies.
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Peter Roff is a contributing editor at U.S. News & World Report. Formerly a senior political writer for United Press International, he’s now affiliated with several public policy organizations including Frontiers of Freedom and Let Freedom Ring.