Rep. Mike Pompeo (R-Kansas) is the Koch brothers’ level man within the House. (AP picture)
As Congress dithers for the umpteenth time over extending a key subsidy for wind energy, the trade as soon as again is up within the air. Called the manufacturing tax credit score (PTC), the subsidy helps stage the enjoying area between wind and fossil fuels and has proven to be important for financing new tasks, serving to to make wind one of the quickest rising electricity sources in the nation. Given the planet needs to transition as quickly as doable away from coal and natural gas to carbon-free energy to keep away from the worst consequences of climate change, who could be in opposition to renewing wind’s tax credit?
The Koch brothers, that’s who.
Charles G. and David H. Koch — the billionaire house owners of the coal, oil and gasoline Koch Industries conglomerate — have enlisted their extensive community of think tanks, advocacy teams and mates on Capitol Hill to spearhead a marketing campaign to drag the plug on the PTC. By no means mind the fact that the oil and gasoline business has averaged four instances what the wind tax credit score is price in federal tax breaks and subsidies annually for the final ninety five years.
The Koch community is preventing the wind business on plenty of fronts. Final month, Koch-funded Congressman Mike Pompeo (R-Kansas) despatched a letter signed by 52 House members to the chairman of the House Methods and Means Committee, urging him to let the PTC expire. In the meantime, a coalition of some 100 nationwide and native teams organized by the Koch-founded Americans for Prosperity sent a letter to every member of Congress asking them to do naphtha the same. And earlier this month, the Koch-funded Institute for Power Research launched an anti-PTC advert marketing campaign and launched a report claiming that solely a handful of states really profit from the subsidy.
Malcolm Gladwell didn’t embrace this battle in his new book David and Goliath as a result of, given the percentages, it’s extra like Bambi versus Godzilla.
The Kochs’ Man in Congress
The truth that Kansas Rep. Mike Pompeo is the Kochs’ point man to scuttle the PTC within the House is a bit ironic given his state is a wind energy leader. Kansas has the second highest wind potential in the nation, it has already attracted more than $5 billion in wind trade funding, and final 12 months wind generated 11.4 percent of its electricity. With stats like that, the trade has broad bipartisan support. Kansas Gov. Sam Brownback and Sens. Jerry Moran and Pat Roberts — all Republicans — are huge followers.
Pompeo, who has been in Congress since only 2011, would argue that he’s in opposition to all power tax credits. For the second year in a row, he has introduced a bill that might get rid of tax breaks that benefit oil, natural gas, coal, nuclear, electric automobiles, alternative fuels, photo voltaic and wind, together with the PTC, which gives wind builders a tax credit score of two.Three cents for every kilowatt-hour of electricity they produce.
But there is a catch. Though it appears evenhanded, Pompeo’s bill would severely hamper wind and solar however preserve plenty of oil, gasoline and coal subsidies, including the percentage depletion allowance, the flexibility to expense the costs of exploration, and the accelerated depreciation of sure kinds of “geologic property.” These and different tax breaks he left out of his invoice would be value about $12.5 billion to the oil and fuel trade from 2011 by 2015, in accordance with a March 2012 Congressional Research Service report.
Why is Pompeo so down on wind? Maybe it is as a result of Koch Industries is headquartered in Wichita, smack-dab in the course of his district — and the truth that the company is by far and away his biggest campaign contributor. Since 2010, Koch Industries has given him $200,000, greater than four times what his second highest contributor kicked in. Moreover Koch Industries, three different oil corporations are amongst Pompeo’s top 5 contributors — McCoy Petroleum, Mull Drilling and Richie Exploration — and they’re also based in Wichita.
What about the opposite 51 Home members who signed Pompeo’s letter? As it seems, 65 p.c of them received contributions from Koch Industries throughout the last two or three marketing campaign cycles, in keeping with Federal Election Fee knowledge compiled by the nonpartisan Middle for Responsive Politics. A quarter of them, in the meantime, cashed checks from ExxonMobil. And besides for two congressmen who did not take any power trade cash, the signatories obtained sizable contributions from numerous other companies that compete with wind, including coal barons Arch Coal and Alpha Pure Assets; oil and gas giants Chesapeake Power, Chevron, ConocoPhillips and Valero Power; and Exelon, which owns the most nuclear reactors in the country.
Individuals for (Koch) Prosperity Weighs In
Pompeo’s letter got here on the heels of a letter from the Kochs’ flagship advocacy group, Individuals for Prosperity, calling for Congress to kill the PTC. AFP’s letter, which was signed by 102 organizations, claims that “the wind trade has little or no to show after 20 years of preferential tax treatment” and declares that “People deserve power options that can make it on their very own within the market — not ones that have to be propped up by government indefinitely.”
Is that proper? Little to point out? Preferential tax therapy?
In actual fact, until Congress left the wind business hanging late last year, it had been doing quite nicely. Even with a deep recession and gradual recovery, over the earlier five years — with the assistance of the PTC, stimulus spending and state renewable electricity standards — the industry doubled its electricity output, employment and non-public funding. In 2012, home manufacturers produced roughly 72 p.c of the wind turbine tools erected throughout the nation — nearly triple the percentage in 2006 — and more than 13,000 megawatts of recent wind era capacity was put in. By the tip of last year, there have been sufficient wind turbines to power 15 million typical American houses — with out toxic pollutants or carbon emissions.
However AFP’s complaint that the wind business has been on the dole far too long is even more galling. What about the oil and gasoline business? It’s been feeding on the federal trough since 1918! On common, the business has benefited from $4.86 billion in tax breaks and subsidies in right this moment’s dollars yearly since then, based on a 2011 examine by DBL Buyers, a enterprise capital firm. Renewable vitality applied sciences, meanwhile, averaged only $370 million a 12 months in subsidies between 1994 and 2009. The 2009 stimulus package deal did present $21 billion for wind, photo voltaic and other renewables, however that assist barely begins to steadiness the scales which have tilted towards nuclear power for greater than 50 years, oil and gasoline for 95 years, and coal for more than two centuries.
So who signed the AFP letter? About half of the signatories are local tea social gathering associates and anti-wind NIMBY teams of indeterminate dimension and funding. The other half are, for essentially the most half, comparatively obscure national groups, but there are a number of that have attracted consideration over time for his or her contrarian views on climate science and renewable vitality. Like AFP, those groups are awash in petrodollars. The American Energy Alliance (and its mum or dad, the Institute for Energy Analysis), Aggressive Enterprise Institute, Freedom Works, Frontiers of Freedom and Heritage Motion (and its father or mother, the Heritage Basis) collectively have received hundreds of thousands of dollars from Koch household foundations, ExxonMobil and the American Petroleum Institute, the oil and gas business’s premier commerce affiliation.
The Institute for Vitality Research’s Questionable Analysis
On December 3, the Institute for Vitality Research and its political arm, the American Vitality Alliance, sponsored what they dubbed the “wind welfare” summit in Washington, D.C., that includes IER founder and CEO Robert Bradley Jr., a Koch community veteran. AEA introduced it would spend $forty,000 on print and digital advertisements calling for an finish to the PTC and is flying in anti-PTC advocates for conferences on Capitol Hill.
Bradley presumably highlighted the findings of a report IER released the day earlier than claiming that a small number of states with wind sources — Iowa, North Dakota, Oklahoma and Texas — are reaping the benefits of the PTC whereas 30 states and the District of Columbia are “dropping millions” to fund it.
The report’s findings, however, don’t hold up to scrutiny. Mike Jacobs, a senior vitality analyst on the Union of Involved Scientists, identified in a current weblog that IER ignored the truth that numerous the states it identified as “net payers” are residence to wind industry manufacturing amenities. There are sixty two firms in Ohio making turbine components, for instance, forty in Michigan and 21 in California. Jacobs additionally discovered that IER downplayed the truth that “the PTC benefits consumers the place wind-generated electricity adds to the availability and lowers the price of electricity, landowners who receive lease payments from the wind turbines, and native communities that gather tax funds on put in wind farms.”
Jeff Spross, running a blog on the center for American Progress’ ThinkProgress web site, additionally chided IER, declaring that most industries should not equally distributed across the nation. “The oil and fuel industries, as an example, benefit from a wealth of federal tax carve-outs,” he wrote, “however the economic activity they generate is concentrated in only a few key states.”
In different words, it’s disingenuous to single out the wind trade.
Twisting within the Wind
While Congress has generously provided the fossil-gasoline and nuclear-energy industries quite a lot of permanent subsidies, it has typically granted the wind trade the PTC on a brief-term basis and then wavered over renewing it. Last year the PTC expired on December 31, however as a part of the “fiscal cliff” budget deal the subsequent day, Congress extended it for the seventh time because it debuted in 1992 — for just one year.
This uncertainty over the PTC’s status has put wind developers at a distinct disadvantage, making it tough to attract buyers and plan ahead. Last yr’s cliffhanger, for instance, positively did a number on the industry. Wind farm building has fallen off dramatically compared with 2012: Just one utility-scale wind turbine was installed in the first six months of this 12 months. Business picked up somewhat in the third quarter, with 68.Three megawatts put in, in response to the American Wind Power Association, however that is far beneath the average of greater than 1,000 megawatts that the trade constructed in most quarters lately.
Provided that it takes years to plan, finance and assemble a wind farm, Congress is once more undermining the business’s potential by sluggish-strolling the PTC extension this 12 months. And that potential is super. Wind presently generates about four percent of U.S. electricity, however by 2030 it could produce greater than 20 p.c, according to the U.S. Division of Power. The DOE’s Nationwide Renewable Energy Laboratory is also bullish on wind and renewables writ massive. Final 12 months, it published a report that concluded right now’s commercially available renewable technologies could simply generate 80 percent of U.S. electricity by 2050, with almost half coming from wind. If the Koch brothers and their allies have their method, nevertheless, it possible will take quite a bit longer to get there — and it’ll cost a hell of much more.
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