“NO” on the Stabenow Amendment

Today, the Senate will vote on the Stabenow Amendment to MAP-21 (S.1813).  The amendment would extend numerous federal subsidies for alternative energy; including market-distorting support for alternative fueling stations, cellulosic biofuel including algae, bio- and renewable diesel, refined coal, energy-efficient homes, energy-efficient appliances, onshore and offshore wind, and more.

In many respects, the amendment is an extension of the 2009 stimulus.  Many of the subsidies being extended were part of the now-discredited American Recovery and Reinvestment Act, which promised to keep unemployment under 8.0% and jumpstart a new era of green technology.

For decades, various alternative energy industries have claimed that subsidies were needed to jumpstart their nascent industry. Wind, for example, has been making the claim for 20 years.  Yet, since the production tax credit came online in 1992, wind accounts for only 2.3% of America’s electricity.  The scope of federal subsidization for wind is shocking. In 2011, the wholesale price of electricity was about 5 cents per kilowatt-hour, while the production tax credit for wind was 2.2 cents per kilowatt-hour. The subsidy amounts to 40% of the wholesale price – that is 1000 times larger than the oil industry subsidies.

The problem is that decades of subsidies promote technological malaise by removing the incentive to innovate and lower costs. Instead, it invites crony capitalism, where politically-favored companies become dependent upon government and lobby furiously to continue receiving tax credits.  Simply put, if a technology is as affordable and worthwhile as the proponents claim, it should not need federal subsidies to stay afloat. Successful companies don’t need to rely on the government to survive.

All energy subsidies should be eliminated to ensure a fair and open market, and the best way to start that process is by allowing current subsidies to expire.

Heritage Action opposes the Stabenow Amendment and will include it as a key vote on our scorecard.

Related Links:
Heritage Action’s Scorecard
Ending Energy Subsidies
Heritage: CBO Debunks Myth that Tax Code Favors Oil over Renewables
Heritage: Gone with the Wind Subsidies
Heritage: End – Don’t Extend – the Wind Energy Tax Credit
Heritage: Wind Subsidies vs. Oil Subsidies