Printed on: December 27, 2012
Frustrating Obama's green agenda
Kevon Martis, Tauna Christensen
The White House and Congress are rewarding big corporations on the backs of taxpayers and ratepayers, write Kevon Martis and Tauna Christensen.
President Obama is committed to asking "the biggest corporations to pay their fair share." But his support of one tax policy -- the federal Production Tax Credit (PTC) for wind energy -- is having grave unintended consequences.
Enacted in 1992 as a means to spur the construction of wind energy facilities that could compete with monopoly-owned conventional fossil fuel power plants, this hefty tax credit has mostly benefitted that same fossil/nuclear monopoly.
Florida-based NextEra Energy/FPL is the largest recipient of this tax credit. Due primarily to the PTC's generous tax benefit, BusinessWeek reports, from 2005 to 2009 "FPL has paid just $88 million in taxes on earnings of nearly $7 billion," yielding a tax rate of only 1.25 percent. Most corporations average a 30 percent tax rate. At that rate, FPL's tax obligation should have been nearly $2.2 billion.
One might argue that these lavish tax credits are warranted, as they allegedly level the playing field between "start-up" "clean" wind energy producers and established "dirty" conventional energy producers. But the bulk of NextEra/FPL's generation comes from fossil and nuclear sources. In fact, they just constructed the largest fossil fuel plant in the U.S., the West County Energy Center Gas Turbine plant in the Everglades.
The price tag for this plant is also $2.2 billion, nearly equal to the value of NextEra/FPL's combined tax credits from 2005 to 2009.
NextEra/FPL boasts that its 9,300 MW of PTC-driven wind generation plants have " ... allowed FPL to avoid building 13 medium-sized power plants since 1980." Yet FPL could have more honestly stated the impact of the PTC thus: "The Wind Energy Production Tax Credit funded the construction America's largest fossil fuel generation plant, located in the heart of the environmentally sensitive Florida Everglades."
NextEra's huge wind turbine fleet certainly seems impressive. But when adjusted for wind's on-again off-again nature, their turbines will likely yield only 2,700 MW while costing $18 billion.
Had this $18 billion instead constructed eight more gas turbine plants like NextEra/FPL's latest in the Everglades, the company would have added nearly 30,000 MW of dependable capacity, versus wind's paltry and unreliable 2,700 MW. And gas turbines, unlike wind turbines, could actually replace dozens of coal plants, while reducing carbon dioxide emissions by half.
For a president committed to "stopping the ocean's rise" by controlling CO2, and asking the "biggest corporations to pay their fair share," the president's PTC fails him on both counts. He needs to abandon a policy that is helping a Fortune 200 company evade its "fair share" of corporate income tax while funding the largest fossil-fuel gas-fired turbine plant in the U.S. a mere 1,000 feet from the Everglade's Arthur R. Marshall Wildlife Refuge.
Martis is the senior policy analyst for the Michigan-based Interstate Informed Citizen's Coalition, Inc. Christensen is a principal of the Idaho-based Energy Integrity Project. Both groups are grass-roots renewable energy citizens watchdog groups, committed to advancing science-based energy policy.