Sen. Udall Urges for Billions More in Wind Subsidies

Major donor is biggest wind producer in the country

May 20, 2014

Sen. Mark Udall is pleading for an extension for billions in subsidies to prop up the wind industry, a fight to protect tax credits utilized by Warren Buffett and one of the Colorado Democrat’s top donors.

The Production Tax Credit (PTC), a corporate tax credit that provides 2.3 cents per kilowatt hour of energy generated by wind farms, expired at the beginning of 2014. Now, Udall and his fellow Coloradan senator Michael Bennett (D.) are asking for a 10-year extension of the program.

Udall was "extremely disappointed" when a bill that would have provided nearly $13 billion for wind energy stalled in the Senate last week, arguing that the subsidies support jobs in Colorado. Udall and Bennett told Denver’s 9NEWS that the PTC is necessary for Vestas American Wind Technology, which operates four wind farms in the state.

Warren Buffett, who has invested billions into wind farms, said recently that the industry is not viable without government assistance.

"I will do anything that is basically covered by the law to reduce Berkshire’s tax rate," he said earlier this month. "For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit."

Buffett donated $2,300 to Udall’s campaign in 2008.

Wind energy production declines significantly absent the subsidy, as seen when it last expired in 2013. According to the Independence Institute, a free market think tank based in Colorado, total available wind energy output decreased 92 percent that year.

"In other words, almost all the wind power construction today exists only because of taxpayer subsidies," the organization said.

Udall himself admitted that the industry is dependent on subsidies. "When we've let the production tax credit languish, then you have seen this drawback," he said.

The first-term Senate Democrat is currently facing a tough reelection campaign against his Republican challenger Rep. Cory Gardner. Gardner is in favor of phasing out the PTC, following a temporary extension that is paid for with an offset. Gardner supported the previous extension in 2012.

Detractors of the PTC argue that the wind industry should prove its worth in the private sector, free from government subsidies and "corporate welfare."

"There is nothing inherently wrong with wind production if it can compete in the marketplace, but taxpayers shouldn’t be footing the bill to help it remain economically viable," said Nick Loris, a senior policy analyst at the Heritage Foundation.

"People will build things if you subsidize them enough, but that doesn’t mean it’s good for the economy," he said.

Loris argues that the subsidy, which has cost tens of billions since 1992, amounts to nothing more than shifting labor and capital around to "politically preferred sectors of the economy."

"Maybe some wind production will be viable without the production tax credit, but we don’t know because it’s been such an egregious subsidy for so long that we don’t know what wind will do in a competitive marketplace," he said.

The PTC faced opposition in the Senate from some Republicans, including Jeff Flake (R., Ariz.), who called the subsidy a "zombie credit" that is "ripe for elimination."

"We all know the U.S. has a $17.5 trillion debt," he said. "All subsidies like this need to be eliminated."

Earlier this month Sen. Mike Lee (R., Utah) introduced legislation that would eliminate all technology specific energy subsidies, including the wind tax credit, as part of his anti-crony capitalism agenda.

"If a particular technology is effective, it’s going to be able to prove itself on the marketplace," Lee told the Washington Free Beacon on Tuesday. "It’s going to be profitable. We shouldn’t be providing tax credits on a technology specific basis within the energy industry."

"This one is no respecter of persons in the sense that it treats renewables no differently than it does fossil fuels, it just says let’s get out of the business of subsidizing those through tax credits," he said.

Udall describes himself as the "leading voice" to renew the PTC. NextEra Energy, the largest wind power generator in the country, is one of Udall’s five biggest supporters, donating $47,000 to Udall’s campaign committee and leadership PAC, between 2009 and 2014, according to the Center for Responsive Politics.

In addition to subsidies, Vestas, the company cited by Udall that employs nearly 2,000 people on its four wind farms in Colorado, received more than $50 million from the federal government to build two plants in 2010, taking advantage of a Treasury Department program that reimburses for costs associated with starting renewable energy properties.

The company also lobbies heavily for the industry. Vestas spent $170,000 lobbying so far in 2014, and $1,865,000 since 2008.

Loris said the PTC is more of a job creator for Washington, than it is for states like Colorado.

"You can’t say this is a job creator when you funnel taxpayer money into a certain sector of the economy," Loris said. "It’s just shifting labor and capital to where members of Congress want it."

Requests for comment to Udall’s senate and campaign press offices were not returned.