Carbon dioxide and other greenhouse gases (GHGs) are responsible for global warming, the long-term worldwide average warming experienced since the industrial revolution. GHGs arise from human use of fossil fuels for energy. Major emitters of GHGs include both industrialized countries and, in recent decades, developing countries as well. Higher global temperatures cause the extremes of hot and cold, and wet and dry, weather of recent years. This blog examines global warming and its effects.
See the Tabbed Pages for links to video tutorials, and a linked list of post titles grouped by topic.
This blog is expressly directed to readers who do not have strong training or backgrounds in science, with the intent of helping them grasp the underpinnings of this important issue. I'm going to present an ongoing series of posts that will develop various aspects of the science of global warming, its causes and possible methods for minimizing its advance and overcoming at least partially its detrimental effects.
Each post will begin with a capsule summary. It will then proceed with captioned sections to amplify and justify the statements and conclusions of the summary. I'll present images and tables where helpful to develop a point, since "a picture is worth a thousand words".
Friday, October 19, 2012
Production Tax Credit for Wind Energy in the U. S.
way of reducing the rate of emission of carbon dioxide is to generate electric
power from renewable sources, including wind energy.In the U. S. renewable energy has been aided by a production
tax credit since 1992, that Congress, in fits and starts, has repeatedly granted
and taken away. It is scheduled to
expire again on Dec. 31, 2012. In
contrast, conventional fossil fuel energy sources have been
steadily subsidized since the early 1900’s.
including wind energy, benefits the U. S. by relieving dependence on foreign energy
sources, expanding economic activity, and lowering the annual rate of emission
of carbon dioxide, the most prevalent greenhouse gas.For these reasons the production tax credit
should be renewed for an extended duration, in order to convey stability and
predictability to the renewable energy industry.
burns large amounts of fossil fuels in order to drive its economy, resulting in
correspondingly large annual rates of emission of greenhouse gases such as
carbon dioxide, CO2.CO2
accumulates in the atmosphere because more is emitted than can be absorbed
around the planet.As a result long-term
average global temperatures have been rising inexorably.Increased temperatures are held responsible
for extreme weather
events around the world, which lead to significant harms to our economic and
One way of reducing
the rate of emission of CO2 is to generate electric power from
renewable sources.Wind generation has
been growing rapidly around the world, including the U. S., yet its share of energy production is
still relatively small.The U. S. enacted a Production Tax Credit (PTC) as part of the Energy Policy Act of 1992 in
order to promote wind energy.It
subsidizes the sale of electricity produced by wind power.
The PTC has been allowed to expire and been
reinstated repeatedly in recent years.The current legislation granting the PTC expires Dec. 31, 2012.However, Congress has not passed any new appropriations bills covering
the current fiscal year that began Oct. 1, including the PTC. Other significant fiscal difficulties arise in
by law on Jan. 1, 2013, so considering an extension of the PTC is greatly complicated by these additional
The PTC subsidizes wind power generation by US$0.022
per kWh.This adds up to about US$1
billion per year at the current level of wind generation (see below).According to Vice Admiral (Ret.) Denny McGinn, the President and CEO of the American Council on Renewable Energy,the PTC has been a major factor in creating and
expanding the wind energy industry in the U. S. since its inception.Currently its extension is a topic of great
controversy, mostly along party lines, in the Congress.Those opposed generally are against promoting
renewable energy and to expanding tax credits as a form of increased government
spending. Those supporting extension
favor the PTC as a way of fostering expansion of the
renewable energy industry.
Over the past
decade the PTC has been allowed to expire, and then been
reinstated, in repeated cycles, leading to an “off-again-on-again” pattern of
funding.This has led to insecurity and
unpredictability facing investors and energy industrialists seeking to develop
new wind energy facilities.It should be
noted that these entrepreneurs are part of the private market economy.They need stability in their understanding of
the financial environment surrounding their plans; it is difficult to plan for
investment and construction of new wind facilities when the PTC is given and taken away in fits and
between breaks in appropriations for the PTC and the annual newly installed wind
generation capacity is shown in the graphic below.
of new wind generation capacity correlated with breaks in appropriation for the
total affected wind generation capacity can be obtained by adding the heights
of each bar.The generation capacity for
2012 and 2013 are estimates based on the present status of the PTC.
The PTC lapsed in the years 2000, 2002 and
2004.The effect of the lost support is
evident in this graphic.In each of
those years the installation of new wind energy facilities fell by 73% or more
(light green bars). When reinstated, the
PTC was implemented only for one- or two-year
periods, rather than permanently or at least for an extended time. In addition, the graphic shows a projected
drop to no new wind capacity to be constructed in 2013, although it is likely
that vestigial new construction will persist into 2013.Adm. McGinn believes the wind industry would
need a 3-5 year horizon for planning, and understands that PTC subsidies will not be, and indeed should
not be, a permanent fixture in their industry.
of the wind energy industry.The expansion of the wind energy industry as
a component of renewable energy has led to a work force estimated to have
reached 85,000 jobs nationwide in 2008-9, according to the American Wind Energy
Association (AWEA) as reported in the New York Times.
It has since fallen by 10,000 because
of competition from China, and the growth of inexpensive natural gas.In July, for example, the U. S. Commerce
Department imposed tariffs on turbine towers originating in China, responding to a finding that the towers were priced in the U. S. at less than the cost of
production in China.
In recent months, facing the unresolved expiration of the PTC, it is
estimated that 1,700 layoffs have already occurred.The American wind industry is composed of
several hundred manufacturers, from multinational companies to small firms
making specialty items needed in wind turbine installations.
According to AWEA2.9% of the U. S. electricity demand was
provided by wind energy in 2011. In Iowa and South Dakota, which have high
potenetial wind energy resources, around 20% of the electricity demand is
provided by wind. Nationally, the U.S. could provide 20%of its electricity from wind power by 2030;
this achievement is expected to provide 500,000 jobs to American workers.In addition, currently 65% of the components
in wind turbines are manufactured in the U. S., compared with only 25% before
2005; there are almost 500 companies distributed across 44 states engaged in
manufacturing for the wind energy industry.These data show that wind energy can make a significant impact on the
Historical role of subsidies
in the U. S. energy economy.One group opposing extension of
the PTC is the American Energy Alliance
.Its president, Thomas Pyle, concurred
in calling the PTC a “boondoggle”,
which it has been receiving for 20 years.This opinion, however, is in flagrant disregard of the findings of
recent studies of energy subsidies.In
the U. S., sources of energy have been recipients of federal
subsidies since the 1800’s.This
includes the coal industry, the oil industry, and nuclear power.Timelines for incentives from the federal
government for energy sources over the past century are shown in the graphic
Duration of U. S. government incentive support for fossil
fuels, nuclear energy and renewable energy (includes wind, solar, hydropower,
geothermal and biomass) from 1900.
have been especially instrumentalduring the early
years in the development of each industry; yet after a century of growth in the
oil and gas industry, it is still receiving federal subsidies (second gray bar; see the graphic above), and it benefits
from a depletion tax credit as well (top gray bar).The coal industry likewise has benefited from
favorable tax treatment since about 1950 (third gray bar).It is hard to argue that industries that are among the largest and most
profitable in the American economy still require subsidies for their survival
and growth.Subsidies to the oil and gas
industry are as much as 5 times larger than those for the entire renewable
energy sector.In 2007 the fossil fuel
sector received US$ 5.450 billion in subsidies, whereas all renewable energy
sources received only US$ 1.147 billion.
Conventional energy sources, namely the various fossil fuels, continue to
receive significant subsidies from the federal government, in spite of the fact
that they are clearly mature industries.The companies in question are massively large, and garner extremely
large profits from their operations.It
is difficult to justify continuation of any subsidy or support in their
favor.The nuclear industry likewise
continues to receive significant subsidy support after several decades of
operation.In this case, operations are
usually regulated at the level of the states that the various nuclear-powered
electric utilities serve.
Development of renewable energy is viewed as having several favorable
effects on the American economy.First,
it would contribute to increasing the independence of the U. S. from relying on
foreign sources of energy, and from having to use dollar resources to buy
fossil fuels from abroad.Second, it
would relieve dependence on fossil fuels overall.Third, development of all forms of renewable
energy would contribute to the U. S. economy by providing new job opportunities
in various skilled vocations, thus expanding our economic activity.Fourth, expansion of renewable energy leads
to economies of scale that would make electricity from these sources be fully
competitive with conventional, fossil fuel-powered, electricity.This effect is in fact already operating;
wind energy generation is considered to be comparable in cost to conventional
adoption of renewable energy would contribute to reducing the annual rate of
emission of greenhouse gases.
For all these reasons it is important that the renewable energy production
tax credit be reinstated for an extended period.The historical persistence of subsidy support
for the conventional fossil fuel industries provides an excellent precedent for
the PTC.Since fossil fuels have long been profoundly
successful industries, their subsidies are no longer needed.The PTC could readily
be funded by reducing or eliminating these historical subsidies.The availability of the PTC would promote
expansion of renewable energy, with all its advantages.Implementing the PTC for a
multi-year interval would convey stability and predictability to entrepreneurs
and industrialists who seek to develop renewable energy resources.