The Cost of Wind-Energy Jobs
The "our industry creates jobs" argument is the last refuge of a subsidy seeker.
Proponents of wind-energy projects frequently claim that wind is free. That may be true, but creating jobs in the wind-energy business is a very expensive proposition.
The battle over the federal production tax credit (PTC) for wind, which amounts to 2.2 cents per kilowatt-hour and expires at the end of the year, is heating up. Last month, the Senate Finance Committee approved a plan to extend the PTC. Republican nominee Mitt Romney has said that, if elected, he will let the credit expire. President Obama wants to extend it: Last week, in a speech at the Democratic National Convention, he declared that "thousands of Americans have jobs today building wind turbines."
How expensive are these jobs? Let’s look at the numbers. The American Wind Energy Association (AWEA) has repeatedly claimed that if the PTC isn’t extended, 37,000 wind-related jobs will be lost. Now consider the figures from the Joint Committee on Taxation, the non-partisan congressional entity established in 1926 that assists legislators on tax-related matters. Their number crunchers put the cost of extending the PTC at $12.18 billion from 2013 to 2022. Divide that figure by the 37,000 jobs claimed by AWEA, and you get $329,000 per job.
A wind-energy supporter might claim that the $329,000 figure is too high — that it should be spread out over a decade, just as the costs calculated by the tax committee are. If we take that approach, then each wind-energy job costs $32,900 per year. But even with that more conservative methodology, wind-energy employment is still expensive, particularly when compared with jobs in traditional energy sectors.
Once again, the numbers tell the story. In March, the Congressional Budget Office reported that tax preferences extended to the fossil-fuel sector total about $2.5 billion per year. The American Petroleum Institute has estimated total direct employment from the oil-and-gas sector, not counting service stations, at 1.2 million jobs. That works out to about $2,100 per job, per year. To be fair, that comparison pits the number of jobs that might be saved in the wind sector by an extension of the PTC against permanent jobs in the oil and gas business. It’s not an apples-to-apples comparison, but it does provide a sense of the comparative tax treatments of the industries.
Using that comparison, wind-energy jobs likely cost taxpayers about 15 times as much as jobs created by the oil-and-gas sector. And while that’s a significant finding, keep in mind that both numbers for wind-energy jobs — $32,900 and $329,000 — may be too low.
In December 2010, Susan Combs, the Texas state comptroller, reported that each wind-related job in Texas, which has more wind-energy production capacity than any other state, cost the state’s taxpayers $1.6 million.
Or consider the most egregious case of wind-energy corporate welfare: the Shepherds Flat wind project in Oregon, which is getting a $490 million cash grant from the federal government. The project, backed by General Electric, Google, and other companies, will create just 35 permanent jobs. Cost of each one of those long-term jobs: about $14 million. Even if we include the 400 temporary construction jobs the project created and count them as permanent jobs, taxpayers are still spending about $1.1 million per wind-related job.
Recall that during the first few months of the Obama administration, wind proponents claimed that their turbines were an essential method of cutting carbon dioxide emissions. But as the economy continues to limp along and a flood of low-cost natural gas is making wind energy less and less economically viable, Big Wind has defaulted to the claim that 37,000 jobs might be lost.
It’s instructive to compare the parallel tactics of Big Corn and Big Wind. About a year ago, as Congress was debating an extension of the tax credit for corn-ethanol production, the Renewable Fuels Association (RFA) abandoned its absurd claims about "energy independence" and instead began running ads touting the "70,000 quality jobs" that rely on ethanol production. The ethanol industry, according to the RFA’s CEO Bob Dinneen, was a "job-creating engine fueled by innovation." Implicit in Dinneen’s message: We need subsidies for just a little while longer.
That’s awfully similar to a statement made by AWEA’s top executive, Denise Bode, that the PTC is an "effective, job-creating tax policy." Letting it expire, she claims, will put "good American jobs" in peril.
And that brings us to another parallel: Until last year, Big Corn had both a mandate and a subsidy. Congress finally killed the ethanol tax credit, which cost taxpayers $6.1 billion in 2011, but the corn-ethanol scammers still have a federal mandate that requires motorists to use their hydrophilic, corrosive fuel adulterant.
Big Wind has a mandate: Twenty-nine states and the District of Columbia are subject to mandates for renewable electricity production, which is affecting the cost of electricity for their 220 million residents. And just as Big Corn did last year, Big Wind is campaigning hard because it wants to keep both the mandate and the subsidy.
The "our industry creates a lot of jobs" argument is the last refuge of a subsidy seeker. Congress took away Big Corn’s subsidy last year. It should do the same for Big Wind.
This piece originally appeared in National Review Online
This piece originally appeared in National Review Online