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Commentary By Diana Furchtgott-Roth

U.S. Renewable Energy isn’t Helping the Economy — or the Fight Against ISIS

This article originally appeared in MarketWatch.

Although the Islamic State is located in some of the sunniest regions of the globe, it’s making money selling not stolen solar panels and wind turbines but stolen oil.

That should send a message to Congress, whose new $1.1 trillion spending bill extends the wind-production credit that expired last year and provides a new extension to the solar credit. Congress will vote on the bill Friday.

The spending bill is named Protecting Americans from Tax Hikes Act of 2015. Americans might be protected from tax hikes, but not from the costs of government subsidies, which drive up their tax bills. Since Congress has abandoned a debt ceiling, or any budget restraint, legislators do not have to find the funds to pay for the $1 trillion-plus package.

Extension of renewable energy credits was the price to pay for allowing American companies to export crude oil, a ban that has been in place since 1975. With oil piling up in storage facilities, the need to export is obvious. The Iran deal allows Iran to export oil, and it’s only fair to allow American corporations the same rights as their Iranian counterparts.

The bill shows that it’s practically impossible to get rid of a program or a tax credit. Even if it’s eliminated, it pops back up — just as the Export-Import Bank has seen new life after its elimination.

The rationale for renewable energy is to reduce greenhouse-gas emissions. Greenhouse-gas emissions from power plants have declined by 15% from 2005 to 2013, according to the Energy Information Administration, not from the use of renewables, but because of the growth of natural gas-fired power plants. With low natural gas prices, this is likely to continue. America generated 27% of its electricity from natural gas in 2014, compared with 4.4% from wind and less than 0.5% from solar. (Another 39% came from coal and 19% came from nuclear power.)

Wind energy is dependent on credits. Since the credit expired at the end of 2014, net wind generation increased by only 0.7% in the first nine months 2015 over the same period in 2014, compared with a 7.3% increase in 2014 over 2013, according to the Energy Information Administration.

ISIS is not putting up windmills or solar panels. It is not forcing ethanol into the gasoline supply (as EPA announced it would do last week). It is getting funds from oil to grab more lands in Syria and Iraq, and fund suicide bombers to kill Westerners. Oil, together with natural gas and coal, are valuable commodities to produce energy, while renewables are not. While ISIS kills, America is slowing its economy with its focus on renewables.

Energy produced by windmills is more expensive than energy generated by natural gas. According to the Energy Department, the average levelized cost in dollars per megawatt hour for an advanced combined cycle natural gas plant is $73. For wind, it is $74, a difference of 1.4%. However, natural gas is listed as dispatchable, and wind energy is not, so this comparison neglects the additional costs of transmitting wind energy via the grid.

According to the Joint Committee on Taxation, the wind production tax credit costs about $1.5 billion a year.

Additional subsidies for wind energy exist at the state level. The top 11 states that represent 75% of U.S. wind capacity are Texas, California, Iowa, Illinois, Oregon, Oklahoma, Minnesota, Washington, Kansas, Colorado and North Dakota. In each of the 11 states except Kansas, there are multiple tax incentive programs for wind energy. Kansas has only one.

On Nov. 30, the EPA announced it would increase the amount of ethanol required to be consumed in the gasoline pool from amounts set earlier in the year. The EPA raised the 2015 and 2016 conventional ethanol mandates from 13.4 billion to 14.05 billion gallons in 2015 and from 14 billion to 14.5 billion gallons in 2016, pushing ethanol to 10.4% of the gasoline pool.

When gasoline prices are low, as they are now, ethanol raises the price of motor fuel, even though the gasoline-ethanol blend, currently 10% ethanol, lowers vehicles’ gas mileage. ISIS does not require ethanol in its gasoline.

This was a victory for corn ethanol advocates. Mandating the use of more ethanol than 10% of projected gasoline demand is a significant step. Car makers generally recommend gasoline blends that contain no more than 10% ethanol so engines won’t be harmed.

This past February, Reps. Bob Goodlatte (Republican from Virginia), Peter Welch (Democrat from Alabama), Steve Womack (Republican from Arkansas) and Jim Costa (Democrat from California) introduced a bill that would eliminate the corn-based ethanol requirement. Another bill was also intended to cap the amount of ethanol.

Commenting on the EPA announcement, Goodlatte said: “The EPA’s decision to funnel more ethanol into the fuel supply is terribly disappointing. The RFS requirements announced today will push ethanol volumes beyond the blendwall in 2016, leaving American consumers and our economy to feel the negative effects.”

The new spending bill might protect Americans from tax hikes, but it doesn’t protect them from subsidizing wasteful programs. Lifting the oil-export ban is costless, but tax incentives for renewables force Americans to pay for more expensive energy generation that will have little effect on reducing greenhouse-gas emissions. ISIS knows better.

Diana Furchtgott-Roth is a senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter here.

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