Another Round Of Energy Pork
Christmas is upon us, and the elves are busy in the North Pole suburb of Capitol Hill. The House has produced a draft piece of “green energy” legislation that would yield massive costs, massive economic distortions and massive environmental damage.
Rep. Mike Thompson, D-California, justifies his “Growing Renewable Energy and Efficiency Now (GREEN) Act,” as “a comprehensive approach to addressing the threat of climate change through our tax code.”
Put aside the fact that there is no evidence — none — that there is a climate “crisis” to be addressed. Instead, nowhere have the supporters presented an actual estimate of the “climate” effect of this ostensible effort to achieve “net zero” U.S. emissions of greenhouse gases by 2050. Applying the climate model used by the Environmental Protection Agency, under assumptions that exaggerate the effects of reduced emissions: 0.17 degree Celsius by 2100. Under assumptions more consistent with the recent scientific literature: 0.08 degree Celsius.
So much for the “climate” rationale for this bill. Instead, the legislation is a blatant pork-barrel exercise for innumerable interest groups. In its most important provisions, it would:
¯ Extend the wind production tax credit through 2024.
¯ Make permanent the solar investment tax credit, at a declining rate.
¯ Extend the investment tax credit until 2026 to a variety of energy sources that were excluded from the 2015 tax deal.
¯ Extend the investment tax credit at a declining rate to batteries and various other technologies at least through 2026.
¯ Renew a number of lapsed incentives for biofuels until 2024.
¯ Extend and revise the sales limit for the electric vehicle tax credit by raising the current 200,000-vehicle-per-manufacturer sales cap to 600,000, while reducing the credit from $7,500 to $7,000.
¯ Implement a new credit for purchases of used plug-in EVs through 2024, with buyers able to claim a base credit of $1,250 for qualifying used vehicles. The credit would be limited to the lesser of $2,500 or 30 percent of the sale price.
¯ Implement a new manufacturer credit through 2024 for the sale of “heavy zero emission vehicles,” defined as those powered “solely by an electric motor which draws electricity from a battery or fuel cell.”
One searches in vain for a cost estimate for all this political largesse. Instead, amusingly, the summary of the bill states that the “Revenue raisers” are “To be provided.” Note that the tax revenues needed to “pay” in the federal budget for all the tax expenditures in the bill are not the correct analytic issue; instead, it is the cost of the bill to the economy that matters, however difficult it is to measure. That true economic cost is at least double the revenues lost as a result of the various tax credits and incentives, because of the economic distortions (“excess burden”) created by them.
Nor have the proponents mentioned the environmental damage from unconventional energy. Because the energy content of wind and sunlight is unconcentrated, land use both massive and unsightly is necessary for a renewables system. The production process for wind turbines, apart from the use of large quantities of steel, concrete and other such straightforward industrial materials, requires also significant amounts of such toxic heavy metals as neodymium and dysprosium for the magnets, for the most part produced in China, where environmental controls are hardly stringent.
The disposal problem for wind turbines’ blades and magnets only now is beginning to be recognized. The noise and light-flicker effects of wind turbines are a serious problem that siting arrangements can solve only partially. There is no easy solution for the disposal of solar panel waste — as much as 78 million metric tons worldwide by 2050 — because of the lead, cadmium, chromium and other toxic metals that are released if the panels are broken during the disposal process. And there is the large amount of wildlife destruction attendant upon the operation of wind farms and solar fields.
Because of the unreliability of wind and solar power, the conventional backup units must be cycled up and down depending on whether the renewable units are producing power. That cycling reduces the operating efficiency of the backup units, increasing net emissions of conventional pollutants, and increasing greenhouse gas emissions under a broad range of conditions.
This legislation is a classic example of Beltway pork-barrel chicanery, justified on the basis of half-truths and worse, with actual effects diametrically in conflict with those advertised. It is a wealth redistribution special-interest bonanza with the costs inflicted upon the great mass of the unsuspecting citizenry. It should be rejected, loudly.
Benjamin Zycher is a resident scholar at the American Enterprise Institute.