Reasonable return on renewable energy

By Braden Sinclair, Special to the BDN
Posted Sept. 22, 2012, at 4:07 p.m.

In an era where the essence of fiscal conservatism is wrapped around tax cuts and tax breaks, one would be hard pressed to gain any support from the right wing when the words “more taxes” are involved. And yet it seems that the very people who live by the tax cut and die by the tax cut have found their breaking point: renewable energy.

The fact that the wind energy production tax credit, or PTC, is set to expire at the end of the year may be news to some. The PTC was originally signed into law in 1992 in order to support renewable energy and harness the positive externalities that it produces, including its environmental, economic and energy security benefits. Since 1980 the cost of producing wind energy has dropped by 90 percent. The wind industry was responsible for about 85,000 jobs as of 2009. A report by the Department of Energy found that not only can the United States reach 20 percent wind energy by 2030, but that by 2030 the industry could support roughly 500,000 jobs in the United States and bring in more than $1.5 billion in property tax revenues annually.

So why are Republicans so anxious to let this tax credit expire, and why is this so important for Maine? The answer to the first question is very simple: bipartisanship. Republican opposition towards renewable energy (and support for oil and gas) clearly overpowers its support for tax credits. While we are on the topic of hypocrisy, let us look at one statement made by a coalition of 64 groups expressing strong opposition to the wind energy PTC: “It is time to end special tax provisions that distort the energy market and increase energy prices.” Of course the word “distortion” that they speak of would be considered competition in any other scenario, and the “increasing energy prices” would simply be an industry working towards becoming an economy of scale. It is important to note that fossil fuels subsidies are nearing $1 trillion per year, while the cost of the wind energy PTC costs $5 billion per year (ironically the same amount of money that leaves the state of Maine every year due to its dependence on oil).

So where does Maine come into the picture? Maine is on the brink of becoming one of the prominent faces of the wind industry. The potential for offshore wind energy in Maine has caught the attention of Statoil North America — the first company in the world to deploy a full-scale floating wind turbine. Statoil is ready to build a 12-megawatt wind farm off the coast of Maine. While 12 megawatts is not going to solve Maine’s dependence on oil, it is a necessary step in order to commercialize wind energy and drive the costs of energy down.

Ken Fletcher, the director of the Maine Energy Office, is skeptical about the high costs of wind energy. “I know pilot project costs are higher,” he said about the Statoil project, “but if you’re asking Maine ratepayers to pay $10 million per year, we need to see that we’re going to get a reasonable return on the investment.” For the sake of reality, let us bring the cost of this pilot project down to a personal level: 73 cents per month per person — just over a tenth of a penny per kilowatt hour. While assumptions are never safe to make, it a safe bet that the average Maine resident would be willing to trade a cup of coffee once a month in order to see a source of energy that is pollution-free and also a strong combatant against climate change. Sacrificing one cup of coffee a month so that our children and grandchildren can drink their coffee stress-free does not sound like too much to “shoulder.” It sounds like an investment.

It is important to recognize that every industry needs someone to invest in it. Providing a tax break to an industry that, in turn, can provide us with a break that cannot even be measured in dollars should be a nonpartisan no-brainer. Today politicians seem to care more about treating party lines like enemy lines than getting down to business and helping America move forward. This country needs leaders who are willing to get their hands dirty in order to get us clean energy.

Braden Sinclair is a second-year economics and political science major at the University of Maine. He currently resides in Eddington.

http://bangordailynews.com/2012/09/22/opinion/reasonable-return-on-renewable-energy/ printed on April 19, 2014