There's a debate brewing on Capitol Hill about which bits of the energy industry the federal government should be supporting with tax breaks and tax incentives. The Senate's proposal from a couple months back to eliminate tax breaks for the biggest oil and gas companies did not pass; another proposal in the Senate, to eliminate subsidies for corn-based ethanol, did pass yesterday.
Republican senator Lamar Alexander is preparing a push to examine and eliminate subsidies for all sorts of energy interests -- in his formulation, "not just big oil, but big wind, big everything else."
But although the wind industry has grown in the United States, it's hardly "big" compared to an industry like oil. According to the American Wind Energy Association, wind contributes just 2.3 percent of the country's electricity mix. (In some states, like Iowa, it's much higher, closing in on or over 15 percent.)
In Washington, when some industry is called a Big Industry, the term usually refers to its political heft. But on that front, wind energy is still a lightweight. The AWEA did contribute more to political candidates than any other renewable group from 2009-2010, but the group's giving totaled just $338,348, according to the Center for Responsive Politics. Compare that to the biggest player in the oil and gas industry, Koch Industries, which gave just under $1.9 million or more than five times what AWEA had to offer. The alternative energy industry, as a whole, spent $31 million on lobbying last year; the oil and gas industry spent $145 million.
Wind energy subsidies are expensive, argues Alexander, who has been citing a 2007 IEA report that put the cost at more than $18 per megawatt-hour. Even with the subsidy, though, wind energy is just now reaching cost parity with natural gas. In part, that's because dirty fuels like coal, natural gas, and oil don't reflect the price of their environmental impact. There would be less of a reason for the federal government to give wind a boost if all sources of energy cost what they should. But they don't, and so subsidies for "Big Wind" still make sense.
