More than ten years after its passage, Pennsylvania's Alternative Energy Portfolio Standards continue to stunt our economy. The standards cost the state $4 billion annually, according to a study by the Institute of Political Economy at Utah State University.
Researchers reviewed renewable portfolio standards in all states and found the law reduced Pennsylvanians' personal incomes by almost $20 billion from 2004 through 2009.
Data beyond 2009 is still forthcoming, but if the trend continues, alternative energy standards will have cost Pennsylvanians almost $50 billion to date. That's not too far off from the state's pension debt.
So what do these figures mean for each household in Pennsylvania? A loss of $10,000 in purchasing power. That's an enormous cost to bear for such a small benefit.
A recent Tribune Review article highlighting the study aptly notes this isn't an indictment of renewable energy but a reality check.
As technology advances, renewable energy will become cheaper and markets will shift to renewables as a matter of course. Mandating the shift before the technology is ready simply wastes our resources.
Up until this point, government efforts to transition to a clean energy economy have been costly and unsuccessful. Ultimately, it will be entrepreneurship, not government planning, that will make clean energy affordable and reliable for all.
Promoters of the U.S. Environmental Protection Agency’s carbon-emission regulation attempt to playdown the jobs it would kill with promises of “green jobs”. Yet these positions pay less and are largely dependent on unreliable taxpayer subsidies for solar and wind.
"We are applying for federal grants to retrain miners for jobs that will pay less than half of what they can make in the mines,” says Robbie Matesic, executive director of the Greene County Department of Economic Development. “The hardest thing is telling a third-generation coal miner that the layoff this time isn’t just a fluctuation in the market, but will be permanent.”
A combination of tightening environmental regulations and competition from natural gas has the coal industry struggling for survival. The latest EPA effort to combat global warming seeks to sharply decrease emissions of carbon dioxide from power plants, but it's projected to reduce the earth’s temperature by less than one-tenth of a degree Celsius by the year 2100.
Still visions of green jobs are routinely advanced by environmental interest groups, President Obama and other politicians as they push EPA’s “Clean Power Plan.”
“When you shift to renewables, you’re creating good green jobs in wind and solar,” says state Rep. Greg Vitali (D-Delaware and Montgomery). “It’s really a job creator when you’re shifting to renewables.”
Sounds nice: You replace “dirty” coal with trouble-free “green” jobs. No fuss, no muss, just nirvana. But it hasn’t worked in the past, according to the Pittsburgh Post-Gazette’s PowerSource:
“The solar sector in Pennsylvania has shed 30 percent of its workforce since 2012, when the state ranked fifth in the country with 4,000 jobs, according to (The Solar Foundation). Pennsylvania’s 2,800 jobs in 2014 placed it at 15th in the country and, when looked at as a percentage of the state’s working population, the state dropped to 37th…
“Factors in the shift include a Pennsylvania rebate program that vanished, a federal tax credit that is scheduled to wane and the fact that the state’s market for renewable energy credits — designed to incentivize projects and prove compliance with the state’s renewable goals — has suffered from oversupply with credits purchased from other states.”
The Pennsylvania Manufacturers’ Association estimates that each green job costs taxpayers $300,000 in subsidies.
Back in Greene County, Ms. Martesic sees more possibilities for displaced coal workers in metals and advanced materials manufacturing, although she says that the transition will take more than “a year or two” that regulators currently are allowing. She also says manufacturing will require “reliable energy” supplies. In other words, energy that’s available when the sun isn't shining and the wind isn’t blowing.
With the possible demise of coal-fired plants that supply 40 percent of the state’s electricity, and the limitations of today’s renewables, it is disingenuous to ignore the significant job losses Pennsylvanians will experience if the EPA gets its way.
The radical environmentalist group and corporate welfare lobbyist PennFuture has updated an absurd study about the "subsidies" Pennsylvania taxpayers pay for fossil fuels. While we oppose subsidies for any industry, most of PennFuture's "subsidies" are the absence of higher taxes on consumers.
PennFuture's analysis show less than $60 million in actual direct subsidy for fossil fuels (some of which is for alternative energy programs). What they consider a "subsidy" is not taxing certain goods and services.
Most of their "subsidy" total comes from not applying the sales tax to gasoline and electricity. That is, taxpayers would "save" by paying more in sales tax at the pump and in their heating bills.
But wait, you must be thinking, don’t we have a gasoline tax and an electricity tax?
Why yes, yes we do. They are claiming we are subsidizing gasoline by taxing it, but not taxing it twice.
- Almost 44 percent of these "subsidies" are for NOT imposing the sales tax on gasoline. Yet gasoline is taxed separately under the Oil Company Franchise Tax. In fact, as of 2015, Pennsylvania has the highest state gasoline tax in the nation.
Gasoline is exempted from the sales and use tax for that reason and that reason alone—it doesn't make any sense to double-tax a product. To suggest state taxpayers are "subsidizing" gasoline production by imposing a tax on gasoline (but not two taxes) is beyond ridiculous.
- Another 20 percent of these "subsidies" are for not imposing the sales tax on electricity and heating fuel. Again, these utility bills are taxed separately under the Gross Receipts Tax. Making consumers pay another tax on their electric bill or heating bill does not repeal a subsidy, and in certainly doesn't save taxpayer.
Both of these tax exemptions—making up almost two-thirds of PennFuture’s estimates of "subsidies"—suggest we should impose taxes on top of taxes on consumers at the pump or in their utility bills. Either PennFuture doesn't understand how taxes work, or are deliberately misleading their readers, but either way, they what they are suggesting is higher taxes on families.
Other "subsidies" include not taxing the government for its use of fuel (because we don’t tax the government for anything) and not imposing property taxes on the value of natural gas. This is a tax that would hit homeowners; it is not a subsidy for the businesses.
PennFuture seems to have no idea what a subsidy actually is. Ironically, they are lobbying for new subsidies, specifically $225 million in subsidies for alternative energy under Governor's Wolf budget proposal.
Worse yet, these subsidies will come from borrowed dollars. Governor Wolf wants to borrow funds and pay it back (with interest) using a new tax on natural gas severance. In other words, PennFuture not only wants to double-tax fossil fuels, they want to place a special tax on natural gas to subsidize cronies in the wind and solar power industry.
It's clear that these subsidization schemes not only punish taxpayers, but fail to create jobs. Pennsylvania continues to see anemic job growth, despite $2.9 billion in taxpayer-financed alternative energy loans and grants since 2003.
One third of the $675 million in new corporate welfare under Governor's Wolf budget proposal is reserved for alternative energy programs. In this week's House budget hearings Community & Economic Development Secretary Dennis Davin defended the new borrowing saying,“We think when you look at those opportunities as a whole ... Pennsylvania will do much better.”
But history indicates otherwise.
A common target of Gov. Rendell's "economic development" schemes was alternative energy companies, who enjoyed $1 billion in renewable energy grants, tax breaks and loans, but only created 8,300 "green" jobs, costing taxpayers over $120,000 per job. In other words, using tax dollars to subsidize green jobs resulted in a net loss.
Worse yet, taxpayers don't have the funds for this program. The Governor wants to borrow the money and pay it back with natural gas severance tax revenues.
Even if placing more debt on Pennsylvania families created jobs, it is still wrong to ask the natural gas industry to subsidize their competitors. Kevin Sunday with the PA Chamber put it well, "It's very ironic that Gov. Wolf expects one industry to subsidize its competitors," he said. "We certainly shouldn't be picking winners and losers."
At the end of the day, Pennsylvania has given more than a billion dollars to alternative energy companies with nothing to show for it: from 1991 to 2014, our state ranked a dismal 45th in job growth. Handing out tax dollars based on political calculations is stifling economic progress. Common sense tells us it's time to try a different approach—letting Pennsylvanians keep more of their money.
The war on coal will be a catastrophe for consumers, according to a new analysis of energy prices under new U.S. Environmental Protection Agency (EPA) regulations.
According to an Energy Ventures Analysis report, combined annual gas and electricity bills in Pennsylvania will increase by more than $1,000, or 46 percent by 2020 compared to 2012. Industrial power rates alone will increase by 62 percent.
The November report—"Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector"—says that Pennsylvania is among five states that "would bear the greatest increases in annual residential power bills." The others are Texas, Mississippi, Maryland and Rhode Island.
Commissioned by Peabody Energy, a St. Louis-based coal company, the report calculates state-by-state effects of a number of EPA regulations, including the Clean Power Plan to reduce carbon dioxide emissions.
Nationally, gas and electricity costs for all customers will increase by $284 billion, or 60 percent, says Energy Ventures.
The increase will result "in large part due to an almost 135 percent increase in the wholesale price of natural gas" as EPA regulations force coal out of use and drive up the demand for gas, says the report.
Numerous business groups and politicians are objecting to the Clean Power Plan, including Pennsylvania’s Democratic senator, Bob Casey, who says that the proposed rule for CO2 emissions, "imposes a disproportionate and unfair burden on Pennsylvania." And the Supreme Court recently announced it will review the regulations in the spring.
Energy Ventures also takes into account the economic effect of rules recently implemented to regulate ozone and particulate matter, the interstate transport of air pollution, mercury, and haze in public parks.
"Our analysis is the first to fully examine the combined economic impacts of the EPA's long list of proposed and finalized regulations on the electric power industry," says Seth Schwartz, Energy Ventures president. The Clean Power Plan is based on flawed assumptions, he says.
From skyrocketing energy bills to killing green jobs to raising manufacturers' cost, the EPA’s actions are harming all Pennsylvanians.
State legislators who advocate for an expansion of government incentives for alternative energy sources need to pay attention to the events happening across the pond where the European Commission is abandoning country-by-country targets for greenhouse-gas emissions after 2020.
Mounting debt and surging rates from an over-reliance on renewable energy sources such as solar and wind prompted the commission’s action, reports the Wall Street Journal (paywall):
Take Spain, where financial incentives for renewable energy have driven renewables to as much as 25% of electricity generation. They have also left the country with a $41 billion gap between what energy costs to produce and what utilities can charge for power. Mariano Rajoy's government has been scrambling to scale back the subsidies and close the gap. These efforts have left in the lurch those who installed wind and solar on the promise of high fixed payments for their power.
In Germany, Angela Merkel is also seeking to push through cuts in wind and solar subsidies and to cap new installations of renewable capacity going forward. Germany's feed-in tariffs—which guarantee renewable-energy suppliers above-market prices for their power—have helped drive up retail power prices by 17% in the past four years while costing utilities and small businesses billions. Many of Germany's largest energy users are exempt from the green surcharges, a fact that the European Commission is currently investigating as a possible illegal subsidy.
Moreover, the Journal says, European companies are moving production to the U.S. where the shale gas boom is producing an advantage in energy costs—not to mention a reduction in carbon emissions as natural gas picks up more of the share of electricity generation.
As the Journal said in a separate piece:
“The innovation of the private oil and gas industry in extracting natural gas from shale has done more to reduce CO2 emissions than have all of the Obama Administration's subsidies, mandates and crony-capitalist schemes for renewable energy.”
Another benefit of the gas boom has been lower heating bills, which have remained moderate even during recent cold snaps.
All of which suggests that state Rep. Tommy Sankey (R-Clearfield) is on the right track with his bill to repeal Pennsylvania’s Alternative Energy Portfolio Standards.
The standards—adopted in 2004—require the state’s electric companies to obtain 15 percent of their energy from alternative sources by 2023. Europe’s experience is crystal clear evidence it’s time for government to stop picking energy winners and losers.
One news story highlights hundreds of jobs lost and millions of taxpayer dollars down the drain via corporate welfare. Another celebrates millions of new state revenue and free market job creation. This contrast offers a lesson for lawmakers.
The closure of Pittsburgh-based Flaberg Solar, a manufacturer of mirrors for the solar energy industry, is a tragic story of job loss and taxpayer abuse. Flaberg was awarded $10.2 million in stimulus funds and received an additional $10 million in state grants, putting taxpayers on the hook for up to $20 million.
(T)he current order and market situation in the North American solar market does not offer any prospect of profitably justifying to continue [the plant's operation], said Flaberg Solar's parent company in a statement.
Flaberg Solar, which once employed 200 people, says it cannot afford to pay former workers severances owed them. Vendors stand by with uncollected receivables as the company projects a debt of as much as $7 million.
A second article reported that the commonwealth expects to collect $400 million from the Marcellus Shale Impact Fee in the first two years of the tax's existence.
Although the tax was an unnecessary money grab, its success in generating revenue demonstrates the ability of private ventures to produce thousands of jobs, economical energy and billions of dollars in wealth without government aid.
The entrepreneurial spirit exemplified in the development of Pennsylvania's Marcellus Shale is key to the higher standard of living Americans enjoy. In contrast, corporate welfare schemes like subsidies for Flaberg Solar squander capital and destroy jobs.
For years, you’ve heard conservatives say the wind power industry would be better off without government subsidies. But now even wind industry advocate and Tang Energy CEO Patrick Jenevin is joining the chorus via the Wall Street Journal.
Without subsidies, the wind industry would be forced to take a fresh look at its product, says Jenevin. And if there is truly a need for wind energy, entrepreneurs who improve the business's fundamentals will find a way to compete.
Jenevin, a developer of "clean energy" projects, including wind farms, makes the following points:
- Subsidies make wind power developers focus less on efficiency and more on securing government grants.
- While receiving $8.4 billion in cash grants or tax credits under the 2009 federal stimulus program, wind farms were increasingly built in less-windy locations.
- Wind power prices have increased nearly 46 percent since 2005.
- Wind power will make marginal-not revolutionary-contributions to the energy mix.
What is the cost of over-priced wind power to Pennsylvanians?
According to The Beacon Hill Institute of Suffolk University, the state's Alternative Energy Portfolio Standards, which require a percentage of electricity sold to retail customers be derived from sources such as wind power, will raise consumers' costs by as much as $3 billion in 2021.
To read more about the cost of renewable energy mandates see our Bleeding Green poligraph.
Pennsylvania's alternative energy mandates will result in higher energy costs, leading to lower incomes and less investment, and costing the state thousands of jobs, according to a new study from the Beacon Hill Institute at Suffolk University.
The commonwealth's Alternative Energy Portfolio Standard requires a set percentage of electricity generation to come from solar, wind and other specific "alternative energy" sources, phased in through 2021. The Beacon Hill analysis projects that this will increase electric bills by 12 to 15 percent, cost residents and businesses $16.3 billion more than conventional power (approximately $130 per resident), and result in in 17,380 lost jobs by 2021.
Our new Poli-Graph, "Bleeding Green: How Much Money will Pennsylvanians Waste on Alternative Energy Mandates?" highlights the costs of these mandates, which benefit a few politically-selected corporations at the expense of taxpayers, residents, and businesses.
Pennsylvania Independent's Melissa Daniels writes that corporate welfare programs to benefit solar companies are on their way out in Pennsylvania, saving consumers more than $100 million. Two major state programs offering taxpayer subsidies for solar projects have expired:
Pennsylvania spent millions on pushing solar as the SREC [Solar Renewable Energy Credits] market developed. The $100 million Sunshine Solar Rebate Program offered rebates to consumers and small businesses who installed solar projects. The Commonwealth Financing Authority gave more than $57.6 million in grants and $7.3 million in loans for 79 solar-related projects; CFA no longer accepts applications for solar energy grants.
"Green" corporate welfare programs have been under fire for several years, most nobably following the fiasco when Solyndra, a company taking millions in federal loans, went bankrupt.
However, Pennsylvania continues to mandate that utilities get more electricity from specific alternative energy sources, including solar. These mandates drive up prices, and while celebrated for "creating green jobs," actually destroy jobs and undermine economic growth.
Thankfully, legislation to escalate these mandates-which would cost consumers an estimated $139 million annually in higher electric prices-has stalled out, PA Indy reports. Testimony from the Pennsylvania Utility Commission sums up why Pennsylvania lawmakers are more hesitant to subsidize more Solyndras:
Robert Powelson, chairman of the Pennsylvania Utility Commission, testified his opposition before the House Consumer Affairs Committee in January.
"By advancing the current solar carve-out, which acts as a subsidy for the solar industry, HB 1580 would increase the price of solar renewable energy credits, therefore, increasing consumers' bills," Powelson wrote. "This is simple supply and demand economics."
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