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Jakob Lowery

Position Paper

ENGL101-FC26

November 28th, 2018

The Inhibitors of Sustainable Energy: An Evaluation of Wind Energy Subsidies

Introduction

Picture this: the year is 2100 and you just woke up to the sound of the wind turbines

catching the early morning breeze. As predicted by the Intergovernmental Panel on Climate

Change, the average temperature of the earth has risen up to 10 degrees Fahrenheit (IPCC 13),

and every year the weather becomes more drastic and threatening to human life. You are in the

middle of an energy crisis because we have reached the moment in time where finding fossil

fuels to sustain the majority of the United States is too difficult. The United States has spent

billions of dollars in wind energy subsidies and this technology is becoming increasingly out

dated. The U.S national debt has reached 100 trillion dollars, and there is no hope for financial

help from the government. Humans are beginning to colonize Mars out of necessity, but you are

too poor to leave the earth. Instead, your family will face an eventual and unescapable

termination.

This future scenario seems unrealistic, but in a world where the United States continues

to subsidize and inflate the sustainable energy market, this future scenario starts to become a

reality. There is little incentive to develop new technology and subsidization allows companies to

maintain the “status quo”, making un-innovative technologies profitable. In order to prevent a

future scenario like this one where sustainable energy has not transformed into the leading
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supply of global energy, the United States needs to stop the subsidization of wind energy or

at least significantly decrease its funding.

Narration

In the wake of global climate change’s frightening future implications on the Earth, the

United States is turning towards sustainable forms of energy production to decrease their carbon

emission. These forms of energy production include solar and wind. In order to “support” their

growth, the government pays sustainable energy companies’ subsidies. A subsidy is defined as a

grant of money from the government to support the growth of industry. In 2016, the United

States government spent 18.4 billion dollars on the subsidization of energy sources (University).

For context, this immense amount of money is approximately double the entire budget of the

Environmental Protection Agency (EPA) in 2016 (UH Energy 34:20).

The United States began to invest money in wind energy during the 1970’s. This

investment was a response to the high cost of nuclear energy and the oil embargo (Horner). The

United States’ first actions were to create the Large Wind Turbine (LWT) research and

development program. They also issued a 25% investment tax credit on the construction of wind

turbines (Horner). Both of these actions failed to meet their goals. The LWT research and

development (RD) did not produce a commercial turbine, and the tax credit led to the

construction of unreliable wind turbines. This is associated with the lack of incentivization of the

production of electricity. For instance, people only received money if they built wind turbines, so

they failed to maintain and develop wind energy generation.

In spite of these great failures in U.S. incentivization policy, the United States

government enacted the Renewable Electricity Tax Credit of 1992. Originally in 1993, the tax

credit given to wind energy companies through this act was $0.015 per kilowatt hours of
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electricity produced (United States). This act was innovative for 1990’s standards because it

marks the first United States policy that incentivized the production of electricity as opposed to

the construction of wind turbines.

Another main issue discussed about this act is its instability. Congress has frequently

changed the complexity of this legislation, and companies that depend on subsidization are

impacted by the whim decisions of the government. Also, every state in the United States has

different incentivization policies. This has caused great “boom and bust” cycles in the growth

and development of wind energy generation (UH Energy 40:00). After looking at United States

historical attempts to promote growth of wind energy through subsidization, one can believe that

the United States has not successfully created policy that fully met its goals. This failure in

subsidization can be attributed to many reasons that I will discuss in my partition.

Partition

For clarification, the argument I will make is that the United States should stop or at the

very least significantly decrease the subsidization of wind energy. It is important for me to

clearly establish that I am not a denier of climate change or against the development of

sustainable energy sources. This means my paper will not analyze the immense benefits of

noncarbon-emitting energy sources. With that being said, I will discuss in my conformation the

five main reasons why the United States should stop wind energy subsidies. These reasons

include: decrease competitiveness of non-carbon emitting nuclear energy, adverse local

environmental effects of wind turbines, subsidization of wind energy will be unnecessary by

2022, subsidies decrease innovation, and subsidization may lead to overcapacity of sustainable

energy markets. After listing and describing these reasons in my conformation, I will evaluate

and refute some main arguments for the subsidization of wind energy. These arguments include:
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wind energy would die without subsidization, subsidization supports “green jobs”, and since all

energy sources are subsidized we should subsidize wind too. Following my refutation, I will

conclude my argument against government subsidies and speculate future implications.

Conformation

My first argument is that renewable subsidies diminish any possible competition of

nuclear energy within state energy markets. Although nuclear energy may be considered unsafe

and produces permanent nuclear waste, this form of energy produces almost no carbon emission

and is vital towards the future of the United States energy portfolio. For example, in his study

“Investing in a Permanent and Sustainable Nuclear Waste Disposal Solution” in the journal of

Progress in Nuclear Energy, Yano determines that an ideal low carbon emitting society needs to

produce 15-20% of their electricity with Nuclear sources (Yano 474). The United States need for

nuclear energy as established by Yano is overcame by the extensive subsidies of other forms of

sustainable energy production. An example of this can be seen in California with the Diablo

Canyon Nuclear Power Plant. The subsidies in the state of California have decreased the cost of

energy so much that the single largest generator of power in the state (Diablo Canyon Nuclear

Power Plant) has been forced to decrease its energy production (UH Energy 38:00). Large

subsidies of wind energy drive the cost of energy in a state down, and therefore reduce nuclear

energy’s market competitiveness while maintaining fossil fuel competitiveness. This has

firsthand environmental costs because although nuclear energy is not sustainable, it is a better

option than burning fossil fuels to generate electricity.

Along with its clear impact on Nuclear energy, the subsidization of wind energy will also

lead to an increase in the local environmental effects caused by wind energy. Through supporting

the profitability of wind energy, the government is supporting its development. This
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development extends to vulnerable lands that are ideal for wind generation. It has been proven

that wind energy has many adverse local environmental effects that include: the killing of birds

of prey and migratory bird populations, increased likelihood of erosion, decrease in an

ecosystem’s biodiversity, disturbance of the sea floor (Dai 913), and local warming due to

mixing of surface air and the atmosphere (Walsh-Thomas 6435). This is a long list of

environmental effects, and before people consider wind energy as the “savior” of earth (climate

change) they should fully understand the pros and cons of this form of generation. This

understanding may cause a shift in people beliefs toward wind energy. The United States should

not subsidize wind energy because wind energy will eventually saturate its energy portfolio and

contribute to many adverse environmental effects.

Despite the subsidization of wind energy’s negative effects on the local environment and

energy markets, subsidization will be unnecessary by 2022. At this time, wind energy will

become cheap enough to compete with its largest future competitor, natural gas. The institute for

Energy Research (IER) states in their discussion on subsidies, “In EIA’s reference case for its

Annual Energy Outlook 2017, which includes the Clean Power Plan, the agency projects that the

levelized cost of new wind turbines in 2022 will be $55.8 per megawatt-hour (in 2016 dollars)

without the PTC, which compares favorably with new natural gas combined cycle units” (IER).

This increase in competitiveness is vital to the growth of sustainable energy and may evoke a

positive outlook among politicians on the usage of 100% non-carbon emitting energy.

The uselessness of subsidizes is also evident in the growth of wind energy around

Europe, and particularly in countries without subsidization (paying for retail cost). For example,

the French company Engie has plans to develop 300 Megawatts of wind energy in nine separate

Spanish wind farms. Additionally, the Swedish company Vattenfall announced it will build a
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700-Megawatt offshore wind farm in the Netherlands (Irfan). These large-scale projects in two

separate countries are backed by private investment mark a shift in the future development of

sustainable energy. Investors are becoming more confident in sustainable energy, and therefore

are more willing to invest in these forms of energy production. Europe has seen a large-scale

increase in the development of sustainable energy in countries without retail cost subsidization.

This displays that wind energy can be developed and constructed without government subsidies.

In addition to the its future uselessness, the subsidization of wind energy hinders the

technological development for wind turbines. Subsidizing wind energy allows wind energy to

become very profitable. This high profitability coupled with the large public support of wind

turbines allows certain companies to maintain the status quo. In his study “Wind Generation

Patterns and the Economics of Wind Subsidies” Jonathan Lesser states, “Regardless of how they

are justified, subsidies distort competitive markets, drive out unsubsidized competitors, and

reduce the incentives to innovate and improve operating efficiency” (Lesser 9). If wind energy

was not subsidized in the United States, companies would be forced to innovate in order to

compete with other forms of energy production. This innovation would ultimately lead to

cheaper renewable electricity generation that can fuel our future.

The final reason that government subsidies for wind energy should stopped is that they

increase the risk of overcapacity (too much supply for low demand). In the review, “The impact

of subsidies on overcapacity: A comparison of wind and solar energy companies in China” in the

journal of Energy, the author finds, “The excess subsidy provided by the government is one of

the important causes of overcapacity for the renewable energy products in China” (Zhang 826).

Overcapacity is unfavorable for industry because companies are generating more electricity than

they can sell, and thus they are forced to lower prices that already have minimal profitability. In
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addition to its decrease in profitability, overcapacity may also lead to a decrease in innovation of

wind energy. If companies see that there is excess wind energy, there is no need to make more

efficient wind turbines that create more energy. This will only further drive the price of

sustainable energy down.

Refutation

In reaction to the arguments against the subsidization of wind energy, many people who

support its subsidization argue that wind energy cannot survive without subsides. In the video,

“Tilting at Wind Turbines: Should the Government Subsidize Renewable Energy?” the Cal State

Fullerton economist Robert Michaels refutes this argument by saying, “you can trust American

ingenuity and business” (Feine 5:00). Michaels believes that if there were no subsidies, then

American businesses would be forced to innovate. This will ultimately lead an increase in the

innovation of wind energy that is associated with the growing need to reduce the cost of

sustainable energy sources.

In addition to Michael’s economic insight of wind energy subsidies as stated in the

conformation, wind energy will become competitive with natural gas electricity generation in as

little as four years (IER), and with the private investment for wind energy growing this

profitability will skyrocket. Companies that innovate and make wind energy cheaper have the

potential to become some of the most profitable and fastest growing companies in the world.

Therefore, in a world without the subsidization of sustainable energy generation, these types of

energy production will not die off, but they will become the leading edge of innovation in

America.

Another argument that people make for the subsidization of wind energy is the argument

for “green jobs”. These jobs are defined as decent well-paying jobs that contribute to the
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conservation and preservation of the environment. In 2008 President Barack Obama promised to

make 5 million jobs through spending money on renewable energy sources. These jobs in the

wind energy field cost approximately $47,000 in tax dollars per job created (Roy). Although

“green jobs” sound like they are great for the future of sustainable technology, these jobs come at

too much of a high cost from the government. If Obama hypothetically met his goal of 5 million

jobs through government subsidies, this immense cost would almost outweigh the minimal

impact that subsidies have on the growth of wind energy.

Along with the argument for green jobs, another common argument that people make for

the subsidization of wind energy is that since most sources of energy are subsidized then wind

energy should be too. Although this argument is valid because fossil fuels should not be

subsidized over wind energy, the extent that wind energy is subsidized is nearly incomparable to

fossil fuels. For example, wind energy is subsidized more that coal and petroleum by a factor of

69 and is subsidized more than nuclear energy by a factor of about 17 (Lynch). The subsidization

of wind energy is significantly greater than most forms of energy, and due to the reasons in my

conformation, there is no evidence against a significant decrease in these subsidies. Therefore,

the idea that because all forms of energy are subsidized then wind energy should subsidize too is

ignorant. This is because if the government significantly decreased wind energy subsidies then

wind energy could still have higher subsidization rates than fossil fuels.

Conclusion

The future implications of climate change on humanity instils a common fear in the

public’s eye. Many people do not understand that in spite of the negative rhetoric around climate

change, there is hope in the future health of the Earth. This hope is rooted in the growth and

development of energy sources such as wind, solar, and non-carbon emitting nuclear energy. The
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United States government understands that sustainable energy is a solution to the problem of

climate change but does not understand that its subsidization is unnecessary. The United States

spent 18.4 billion dollars on the subsidization of energy in 2016 (University), and with its

increasing national debt the U.S should become more fiscally responsible. The reasons that the

U.S should stop subsidizing wind energy are because it decreases the competitiveness of non-

carbon emission nuclear energy, its adverse local environmental effects, subsidization of wind

energy will be unnecessary by 2022, and subsidizations decreases innovation, and subsidies can

lead to overcapacity.

The counterarguments that support wind energy subsidization are that government

subsidies are vital to the survival of wind energy, subsidization supports “green jobs”, and since

all energy sources are subsidized we should subsidize wind energy too. These ideas are

compelling to one at first glance, but when someone takes a deeper look into the results of

subsidization they quickly learn that subsidization is unnecessary and harmful for the future of

sustainable energy markets. In conclusion, there is no doubt that wind energy sources are vital

for the health of the globe, but the subsidization of wind energy needs to be stopped.
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