PACE: Wind Energy Tax Credits Are Working for Oklahoma

This morning, Tulsa World published an opinion piece by PACE Executive Director Lance Brown regarding the current debate over wind tax credits in Oklahoma. That piece is available in its entirety below or you can view the piece online here.

Altamont Wind

Subsidies for renewable energy aren’t always all they are cracked up to be. The Partnership for Affordable Clean Energy has written in recent years of failed promises and bad policies that hurt taxpayers.

On the other hand, we back a simple strategy about renewables: Build them where they work best. Subsidies, too, should be targeted to create real, measurable results.

Faced with a $1.3 billion budget shortfall, Oklahoma lawmakers are considering eliminating the state’s wind tax credit. More than a decade old, the credit provides 10 years of tax credits worth half-a-cent per kilowatt-hour of generation. This comes with a real cost, of course. Estimates placed the price at $56 million for 2014, with expected growth to $88 million for 2016.

But the results of the credit are real, too. With more than 5,000 megawatts of wind capacity, Oklahoma ranks fourth in wind generation, behind Texas, Iowa, and California. More than 1,400 megawatts of wind was installed last year, with 700 more under construction. That capacity allows Oklahoma to get about a sixth of its electricity from wind. Put simply, Oklahoma’s credit is working exactly as lawmakers intended.

A November study from the State Chamber, authored by Oklahoma State University economists, found huge benefits originating from the wind industry. Research showed existing wind farms and those under contract are due to generate more than $1 billion in additional property tax for Oklahoma’s schools and counties. Wind generation also will save Oklahoma electricity customers about $2 billion in fuel costs. Those are serious benefits.

Compare that to Louisiana’s situation. Like Oklahoma, Louisiana faced a budget crunch and was forced to consider repealing all tax credits. We were heavily critical of Louisiana’s solar tax credit, mostly because it failed to deliver results. The credit cost taxpayers $42 million annually, but Louisiana ranked just 34th in solar energy jobs. Louisiana taxpayer money was practically being thrown away, the complete opposite of what is happening in Oklahoma.

The reality is that Oklahoma’s zero-emissions tax credit will expire anyway in 2020. This mirrors the drawdown of the federal tax credit for wind, which ends a year earlier in 2019. To its credit, the Oklahoma wind industry is on a path to be free of government subsidy by decade’s end. That’s a good thing, both for ability of the industry to stand on its own and for taxpayers.

Oklahoma lawmakers have tough choices to make. Many aren’t fans of renewable energy subsidies. We’ve criticized subsidies too. But it’s important to recognize when a subsidy works and when it doesn’t. When it generates results, as opposed to simply being a boondoggle. And, just as important, as the famous song tells us, when to hold ’em and when to fold ’em.

An opinion piece by The Oklahoman hits the nail on the head, stating, “Lawmakers shouldn’t repeal tax breaks in a blind panic to address short-term financial problems.” We agree. Wind power, spurred on by incentives, is coming up aces for Oklahoma. That’s worth holding on to for now.