Energy Subsidies Cost Us All
Corporatism and liberals go together too well. In Sunday’s Observer, Christopher Gergen and Stephen Martin advocate the continuation of tax credits to encourage the installation of solar farms. In typical leftist fashion they start their plaint for continuing tax credits with an anecdote about a farmer who has leased 40 acres of farmland to Strata Solar and now gets a steady annual rent payment for land he has taken out of agricultural use. We are led to understand this 40 acres of solar panels will provide electricity for 800 houses. We are also led to understand the tax credits which encourage this continued abuse of the tax payer will expire in North Carolina at the end of this year and the federal tax credit is set to go from 30% to 10% at the end of next year. The writers make clear they are asking for the reader to encourage their representative vote to extend these credits. Why?
The NC credits were established in 1977. If the industry can’t stand on its own now, almost 40 years later, then it shouldn’t exist. It’s a nice idea, but if it isn’t viable by now, when will it be? Why should the taxpayers be subsidizing corporations whose goal is to make money off tax credits? Is that what we want, businesses which survive on tax credits? According to the authors, yes, because, they tell us, Solar Strata predicts a substantial reduction in new solar farms if the credits go away. So what exactly is Strata Solar producing? An ability to make use of tax credits. Let us go another direction.
According to the article, forty acres of land are required to provide solar electricity for 800 houses. So with 3,000,000 or so households in North Carolina we would need to put solar farms on 150,000 acres. Then, if you wanted to supply business and industry with solar electricity, it would take another 300,000 acres, and that doesn’t address transportation; call it 500,000 acres in solar farms to supply the electrical needs of North Carolina today. In a state with 26,000,000 acres, we could do that but what do these solar farms displace: farmland and forests.
Recently we have seen a huge decrease in the price of oil. The reason for that is typical of anything where the price rises high enough to encourage competition. Fracking became viable and with it enough additional oil has been produced to lower the price by about 50%. According to Matt Ridley’s article in this weekend’s Wall Street Journal in 2013, 87% of the world’s energy came from fossil fuels, one percent came from windmills, and less than 1/2 of 1% came from solar. Nuclear gave us 4% of our usage and the most of the rest came from hydroelectric.
What is most glaring is that for development, both wind and solar depend on subsidies. According to Ridley, these subsidies amount to about $10.00 per gigajoule (whatever that is) worldwide, and mostly go from consumer to producer. The subsidies which exist for fossil fuels amount to about $1.20 per gigajoule and tend to help the consumer.
All of which brings us to understand an interesting situation. Those proposing continued subsidies for solar power are advocating the destruction in North Carolina of 1/2 million acres of forests and farmlands. They are also advocating subsidies to corporations where the money is supplied by higher prices to the consumer, including the poor.
This is typical liberal policy: It is the opposite of what they want you to believe.
It seems time to let those tax credits expire and let the market sort it out.
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