It’s President Obama’s way or the highway, to summarize the words of of one of his spokespersons, that he will “use all of the tools at his disposal working with Congress where they are willing but also taking action on his own where they aren’t.” The administration has bucked the deliberative political process that our forefathers laid out, employing executive actions and other mechanisms to push through its agenda on contentious issues.
The latest “tool” that Obama has leveraged to accomplish his goals is the Internal Revenue Service (IRS). Last month, the agency lowered the threshold for projects that qualify for the wind Production Tax Credit (PTC). Such manipulation of what is supposed to be an apolitical agency to support an administration’s aggressive renewable subsidy agenda is an example of government overreach in its finest form, and is an obvious attempt to throw Obama’s green energy cronies a bone in the face of opposition in Congress that is prohibiting him from accomplishing this in any other way. This is certainly not the first time, and we can be sure it won’t be the last time that this administration reaches its hands into a cookie jar it’s not supposed to. But the good news is that, thanks to Congress, some of these green energy favors – most notably the PTC – may soon come to end.
The administration has a seemingly limitless checkbook when it comes to green energy spending, with billions of dollars thrown at the cause each year. One of the more egregious examples of this is the PTC, an overly generous subsidy that compensates wind farm operators for the amount of wind energy they produce. Last year, the PTC was extended at a cost of $12 billion to taxpayers. This year, the legislation to extend the PTC (up for renewal in the Senate after over 20 years and numerous extensions) has stalled. A renewal would come at a cost of $13 billion to taxpayers, all for a sophisticated industry that can stand on its own.
So what’s a president to do to appease his green friends? Normally, any kind of answer would have to come from a legislative process. But not in this case. In a boon to wind developers, the IRS said renewable energy projects could qualify for the PTC if they had incurred at least 3 percent of the total project cost before the beginning of 2014, down from the previous threshold of 5 percent. Of course, this news comes on the heels of prodding from wind developers who have been waiting for this direction since this spring, when investors that provide the cash to fund major wind power projects began demanding a guarantee that projects would qualify. Alas, if only we all lived in a world where we could get paid based on accomplishing 5 percent of something.
Perhaps President Obama is smart to throw his pals a lifeline, because the legislative process won’t get him anywhere when it comes to the real prize. Opposition to an extension of the PTC is strong and bipartisan, with 54 Members of Congress recently issuing a letter to House leaders calling for its end. This comes on the heels of other members who were once supportive of the PTC changing their tune in recognition that the subsidy has served its purpose. House Majority Leader Kevin McCarthy is one of them, which is notable coming from California, a state that has generally supported these kinds of incentives. Other members of Congress are also bound to take note that the PTC should end, especially in the wake of developments like the CEO of Power Company of Wyoming admitting that the PTC is not needed and that its demise will not halt the company’s plans to build a large wind farm.
The clock has run out on the PTC and its time is past. Thankfully, there’s no amount of political wrangling that the president can engage in to prevent this. Let’s do things the right way and ensure that our tools for action respect the prudent and thorough structures our forefathers established, and let the PTC expire.
Former Oklahoma Senator Don Nickles is the chairman and CEO of The Nickles Group, LLC. He was a member of the U.S. Senate from 1981-2005.