October 29, 2021
Dear Senators and Representatives,
As discussions continue in Congress toward a $3.5 trillion budget reconciliation bill, the undersigned groups write to express our concern on behalf of millions of taxpayers and consumers across the country about the possible extension of the production tax credit (PTC) and investment tax credit (ITC) that amount to large federal subsidies for wind and solar power. If continued, these credits would not only burden federal taxpayers with billions in spending, they would perpetuate a generous subsidy that is no longer necessary.
Congress established the ITC in 1978 and the tax credit has for more than 40 years supported mostly solar power projects. The PTC was passed by lawmakers in 1992 and has primarily benefited wind power projects. Congress created expiration deadlines for these generous subsidies, but has since extended those deadlines a shocking 24 times, including just this past December. Now, that the solar and wind industry have matured, in no small part from the taxpayers’ long time and generous help, they no longer need these subsidies. It’s time for them to end.
Since the tax credits were first introduced, 38 states have adopted mandates to require a certain percentage of renewable energy generation and in doing so they have artificially created demand for these sources. Additionally, other proposals in Congress and by the Administration, including those that would seek to decarbonize the electric power sector by 2035, will have significant costs associated with them if they are actually enacted; adding to the costs borne by the American taxpayer and making any further subsidy for the wind and solar industries a mistake.
Renewable subsidies have already cost U.S. taxpayers $100 billion over the past four decades, with solar and wind receiving $70 billion from 2010 to 2019. The Joint Committee on Taxation says extending the credits would cost $106 billion over the period 2022-2031, while other sources say the cost could be as high as $260 billion. It would be irresponsible to saddle taxpayers with the cost of even more subsidies for fully mature energy technologies readily able to compete on their own merits.
Finally, the more solar and wind power are propped up through federal subsidies, the more the dependence on China is increased for materials and products. Today, according to Bloomberg, Chinese firms supply three-fourths of the world’s solar panels while U.S. firms manufacture just one percent. China has 261 manufacturing facilities for solar panels while the U.S. has just 16, giving China a solar manufacturing capacity that is today 70 times greater than American capacity. Roughly half of the world’s polysilicon, the primary material in most solar panels, comes from China’s Xinjaing region, where ethnic minorities have been subject to human rights abuses, including forced labor and torture.
The same is true for the manufacture of lithium-ion batteries that complement solar and wind power. China today has almost two-thirds of the world’s production capacity, compared to just 12 percent here at home. When examining the future of the ITC and PTC, lawmakers would be remiss not to consider the implications for our geopolitical relationship with China, especially as it relates to continued dependence on that nation for critical components and materials used in energy production.
For these reasons, we urge Congress to allow the ITC and PTC to run their course, without extension or continued support by American taxpayer dollars. It is clear that the industries that rely upon these tax credits are mature and no longer in need of generous Federal support and it is time for lawmakers to allow the solar and wind industries to sink or swim on their own merits.
Taxpayers Protection Alliance
American Consumer Institute
American Energy Alliance
Americans for Prosperity
Americans for Tax Reform
The Buckeye Institute
Center for a Free Economy
Center for Freedom and Prosperity
Center for Individual Freedom
Citizens Against Government Waste
Consumer Action for a Strong Economy (CASE)
Ethan Allen Institute
Family Businesses for Affordable Energy
Frontiers of Freedom
Institute for Policy Innovation
The Market Institute
National Taxpayers Union
R Street Institute
Rio Grande Foundation
Roughrider Policy Center
60 Plus Association