Production Tax Credit and Costs

By Meghan Tighe

With the clock ticking on the production tax credit (PTC) for wind energy, antagonists have been pointing to the cost of the credit and calling for its end. They highlight the announcement from the Congressional Joint Committee on Taxation that extending the PTC for one more year would cost the United States $6.1 billion over ten years.

Conspicuously absent from these articles is any mention of the public health costs from fossil-fuel fired electricity, and the avoided costs clean, renewable wind power provides. Indeed, centrist economists writing in one of the most prestigious economic journals estimate that coal alone generates $53 billion in damages per year, or 3.6 cents per kilowatt hour of electricity produced. What’s more, these values do not include health costs related to climate change.

The federal production tax credit provides wind power 2.3 cents for every kilowatt hour of electricity produced.  Even with it, wind power still saves societal electric bills by approximately 1.3 cents/kwh. The PTC expenditure spans ten years, but the benefits of wind power, recently estimated to tally approximately $2.6 billion per year, last as long as we keep turning the steel blades rather than burning the coal bricks. When the PTC stops paying after a decade, the kilowatt hour savings from wind grow to the entire 3.6 cents/kwh of costs that we are avoiding producing with each coal-fired kilowatt hour.

It’s not coincidental that the same voices calling for repeal of the PTC are also those who happen to lobbying for removing the social cost of carbon from federal rulemaking calculations. By neglecting to include any evidence of these findings in their testimonies and actively attempting to prevent the government from considering them, industry allies are protecting polluter profits at the expense of public health.

Americans deserve energy solutions that don’t cause irreparable harm to their health, homes, and planet. If there are any sources of energy that has been propped up by the government indefinitely, it’s those whose development and production we have been using and subsidizing for over a century: coal, oil, and gas. [MT1] [AJ2] 

It’s simple math. It’s also fiscally conservative.






In addition to being a member of the Fall class of CELI, Meghan is an Operations Associate at Clean Currents.