Sen. James Lankford is now making the same arguments about tax credits for the wind industry that many Oklahomans were making about subsidies for oil not very long ago.
The idea behind the tax credit was supposedly to spark production in emerging fields. It happened for horizontal drilling when that was experimental. Oil companies got around expiration dates by digging new wells every couple of years, so they could always take advantage of the tax cut. It outstayed its welcome.
It was done for wind when we were searching for clean, renewable energy. And we found it in abundance here in Oklahoma. Great. All great.
But, Lankford has a point, doesn’t he?
Shouldn’t we explore if we can end the subsidy without it impacting the industry too much?
The subsidy, however, does mean that wind power providers are able to pass along some of the cost savings to consumers as well, keeping it relatively cheap.
As Lankford was participating in a Senate Finance Committee Hearing when he posed a question to hearing witness Alex Brill, a research fellow at right-leaning think tank American Enterprise Institute. Lankford asked if it was still effective to do the same credit “over and over again” when wind is no longer a start-up.
“Depending on how one does their calculations, it is often cost-competitive even without the subsidies,” Brill said. “The subsidies, of course, further encourage additional investment and additional deployment of a carbon-neutral source of energy, and there are climate and economic advantages to that. But continuing a strategy of large subsidies for all clean energy will become increasingly costly over time as we continue to transition towards lower carbon emissions. So, therefore, the cost of these policies, I think, should be carefully examined.”
The arguments about corporate welfare are fair, and when to turn on or turn off the spigot should be determined after thorough study into the financial and economic impact.
We can argue about why the film rebate works for Oklahoma, because without it, people would just take their business elsewhere.
But wind power? Oklahoma has a lot of that.
Drilling? Pretty certain drillers can only drill in places that already have natural gas and oil. Otherwise, it’s a huge waste of time.
So, if Lankford wants to end wind credits, he just needs to keep making the arguments in terms that make financial sense.
So far, we think he’s done that.