Of immediate concern to eco-energy planning is wind power, beloved as a renewable resource with no air pollutants and considered worthy of regulatory preference and open-ended taxpayer and ratepayer subsidies. Despite decades of liberal subsidy, however, the cost of generating electricity from wind still remains stubbornly uneconomical in an increasingly competitive electric market. Many leading wind power providers have encountered financial difficulty, and the retirement of capacity appears as likely as new projects in the United States without major new government subsidy.
On the environmental side, wind power is noisy, land-intensive, a visual blight and, worst of all, a hazard to birds. While the first three environmental problems could be ignored, the indiscriminate killing of thousands of birds -- including endangered species protected by federal law -- has created controversy and confusion within the mainstream environmental community.
The total cost of wind power is higher than advertised estimates for several reasons. First, wind receives a 1.5 cent per kwh federal tax credit, escalating with inflation, which is approximately one-third of its (as-delivered) selling price. Accelerated depreciation, allowing a five-year write-off compared to the standard 20 years or more, is also given to wind, significantly lowering its tax rate. Gas-fired electric generation does not have a tax credit or an option of accelerated depreciation, and natural-gas extraction has a total deduction (primarily a scaled-back percentage depletion allowance) of under 2 percent of its wellhead price.17 State severance taxes, which totaled $45 billion for oil and gas extraction between 1985 and 1994, swamp this wellhead deduction.18 Thus wind's entire tax credit can be added back in for an apples-to-apples comparison with gas-fired alternatives.
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