Green Energy Welfare for the Wealthy

CELDF - report on Mora countyTom Shepstone
Shepstone Management Company, Inc.


A new study from the University of California at Berkeley exposes the awful truth about many renewables – they’re green energy welfare for the wealthy.

One of the things that has been blatantly obvious about much of the environmental movement and certainly about the enforced drive toward renewables is that they primarily benefit upper income folks at the expense of the economy on which everyone else depends. They’re a form of green energy welfare for the wealthiest members of our society, which goes a long way toward explaining why the pampered rich invariably push this stuff to extremes – because they’re the beneficiaries. They get to play do-gooder and expunge their feelings of guilt at having inherited all that money while getting someone else to pay the bill. A new study from Berkely – yes, Berkeley – confirms it.

Green energy scams and the cronyism that go with them, especially in New York State, are nothing new, but this is the first academic study I’ve seen that demonstrates the extent to which the beneficiaries of all those programs our government has foisted upon us to encourage “clean energy” are really just green energy welfare for the wealthy. The full copy of which is available here but you don’t need to read much more than this from the abstract to see the story (emphasis added):

Since 2006, U.S. households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other “clean energy” investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits.

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Dig further into the study and you find this as well:

Taxpayers with AGI [adjusted gross income] in excess of $75,000 have received about 60% of all credit dollars aimed at energy-efficiency, residential solar, and hybrid vehicles, and about 90% of all credit dollars aimed at electric cars. Thus while there may well be political or other rationales to prefer this approach to first-best policies, it would seem to be difficult to argue for these policies on distributional grounds.

We’re helping Elon Musk build a fortune by building heavily subsidized electric Teslas that benefit almost no one but his trendy gentry class admirers who want to drive them. Now, Andrew Cuomo is helping him finance a repeat with SolarCity while he subjects the economic needs of Southern Tier residents to radical environmental political correctness tests.

Green Energy Welfare

There’s more:

About 60% of tax filers have less than $40,000 in AGI and these filers receive very little of any of the three categories of clean energy credits

Compared to most other tax credits, the clean energy tax credits are more highly concentrated among high-income filers

The PEDVC [Qualified Plug-in Electric Drive Motor Vehicle Credit] is much more concentrated than the other categories of credits. The bottom 80% of filers receive a little more than 10% of all credits, and the bottom 90% of filers receive only about 40% of all credits. It may simply be that electric vehicles, for the moment, are only affordable for relatively rich households. Even after the credit, electric and plug-in electric drive vehicles are expensive compared to equivalently-sized gasoline-powered vehicles. Another possible explanation is that in “green” communities (which tend to be high income), driving an electric vehicle could be perceived as a symbol of status. Kahn (2007) makes this argument about hybrids, but over the last several years this probably applies better to electric vehicles.

Interestingly, the Energy Information Administration (EIA) just came out with a story explaining what happens when these subsidies go away or get reduced, at least with respect to wind. Here’s what they found (emphasis added):

Based on information in the U.S. Department of Energy’s Distributed Wind Market Report, most of the 2014 distributed wind capacity was installed on institutional sites, such as schools, universities, and electric cooperatives. Government installations on city, municipal, or military facilities made up more than one quarter of 2014 installed capacity. Other sectors (industrial, commercial, agricultural, and residential) were relatively small in terms of capacity, but larger in terms of number of installations, as the average turbine size on these sites is relatively small compared with institutional and government sites.

Some customers who install these turbines are eligible for federal tax credits, in particular the investment tax credit (ITC), which provides a 30% cost incentive for turbines with capacities of 100 kilowatts or less. The investment tax credit was one of the largest factors in both the increase in installations from 2010 to 2012 and the decline after 2012. In 2009, as part of the American Recovery and Reinvestment Act, the U.S. Treasury allowed projects to receive cash payments instead of tax credits. To qualify, projects had to be under construction or in service by the end of 2011 and must have applied for a grant by October 1, 2012.

Even though these tax credits are still available, the expiration of the cash payment option drastically reduced the installation of small and mid-size wind turbines. Further affecting the outlook for distributed wind is the U.S. Internal Revenue Service requirement, added this year, that small wind turbines meet performance and safety standards in order to qualify for the ITC.

Here’s the trend:

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Interest in wind, outside of politically correct government, plummeted when the green energy welfare cash disappeared. Combine this with the findings of the Berkeley study and you get a clear picture of what these scams are all about; taxpayer financing of trust-funder guilt relief – green energy welfare for the wealthy.

What a country!


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