The Trump administration and Congress are considering including a tax credit cash-out in the next economic relief legislation, according to a July 20 Wall Street Journal article, which would benefit large U.S. corporations unable to immediately use their tax credits. Those corporations include renewable energy companies such as Duke Energy and Occidental Petroleum Corp.
“It might pass the House but not the Senate,” said Jason Isaac, director of Life: Powered, a Texas Public Policy Foundation (TPPF) energy and environment initiative. “It's probably going to get stripped out so that they can get something done. To have a cash-out of a 10-year investment early just to get money because the renewable investment isn't working out the way that people thought it was going to, it’s the virtue signaling of these corporations coming home to roost.”
The TPPF sent a letter to members of Congress in April, urging them not to provide incentives to any energy production companies beyond what they already receive.
“The Paycheck Protection Program funding is more than suitable, but not any additional incentives that would favor one form of energy production that's unreliable over another that's very reliable,” Isaac told the Washington D.C. Business Daily. “We'll continue to encourage lawmakers not to support these efforts.”
Wind, solar, nuclear and fossil fuels have secured between $13 billion and $37 billion in federal subsidies since 2010, with wind receiving 17 times and solar 75 times more subsidies per unit of electricity generated than the average for oil, gas, coal and nuclear, according to a Life: Powered study called The Siren Song that Never Ends: Federal Energy Subsidies and Support from 2010 to 2019.
“Tax deductions for capital investments to lower taxable income is corporate welfare, which increases the burdens on those of us that are actually paying our taxes,” said Isaac, a former state representative for Hays and Blanco counties in the Texas Hill Country. “We're driving up energy costs, which hurts the least among us, and then the energy-producing companies that are supportive of these efforts signal to their stakeholders that they're investing in green when all they're really doing is evading tax liability, which is squeezing those of us in the middle that are paying these taxes.”
For example, Richard Rubin reported in the Wall Street Journal that Duke has been using tax deductions to reduce its taxable income and, as a result, has not enlisted $1.8 billion in tax credits.
“Large major U.S. corporations have friends in high places and they chalk it up to issues with COVID and that's how they're going to Congress with their hand out,” said Isaac in an interview. “It's just economics and math playing out and it has really very little to do with a pandemic.”
Over the last decade, the federal government spent more than $230 billion on energy subsidies, and three-quarters went to renewable energy sources, according to TPPF data.
“They're barely producing any of the energy that we use on a daily basis,” Isaac said. “We've seen this for years in Germany with their efforts to go 100% renewable, and now they're having to subsidize coal to make sure that they have adequate power. Their electric costs are up 50% over the last 10 years. It's just a gamble that's not paying off.”