Congress Can Fix Unfair System of Tax Incentives
August 16, 2017
This column by ACRU Senior Fellow and Policy Board member J. Kenneth Blackwell was published August 16, 2017 by Townhall.
It’s no secret President Trump is working to create thousands more American energy jobs, reduce regulations on energy producers and restore parity to the tax code. Given these goals, it’s time for Congress to work with the president to end the unfair practice of granting tax incentives favoring one energy sector over another and give more promising American energy technologies a chance to flourish.
Lawmakers in Washington award billions each year in tax breaks and government backed loans to solar power and wind power companies while ignoring promising energy technologies such as our burgeoning fuel cell industry. From 2010 to 2013 Congress increased funding for solar and wind power companies from nearly $12 billion to more than $16 billion. Yet solar power generates less than 1% of America’s electricity supply and wind power contributes less than 6% to America’s power grid.
In addition, the US solar power industry has fallen victim to government-sponsored cyber-thieves operating in China. It has been well documented how an army of cyber-hackers in China raided hundreds of US companies and hacked into intellectual property worth billions. Solar companies were particularly hard hit along with many tech firms, U. S. Steel and other businesses. Subsequently China is now overproducing solar power cells and flooding international markets with cut-rate solar panels.
American solar power companies Suniva and the U.S. division of SolarWorld have filed for bankruptcy due primarily to overproduction of solar cells from China and other foreign competitors. SunEdison and Sungevity have also declared bankruptcy. These failings follow Abengoa’s bankruptcy announcement in 2016, Abound Solar’s collapse in 2012 and Solyndra’s much publicized demise in 2011.
Despite significant problems for the solar industry and the unreliability of wind power, America is leading the way in the development of promising fuel cell technology. Fuel cells are powered by natural gas — something we have plenty of in the US. Even more noteworthy is how the fuel cell industry shows strong growth potential. Walmart and the huge mail-order fulfillment operation Amazon are already replacing their antiquated battery powered forklifts and industrial vehicles with vehicles powered by natural gas fuel cells.
At the Toyota proving grounds in Arizona, hydrogen fuel fuels cells are being tested in 18 wheel trucks. These vehicles have no exhaust emissions. And companies like eBay, AT&T and Home Depot are installing stationary fuel cells to provide secure, onsite electricity for their facilities to ensure that they can remain operational in the event of an electric grid outage.
Natural gas fuel cells are clean, recharge more quickly than outdated electric batteries and are much less expensive to maintain. And because our own abundant natural gas supplies power fuel cells, they don’t rely on environmentally disastrous cobalt and lithium mining operations around the world. Cobalt and lithium are needed to make battery-powered vehicles for the US. Most of these mines in Africa, Russia and Asia are strip mines and are environmental tragedies. The mining operations have also become horrific examples of human rights abuses for the workers who labor in them — some mineworkers are as young as four years old.
The United States is the undisputed leader in fuel cell technology, which, if properly developed, would give America a global competitive advantage and would enhance our national energy security. But as with solar power, China hopes to gobble up this technology. So far, China isn’t producing fuel cells but the question remains will Congress allow this vital energy resource to be co-opted by China or other foreign competitors?
Congress must change the arbitrary way it offers businesses tax credits. Such incentives should not be awarded in ways that allow lawmakers or bureaucrats to pick winners and losers. If we wish to continue developing and supporting our energy and manufacturing sectors, we must do so in ways that allow promising technologies a chance to flourish but also with established end-dates for such tax breaks. The days of endless government subsidies must stop.
The US fuel cell industry is growing; it has an established business model and presents an opportunity for our country to create tens of thousands of new energy jobs. Temporary tax incentives can encourage innovation but must include mandates requiring businesses to stand on their own. American fuel cell technology has to be part of our nation’s energy mix and Congress should work to find commonsense ways of embracing this promising energy resource.