Overlapping federal subsidies let some projects get multiple grants, credits — GAO

Source: Emily Yehle, E&E reporter • Posted: Friday, March 29, 2013

Federal subsidies for wind energy sometimes overlap, letting some projects take several dips into the government’s coffers, according to a new report from the Government Accountability Office.

The Republican-requested report outlines the various federal initiatives that support wind energy, identifying areas of duplication amid the more than $4 billion in grants and tax credits that go to wind-related activities.

Seven initiatives overlapped in support for wind projects, according to the report: three tax expenditures and a grant from the Treasury Department, a loan guarantee from the Department of Energy, and two programs within the Agriculture Department. That means that a single wind project can simultaneously receive financial support through several federal programs.

The GAO report stops short of calling the overlap wasteful, pointing only to the “potential” for unnecessary duplication. But Republicans say it supports their contention that the Obama administration is spending too much on renewable energy subsidies.

House Science, Space and Technology Chairman Lamar Smith (R-Texas) pointed in a statement to the report’s finding of 82 different federal initiatives subsidizing wind energy.

“Despite this duplication, the administration wants to expand federal spending even further. We should eliminate duplication, not throw more money at overlapping initiatives. We should also redirect efforts toward research that will help renewable energy companies compete without taxpayer subsidies,” said Smith, who requested the report. “The GAO’s findings are another reason why taxpayers should not continue to pick up the tab for billions of dollars in wind energy subsidies.”

GAO found that the 82 initiatives were spread across nine agencies, with the Treasury Department spending the lion’s share of financial support.

Treasury, along with DOE, Interior, USDA and Commerce, implemented 73 of the initiatives. Sixty-eight overlapped with at least one other initiative “because of shared characteristics.”

Overlap, however, can be beneficial, according to the report, since each agency can tailor its program to its mission statement. But GAO found that half of the initiatives reported formal coordination.

Many agencies also failed to document whether their financial report was needed, leading to potential waste.

“While the support of these initiatives may be necessary in many cases for wind projects to be built, because agencies do not document assessments of need, it is unclear, in some cases, if the entire amount of federal support provided was necessary,” GAO analysts wrote. “Federal support in excess of what is needed to induce projects to be built could instead be used to induce other projects to be built or simply withheld, thereby reducing federal expenditures.”

The report comes as lawmakers debate the future of renewable energy subsidies. Congress extended the production tax credit for wind earlier this year, but the debate has shifted to the credit’s long-term fate and how much the government should be subsidizing such projects.

The GAO report doesn’t answer that question. But it does emphasize the “significant impact” federal investment has had on wind energy, pointing out that when the production tax credit has periodically expired, new additions of wind energy have dropped significantly. That is a point emphasized by the American Wind Energy Association. A spokeswoman for the group did not immediately return a request for comment.