Morgan County businessman John Christensen is upset.
Christensen, who operates Mountain View Solar, says his industry is supposed to be getting a tax credit under a 2011 West Virginia law designed to encourage the use of alternative fuels.
The law does indeed list “electricity… from solar energy” as an alternative fuel that could be used to power alternative vehicles that qualify for the credits.
Christensen says, however, that solar has been shut out of the tax credit largess.
He’ll have to work that one out with the state, but the dispute raises a larger question: why would a state that has loads of coal and natural gas use taxpayer dollars to subsidize solar power in the first place?
The original legislation is filled with feel-good pap about how alternative fuel credits will reduce the dependence on foreign oil and improve air quality. The Associated Press reports the credits “cover 35 percent of the cost of an alternative fuel vehicle, up to $7,500 for cars and $25,000 for large trucks.”
The original bill had no fiscal note, meaning it was passed without regard to how much the tax giveaways would cost. But now that the price tag has become evident, the Tomblin administration wants to scale back the program.
The Governor wants the credit to apply only to natural gas powered vehicles. Evidently the aim is to incentivize that industry since West Virginia has huge supplies of natural gas.
The Associated Press quotes Deputy Revenue Secretary Mark Muchow estimating that eliminating all other alternative fuels from the credit program will save the state about $10 million a year.
But here is the larger question: why is the state in the tax credit business at all?
The simple answer by those who support the concept is that credits, which reduce the amount a taxpayer has to pay, will help attract new businesses and encourage existing businesses to expand.
That’s debatable.
West Virginia’s myriad tax credits are mostly bunched into four categories: economic opportunity, research and development, manufacturing and high-growth business investment. A state tax department review of those programs found that from 2003 to 2009 the state reduced companies’ taxes by $44 million through those four tax credit programs with a net creation of about 6,500 jobs.
True, it’s beneficial to have more people employed, but those jobs are being subsidized by taxpayers. Special credits mean revenue due the state goes uncollected, so the rest of the taxpayers have to bear more of the burden for the cost of government services.
Credits are efforts by public policy makers to micromanage the free market in ways that often produce questionable benefits. According to the Governor’s Commission on Fair Taxation 1999 report, credits “do not embody the values of neutrality and consistency” which are fundamental principles of taxation.
In short, why should the government pick winners and losers?
John Christensen is a true believer in the future of solar power, and he can make a compelling argument for helping his industry get off the ground.
Maybe he’ll be successful, and that would be wonderful. But why should the taxpayers be on the hook for his business, or any other for that matter?
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Comments
wirerowe
Hoppy. With or without incentives solar and wind are not scalable enough with foreseen technology to make significant inroads into fossil fuels dominance in US energy production. President Obama's own Energy Department projects that wind and solar will represent less than 5% of US Energy production in 2040. Fossil fuel's share will decrease slightly but stay around 80%. Coal's absolute numbers go up but share is down because of natural gas substitution in power plants.The coal technology developed at Ohio State University has the potential to be commercialized within 5 years and be retrofitted on power plants to reduce all pollutants including co 2 to negligible amounts. This breakthrough would potentially increase fossil fuels share by 2040.
February 25, 2013 at 6:26 am | Report comment
TD
Wirewoe, I would like to know more about the Ohio State program, do you have any links to information?
thanks
February 25, 2013 at 7:10 am | Report comment
wirerowe
TD i would recommend googling Ohio State Coal and you will see a number of articles from various sources. I like to read a number to articles to filter out agendas. I have included a link from one environmental group
http://www.enn.com/pollution/article/45613
February 25, 2013 at 7:39 am | Report comment
Uncle Fester
Ohio State make that huge clean coal breakthrough on only $5 million. What does that say about the clean coal research being done at WVU after tens of millions of $$$$$ have been spent??? Every liberal will denounce this breakthrough. However, coal is here to stay to power a strong America, once we get the repressive progressive liberals out of the White House.
February 25, 2013 at 9:19 am | Report comment
Hop'sHip
Festering Uncle: In your eyes I'm a "liberal" because I believe in effective government regulation. I do not denounce this breakthrough. I welcome it. But I would think you would denounce it and not call it a "breakthrough" since you have always denied there was any problem in using coal the way we do now. I suspect it must have something to do with my inability to understand regressive logic. I guess I need to listen to Glenn more.
February 25, 2013 at 12:42 pm |
Hop'sHip
http://www.midwestenergynews.com/2013/02/11/ohio-states-carbon-capture-breakthrough-still-has-long-road-to-adoption/
February 25, 2013 at 12:47 pm | Report comment
Medman
Anyone wonder why companies like Ford, GE., Microsoft, Dupont, Kodak, IBM, Apple, etc. were able to bring successful products to market without government handouts, whereas we have to subsidize manufacturers of solar panels, electric cars and batteries?
February 25, 2013 at 6:52 am | Report comment
Wowbagger
Hoppy,
I agree with wirerowe 100%, but would add that Appalachian coal is on the downhill side of the Hubbert curve. In plain English coal production has peaked. In my opinion the best use for the remaining West Virginia coal is industrial feedstock including metallurgical applications. This is a very lucrative market. Interestingly the prices are set annually in the far east already recognizing that we are now only a secondary player. Thirty years ago this was not the case. For West Virginia coal we should be encouraging port development including dredging any way we can to get transportation costs as low as possible. The future of coal for electric power will favour Powder River basin coal competing with gas. I imagine that ultimately gas will win.
The problem with solar and wind power is they do not suit the current distribution grid and no one wants the changes in the grid necessary to implement solar or wind energy. Think hundreds or maybe thousands of TRAIL projects across the country including all of the enviro-crazy resistance.
The future direction of energy in the US is now falling off a log obvious. Gas is the answer, what is the question?
Hydraulic fracturing to produce gas and related liquids is starting a revolution equivalent to when coal took the lead from wood for heating and transportation in England or when Drake's rock oil (conventional petroleum) replaced whale oil for lighting.
The real issue is just what form the gas will be distributed for transportation fuel. Should it be liquefied under pressure like politician ERT and his questionable Department of Energy "experts" obviously think or should it be converted to a more convenient liquid form that can be distributed by the current system of fuelling (gasoline) stations and burned in cars similar to what we drive today. The key is the distribution system and it is the difficult and expensive part to develop. I favour conversion to some gasoline like liquid as the distribution system is already in place. This whole problem should be allowed to resolve itself without the intervention of government attempting to pick the winner. I also personally imagine that ultimately the gas to liquid fuel solution would generate more jobs for West Virginians than the liquid natural gas solution.
February 25, 2013 at 7:50 am | Report comment
wirerowe
Wowbagger fascinating analysis. Is the liquid fuel you speak of propane? Would this be a blend like e85 or stand alone and would vehicles have to be retrofitted or special design for new vehicles to burn the liquid?
February 25, 2013 at 9:32 am | Report comment
Wowbagger
Unfortunately organic chemistry is not my forte... long story, but I probably made a big mistake not taking organic in college as I did pretty well in introductory chemistry, but I was headed in a different direction at the time.
I did recently hear a discussion of a process that, as I recall converts methane to ethanol and then converted the ethanol to a more gasoline like, energy dense liquid that should work in cars and trucks with modifications.
I once had a chance to ask Mr LNG himself, T. Boone Pickens about the most difficult part of promoting LNG as motor fuel and his response was that the key to deploying any new fuel is the distribution system. This seems to be a big issue in energy deployment in general. My takeaway was that if you can use most or all of the existing infrastructure and keep costs down the energy system you are promoting has a huge advantage. It is possible to do this with LNG, but a liquid fuel that behaves more or less like gasoline would be an even simpler conversion and could justify the cost of building gas to liquid fuel conversion plants. I have seen combined LNG and gasoline stations in Alberta and this necessary, intermediate step takes up a lot of room. This isn't a big deal in the plains of rural Alberta, but would be a big problem in densely populated urban areas.
This is also why I believe that high efficiency gas turbines and nuclear have a huge advantage over solar and wind. All you have to do is plug a big gas generator or a nuke into the power grid replacing or near a coal plant and the rest of the infrastructure remains the same avoiding building the many miles of power lines for gathering and transmission necessary for widespread adoption of wind or solar power.
February 25, 2013 at 10:42 am | Report comment
Wowbagger
Oops that's methanol not ethanol!
February 25, 2013 at 7:15 pm | Report comment
Shadow
I have yet to see how tax incentives to new businesses is fair to the current businesses in any situation. I guess it goes under the "already captured" theme.
February 25, 2013 at 8:51 am | Report comment
Jim N Charleston
Skippy,
Didn't read the commentary but did read the headline.
With that said, Elvis had a song & movie called, "Follow that Dream". Both were good.
That is all.
February 25, 2013 at 12:47 pm | Report comment
Hop'sHip
By the way. Did Hoppy denounce the government "picking winners and losers" over the several decades that the federal government provided support in developing today's advanced fracking process? It looks like that may have served us well. Seems like there was a lot of failure along the way, including a spectacular one right here in Morgantown:
http://www.huffingtonpost.com/2012/09/23/fracking-developed-government_n_1907178.html
February 25, 2013 at 12:59 pm | Report comment
wirerowe
Hops godd hypocrisy detection. I was not aware of all of the support. One distinction is that marcellius is a winner and solandra is a loser. I think the govenrment should provide research support for all technologies including fossil, renewables and nuclear. Where it gets more difficult is in the operational support through tax credits. I think this if it is done at all should be for a very limited time period What should always be a no no is to give grants for operational expenses for any company such as Solandra.
February 25, 2013 at 1:21 pm | Report comment
Hop'sHip
Good, reasoned argument, wireowe. I will point out if you read the article I referenced that there were times when fracking of the type done today looked every bit the loser.
February 25, 2013 at 6:23 pm | Report comment
wirerowe
Point well made and I did notice in the article that most in the industry thought it would be a loser for a long time.
February 25, 2013 at 6:34 pm | Report comment
GregG
It's only wrong for the government to "pick winners and losers" when they pick a company that goes against Hoppy's views.
February 25, 2013 at 1:26 pm | Report comment
bulldog95
I think there is a difference in the developing phase vs the production phase. While the government may have helped with the research to develop fracking, I do not see them throwing money at companies to make the wells.
I have no doubt that the future will be solar and wind but research has to be done to improve this product. Throwing money at something that is currently garbage is not the answer. Once there is improved battery life and storage, the solar industry will explode.
The biggest problem with this entire thing is that many people in DC have investments in companies or have family members with investments in these companies that they are going to force to be successful in order to fatten their own wallets. Case in point is the guy that beat Christine O'Donnel, or what ever her name is, you know, the one that was into witchcraft.
February 25, 2013 at 2:55 pm | Report comment
Wowbagger
Hippie,
My understanding is that George Mitchell was the real standard bearer for hydraulic fracturing and some DOE contracts helped do what otherwise could not be justified on a purely economic basis, at the same time this is not picking winners and losers it is about government supporting basic scientific research that might or might not prove commercial.
According to Alex Crawley in your cited article: "It wouldn't be research if you already knew that it was going to be effective," said Crawley.
DOE also funded a lot of related fundamental research about Devonian shales including the Marcellus during the same period not knowing whether this research would pan out or not. It turns out it did. Government funding for research is also justified in my experience for projects that are generally regarded as useful to society, but hard to commercialize like say Astronomy, for example. Pretty theoretical until the asteroid just misses the earth apparently accompanied by a couple of meteorites. Are they related or not? Are more on the way? The answer in this case was they were not related and this was just a coincidence, but a lot of people were seriously wondering for a couple of days.
Picking winners and losers isn't about science, but involves heavily subsidizing projects that will certainly work to some extent, but are not necessarily the best solution.
I'm sure this fine distinction is lost on you or perhaps you will ignore it, but when you have worked in the sciences for a few decades this distinction becomes apparent.
February 25, 2013 at 3:20 pm | Report comment
John
Hoppy, I appreciate you letting me on your show, if only for a brief time last week. If we had more time I could have explained that these tax credits are necessary for start up industries to get started and the popularity of the electric car requires charging infrastructure in order for it to take off. The solar panel component is only a small fraction of sb 465 as originally written; further it will provide hundreds of jobs and lower taxes as was the governors mantra throughout his re-election campaign. Finally I am not an owner in MTV Solar as you suggest, I do advocacy work and anything else that Mike and Pete McKechnie ask of me to further the discussion on solar electric energy in the mountain state and have a system on my home that has almost eliminated my electric bill.
February 25, 2013 at 1:33 pm | Report comment
DWM
John,
If the electric car was popular, people would be buying them and we wouldn't need to provide tax cerdits to get them sold. Nor am I convinced that there is some social good that would warrant the coddling of electric cars to get them sold. They are not efficient, they certainly aren't economical, I'd not sure they are safe, and they aren't a compelling mode of transportation. The only reason I see for people purchasing one is to try to convince their liberal friends that they care more for the environment. I think those people would feel even more special if they had to pay the full cost of the car instead of having us unwashed subsidizing that cost.
February 25, 2013 at 3:09 pm | Report comment
Wowbagger
You have that right. I can imagine Professor Birkenstock thinking:
Hmmm... Should I buy a (stupid little) Smart car or a (heavily subsidized) Volt. The Smart car doesn't have room for a second pocket handkerchief and the mileage isn't too good, but at least I can drive to Charleston and back without spending the night for a recharge. I think I'll go with the Smart car!
February 25, 2013 at 4:34 pm | Report comment
stophating
Have I gone crazy. Haven't I read numerous commentaries where Hoppy has supported tax breaks, such as one for Macy's distribution center, and doesn't he call for lower taxes? Maybe he's jealous that his taxes, or the taxes of his boss haven't been lowered... Either way, I'm sure teachers, AFT and WVEA are to blame for this problem as well as the other ills of WV.
February 25, 2013 at 2:45 pm | Report comment
Shadow
I don't know why some of the responders read Hoppy, I think they would be happier if they restricted their watching to CNN TV and reading the Huffington Post.
February 25, 2013 at 2:52 pm | Report comment
bulldog95
They post on here for a couple of reasons.
1. Maybe they want to try and get their point across to inform us of where they are coming from. I suspect that if this site was left leaning that any thoughts from the right would be quickly deleted.
2. Its nice to hide behind a monitor and insult people and call them names.
3. It is evident from some of the comments that some people are so far off the charts with their logic and thought process that no one in their real life will talk to them about this stuff, so this is their only outlet.
February 25, 2013 at 3:00 pm | Report comment
Hop'sHip
bulldog: An example of name calling and "off the chart" logic?
February 25, 2013 at 4:36 pm | Report comment
bulldog95
Name calling, just wait for someone to mention Don Blankenship. I am not taking up for the man. I have also seen people statements like "then you must be stupid." This took place a few weeks ago when the gun debate/control was booming on the site.
Off the charts? I could point to myself on that one, but not always. I refer back to the gun control issue from a few weeks ago. I was talking about mental health not being defined and some other posters were chimming in with the same thoughts as well. As it turns out a state out west, I think Washington, had an 8 page bill that its major sponsors didnt read had a provision in it that anything defiend as "assualt weapon" (which was a removable magazine) was subject to random checks from law enforcement, not more than once a year for proper storage. If it was not stored correctly...
February 26, 2013 at 9:24 am | Report comment
wvman75
"John Christensen is a true believer in the future of solar power, and he can make a compelling argument for helping his industry get off the ground."
Apparently not compelling enough. Otherwise he could encourage private investment in his vision and wouldn't be begging for his place on the government teet.
February 25, 2013 at 7:15 pm | Report comment
john
Boy, after Hoppy chewing on me now I'm getting it from his fans, well that comes with the territory I guess but I think we are failing to realize the big picture here. The tax credit bill was written for the downstream Marcellus gas industry and the solar panel infrastructure was included to make it more palpable to ALL the energy sectors and since electric cars like the Volt and Leaf plug -in to the grid it should stand to reason in WV that the coal industry would also be onboard. Alexander Hamilton once said the govt needs to help incubating businesses like solar, my question would be why are we doing so much for gas when it has been established for over a hundred years?
February 26, 2013 at 1:48 pm | Report comment