The rural-urban divide is clear, if nuanced, and paying attention to it can have significant returns. This was never clearer than in 2016 when Donald Trump rode a populist wave, driven by rural America, into the nation’s highest office.
Sadly, rural Americans aren’t just ignored, they’re laughed at. On Netflix’s “Patriot Act,” host Hasan Minhaj showed a video from Texas Public Policy Foundation (TPPF), where I work. The video shows residents of Comanche telling about living in the shadow of a massive, heavily subsidized wind farm. As they discuss what it’s like to live next to a wind farm, the in-studio audience chuckles.
If there was ever a moment that exposed the urban-rural divide and explained the populist sentiments that follow, it was this one. The difference between Comanche resident Charla’s country home and a high-tech, urban studio is striking. Even more, a crowd of urbanites laughing at rural Americans they’re watching from afar comes across as elitist. Aside from that moment, Minhaj is funny — but he gets the story all wrong.
I know, because I’ve been to these communities and talked to residents first hand. The effects of wind farms on their neighbors shouldn’t be discounted so quickly. For those of us in large cities, myself included, claims of anxiety or lost sleep due to subsidies can be easily dismissed. Some might scoff at those who are annoyed by incessant, cyclical swooshing or blinking red lights that crowd out stars in a nighttime vista, but these are important questions when the government gets involved.
The question isn’t whether renewable energy should be built. When a government picks winners and losers, it becomes a question of whether we should subsidize development that is unwanted by neighbors and harms quality of life. In my view, we shouldn’t offer subsidies at all, but if we do, they shouldn’t do harm to those who have to live with the industry the subsidies promote.
Those outside of Texas probably don’t know too much about how our local tax abatements work. It’s a complicated process involving local governing boards, a small amount of public input, and a large energy company. The negotiations between the company and the commissioners or board members are hidden from public view, as they are exempt from Texas’ open meetings and public information acts.
Residents often don’t know about a project until 72 hours before a decision will be made or, like those in Comanche County, until a truck barrels down their quiet, country roads. It usually ends up being a subsidiary of a multi-billion-dollar wind company with months of hidden negotiations under their belt, versus the few locals who could make it on short notice. The results are a lack of faith in the governing process, broken relationships between residents and their elected officials (who are often friends), and an unwanted neighbor for decades to come.
It isn’t just local governments, though. Many states require a certain percentage of their energy supply to come from renewable sources and have renewable energy credit schemes to promote this — even in states like Texas that are presumed to be pro-oil.
It’s been almost a century since U.S. Supreme Court Justice Louis Brandeis referred to the states as laboratories of democracy that can “try novel social and economic experiments without risk to the rest of the country.” That idea is all but lost in Washington, where renewables find their biggest boon.
The federal production tax credit for renewable energy is a $24 per megawatt-hour subsidy distributed as energy is produced. The credit has no relation to market demand for the energy. In some cases, this has led to “negative pricing” — a distortion of the market so immense that renewable energy producers actually pay retailers to take their product.
I’ve been around Texas discussing renewable energy on behalf of TPPF. Many of the people I talked to were business owners, ranchers, and farmers. None would pay someone else to take their product. It just doesn’t make sense, except in the realm of government.
Some like to paint renewable energy as an emerging sector, signaling a new era in energy production. Reality shows, however, that renewables precede carbon-based fuels. Given such a breadth of time, one would expect a mature and highly competitive industry. But proponents of renewable development in our current age have put the cart before the horse in their zeal for a carbonless future. The fact is, subsidies encourage more of the same. When a government will give you money to do exactly what you’re doing — no more, no less — there is no incentive to innovate or improve.
Germany was embarrassed globally as their aggressive renewable energy program led to an increased carbon output. Why? The intermittency of renewables (a problem that still hasn’t found a solution) led to a reliance on coal to pick up the slack. The United States, on the other hand, reduced carbon emissions by more than double the next closest nation as natural gas technology provided a reliable alternative in periods when the wind wasn’t blowing and the sun wasn’t shining. Allowing the market to function led to better policy outcomes.
The current subsidy scheme doesn’t promote innovation and keeps our energy supply decades behind where it ought to be. Residents of rural America like Charla know the effects the subsidies can have on their daily lives and communities. Despite immense benefits at the expense of taxpayers, a graveyard of private efforts is left behind with no benefit. If we want to reduce our carbon output and promote democracy, it’s clear that favoritism and government mandates won’t do the trick.
It’s easy to be pro-subsidy when you don’t have to live with the results. I can sit in an Austin high-rise or a cushy studio and pontificate, or I can listen to locals and look at the facts. Rural America is speaking, and the data backs them up. Renewable energy subsidies are a bad deal.