White House Ballyhoos Stimulus $ for Carnahan Wind Farm
In response to the perception that much of the stimulus money has been spent on wasteful or unnecessary projects, the White House last week released a report titled "100 Recovery Act Projects That Are Changing America." It included $107 million for a wind farm in Missouri owned by Wind Capital Group (WCG), whose CEO is Tom Carnahan. His sister Robin (in photo) is the Democratic nominee for the Senate and his brother Russ is running for re-election to Congress.
When we commented on this appearance of cronyism back in May, we were under the impression that WCG qualified for a tax credit. It appears, however, that WCG will receive direct payments in lieu of tax credits for up to 30 percent of the cost of the wind farm.It is unclear whether the White House was aware that it was doing the Carnahans no favor by drawing renewed attention to the project. According to the St. Louis Post-Dispatch:
While Tom Carnahan has been in the wind energy business for several years -- he formed St. Louis based Wind Capital Group in 2005 -- the announcement made on Friday by the White House that his wind project in northwest Missouri will receive stimulus cash presents an unwelcome liability for the family's political aspirations.
Republicans were quick to pounce. From a Missouri GOP statement:
Robin Carnahan and her brother, Congressman Russ, rubberstamped Barack Obama’s wasteful and ineffective $800 billion stimulus in 2009—and now we know why. According to a new government report, a massive amount of money, more than$100,000,000.00 taxpayer dollars were handed over to Robin and Russ’ brother, Tom Carnahan, to save his “Lost Creek” wind business.
The bigger scandal is that taxpayers are being forced to subsidize an energy source that is not economically viable, nor even better for the environment. New data indicates that the case for wind power is falling apart.
As pointed out by Robert Bryce in an August 24 Wall Street Journal op-ed titled Wind Power Won’t Cool Down the Planet:
The wind industry has achieved remarkable growth largely due to the claim that it will provide major reductions in carbon dioxide emissions. There's just one problem: It's not true. A slew of recent studies show that wind-generated electricity likely won't result in any reduction in carbon emissions—or that they'll be so small as to be almost meaningless.
The supply of wind-generated electricity would not exist without taxpayer handouts and tax breaks. The demand is also artificial. According to Bryce:
This issue is especially important now that states are mandating that utilities produce arbitrary amounts of their electricity from renewable sources. By 2020, for example, California will require utilities to obtain 33% of their electricity from renewables. About 30 states, including Connecticut, Minnesota and Hawaii, are requiring major increases in the production of renewable electricity over the coming years.
Producers like Tom Carnahan are harnessing the wind only as a means to harness taxpayer subsidies. His long-term business plan surely includes the option to flip his existing wind farms to larger companies who will quickly have ramp up renewable production to meet mandates. Thus, Carnahan may get rich the old-fashioned way, through political influence.
That special influence was on display yesterday. Senate Majority Leader Harry Reid held a fundraising breakfast whose sponsors included the American Wind Energy Association. Tickets were $2,500 each, underscoring a familiar pattern in Washington. When government funds are introduced to benefit private parties, those parties seek to ensure that the benefit continues. Usually asserting some larger cause like saving the planet, they form lobbies and find ways to share the benefit with the politicians who make it possible.