Pros and Cons of Subsidies Tarrifs and Trade Barriers in Holland S Wind Energy Sector Essay

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Subsidies in Wind Energy in Holland

As it appears, Holland is not the only nation to give an economic boost by supporting a promising new source of energy. In the Holland history, energy subsidies have been crucial for the overall economic development. This essay looks at the positive aspects of these intermittent subsidies. It also details how the same subsidies are weakening the renewable energy industry by focusing on how the Production Tax Credit (PTC) is affecting the industry. Nevertheless, the essay will establish that despite the precise information about the subsidies in wind energy, the provision of long-term and predictable subsidies is important in ensuring a sustainable shift to a renewable energy source.

Positive Aspects

Holland's subsidies in wind energy, in the form of PTC, are a government incentive that serves financial support for the development of renewable energy facilities. Firms that produce electricity from geothermal, wind and "closed-loop" bioenergy qualify for a government PTC that grants a 2% per kWh incentive for the initial ten years of operating a renewable energy facility (Piscitello, & Bogach, 1998).

The incentive was because of the industry recording a strong growth while the PTC was enacted, leading to the PTC extension. Then, lapses in the PTC ignited a drastic slowdown in the execution of intended wing projects, leading to layoffs at wind facilities and production companies. With the restoration of PTC, Holland's wind energy sector has regained its footing, thus experiencing strong growth, thanks to the credit subsidy (Zhongguo & Zhongguo, 2010).

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Temporary extensions of the PTC are inadequate in sustaining a lasting growth of the renewable energy. The permitting and planning procedure for new wind energy companies could take up to two or more years to complete. Therefore, renewable energy companies that depend on PTC to enhance their cost-effectiveness could hesitate to launch a new project because of the uncertainty that the subsidy will still be available when the venture is finished.

Negative Aspects

Holland's subsidies in wind energy are working against global efforts to curb the use of fossil fuels to control global warming. In fact, the Organization for Economic Cooperation and Development (OECD) states that subsidies that support fossil fuels, especially oil and coal, pose greater threats to the environment than subsidies to renewable energy. Wind energy subsidies contribute to peculiar safety and environmental issues. In most cases, these issues are related to the risk of high degree environmental damage like global climate change (Strachan, Lal, & Toke, 2009).

Subsidies in wind energy have led to an increase in fossil fuel consumption. It is argued that roughly 95% of the recent surges in oil demand accrue from regions where the oil price is subjected to subsidies (Zhongguo & Zhongguo, 2010). International Energy Agency (IEA) estimates that eliminating subsidies in wind energy would curb global carbon dioxide emissions by 2% in 2020. The world energy outlook reveals that removing wind energy subsidies by 2020 would reduce….....

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