Clean energy projects could soon get the same tax advantages that fossil fuel projects, like oil, gas and coal have been privy to for decades under a bill introduced in both houses of Congress by Republicans and Democrats. The bill, the Master Limited Partnerships Parity Act, would allow MLPs to be used to finance renewable energy projects, making them more attractive to investors.
The previously introduced legislation was re-introduced by Senators Chris Coons (D-DE) and Jerry Moran (R-KS), and Representatives Ted Poe (R-TX) and Mike Thompson (D-CA). The bill has broad support and was co-sponsored by Sens Debbie Stabenow (D-MI), Cory Gardner (R-CO), Michael Bennet (D-CO), Lisa Murkowski (R-AK), Angus King (I-ME), Susan Collins (R-ME) and Martin Heinrich (D-NM). In the House it was cosponsored by Mark Amodei (R-NV), Peter Welch (D-VT), Jerry McNerney (D-CA), Paul Gosar (R-AZ) and Earl Blumenauer (D-OR).
“Clean energy technologies have made tremendous progress in the last several decades, and they deserve the same shot at success in the market as traditional energy projects have experienced through the federal tax code,” Coons said. “By updating the code, the bipartisan Master Limited Partnerships Parity Act levels the playing field for a broad range of domestic energy sources—clean and traditional alike—to support the all-of-the-above energy strategy we need to power our country for generations to come.”
The bill would allow renewable energy and renewable fuel companies to form MLPs. MLPs allow companies to combine the funding advantages of corporations and the tax advantages of partnerships. MLPs are taxed as a partnership but their interests are traded like corporate stock on a market, Coons’ office explained. Currently they’re limited to investors in energy portfolios for oil, natural gas, coal extraction and pipeline projects. Since MLPs are more liquid than other financing mechanisms and can get access to lower-cost financing they’re highly effective at attracting private investment.
“The United States has the largest and most efficient capital markets in the world, yet our renewable energy companies rarely have access to those markets,” Moran stated. “The MLP Parity Act will allow the renewable energy sector to utilize the MLP structure for project development making it accessible to a broader and deeper investment pool that can drastically reduce the time and cost associated with deploying new energy technologies.”
Under the bill solar, wind, marine and hydrokinetic energy generation companies could use MLPs to finance projects. They could also be used to finance fuel cell, energy storage, combined heat and power, biomass, waste heat to power, renewable fuels, biorefineries, energy efficient buildings, carbon capture utilization and storage projects.Tweet