As the Republicans in the Senate appear ready to pass their tax bill—without any bipartisan support, the renewable energy industry is among those concerned with provisions in the bill. Earlier this week a group of renewable energy advocates issued a joint letter to Senate leaders warning that Base Erosion Anti-Abuse Tax (BEAT) in the Senate’s Tax Cuts and Jobs Act would have a “devastating impact” on renewable energy growth. The Senate bill could pass any minute today (Dec. 1).
The industry organizations said the provisions would impact both investment and deployment of renewable energy projects across the country. The letter was signed by Gregory Wetstone, CEO of the American Council on Renewable Energy (ACORE); Tom Kiernan, CEO of American Wind Energy Association (AWEA); Heather Reams, Managing Director of Citizens for Responsible Energy Solutions (CRES); and Abigail Hopper, Executive Director of the Solar Energy Industries Association (SEIA). They said they were writing on behalf of thousands of investors, developers, manufacturers and corporate energy consumers.
“Renewable tax credits, which are already phasing down, would be subject to a new 100 percent tax under the Senate bill, while the array of tax benefits for fossil fuels, in some cases more than 100 years old, remain untouched,” Wetstone contended. “If this bill passes as drafted major financial institutions would no longer participate in tax equity financing, which is the principal mechanism for monetizing credits. Almost overnight, you would see a devastating reduction in wind and solar energy investment and development.”
The letter points out that the industries appreciate that the Senate bill preserves the previously negotiated draw downs for renewable energy incentives like the Investment Tax Credit (ITC) for solar and the Production Tax Credit (PTC) for wind. The recently passed House tax reform bill would impact both tax credits, but the PTC would be reduced almost overnight if the House Bill becomes law, impacting tens of thousands of jobs.
Still, the BEAT provisions would have a chilling impact on the industries’ growth. The letter also pointed out that the BEAT provisions would apply retroactively to tax credits generated by existing and new projects. As such it would penalize companies that relied on the existing tax code to make their investments.
“Not surprisingly, major financial institutions have indicated that, under such a regime, they would no longer participate in tax equity financing, the principle mechanism for monetizing credits. The tax equity marketplace would collapse under these provisions, leading to a dramatic reduction in wind and solar energy investment and development,” the leaders wrote in their letter. “It is important to note that, while the BEAT provisions are intended to promote US investment and job growth, the program’s treatment of renewable energy tax credits—which are generated exclusively through investment in US projects—would have the opposite impact, dramatically reducing American wind and solar energy investment and job creation.”
The cost of the changes could dramatically cut the $50 billion in annual US investment that the renewable energy industries are creating.Tweet