Sens. Chris Coons (D-Del.) and Jerry Moran (R-Kan.) say a small change to the U.S. tax code would provide a big boost to renewable energy projects.
The duo is floating legislation that would allow investors in green-power projects to use the “master limited partnership” tax structure, which is already available to investors in fossil fuel projects.
The lawmakers call it a “powerful tweak” to the tax code that would help steer capital into solar, wind, biofuels and other projects.
MLPs are limited partnerships that are also traded on U.S. exchanges — a structure that the lawmakers call well-suited to getting capital into the energy space.
“In order to grow our economy and increase our energy security, sound economic tools like the MLP should be expanded to include additional domestic energy sources,” Moran said.
A summary, from the lawmakers’ offices:
By statute, MLPs have only been available to investors in energy portfolios for oil, natural gas, coal extraction, and pipeline projects. These projects get access to capital at a lower cost and are more liquid than traditional financing approaches to energy projects, making them highly effective at attracting private investment. Investors in renewable energy projects, however, have been explicitly prevented from forming MLPs, starving a growing portion of America’s domestic energy sector of the capital it needs to build and grow.
The bill faces plenty of near-term political barriers.
Energy legislation has been stuck in place during this Congress. And efforts to change the tax code risk getting caught in the cross-currents of wider tax reform battles and election-year fiscal policy disputes.
But the bipartisan pair has done homework that could help generate attention to the bill — the announcement comes with the backing of think tanks, industry trade groups and environmental organizations.
The lawmakers are touting support from companies such as NRG Energy, a power company that has substantial investments in renewables, and DuPont, which is active in biofuels.
Other backers, from the list provided by Coons and Moran, are the American Wind Energy Association; Third Way; the Solar Energy Industries Association; the Biomass Power Association; the Biotechnology Industry Organization; the Ocean Renewable Energy Coalition; the American Council on Renewable Energy; the Natural Resources Defense Council; the Advanced Biofuels Association; the Offshore Wind Development Coalition; and the Advanced Ethanol Council.
The bill’s initial co-sponsors are Sens. Jon Tester (D-Mont.), Al Franken (D-Minn.), Amy Klobuchar (D-Minn.), Sheldon Whitehouse (D-R.I.) and Jeanne Shaheen (D-N.H.).