June 24, 2015 at 12:53 pm ET
Resurrected Bill Would Grant Favored Tax Status to Renewable Industry
A bipartisan group of lawmakers is taking a second whack at tweaking the U.S. tax code to potentially unleash billions of dollars of capital into clean energy financing.
Sen. Chris Coons (D-Del.) is spearheading the effort with his introduction of the Master Limited Partnership Parity Act, which would allow renewable energy projects to access financial support that has been available to conventional energy projects like oil, natural gas, coal extraction and pipelines for decades.
The bill “directly responds to the Republican position on energy,” Coons said in a media teleconference today, “that we shouldn’t be picking winners and losers in the marketplace.”
Master Limited Partnerships offer businesses the advantages of a partnership – tax breaks and greater leeway in fundraising – while allowing their stock to be traded on the public market. First established by Congress in 1987, MLPs have since become a standard organizational mechanism for oil, gas and related industries.
The legislation already has a wide coalition of cosponsors. In the Senate, Republicans Jerry Moran (Kansas), Cory Gardner (Colo.), Susan Collins (Maine) and Energy and Natural Resources Committee Chairman Lisa Murkowski (Alaska) are giving the bill a green light, along with Democrat Debbie Stabenow (Mich.). Coons said he’d also lined up a “broad bipartisan group” in the House that includes Reps. Peter Welch (D-Vt.) and Ted Poe (R-Texas).
Coons also said he had spoken to congressional leaders, including Majority Leader Mitch McConnell, Minority Leader Harry Reid, Sens. Orrin Hatch (R-Utah) and Ron Wyden (D-Ore.) – the chairman and ranking member of the Finance Committee, respectively – about moving the bill to the floor. He said he was “optimistic” that 2015 is the year to pass the MLP Parity Act. Coons first introduced the bill in 2013, but the measure never made it out of committee.
With broader tax reform efforts mired in uncertainty, the bill may still struggle to find broader legislation to attach itself to. But Coons noted that the bill attracts support from both those interested in preserving tax credits for the fossil fuel industry and those interested in expanding tax benefits to renewable energy. The president’s fiscal year 2016 budget request would eliminate MLPs entirely, and broadening the MLP market instead of doing away with it could rally Republicans and Democrats to Coons’ side.
“There’s never been a great explanation for why renewables were originally excluded,” said Daniel Reicher, the executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford University. “But of course in the early 80s it wasn’t a big industry with a lot of need or clout at the time.”
The market capital for MLPs has grown in excess of half a trillion dollars, according to data from the National Association of Publicly Traded Partnerships. If MLPs were expanded to include renewable energy projects, the market could grow substantially. “Nobody knows for sure,” said Reicher, who is currently serving as interim-CEO for the American Council on Renewable Energy. “But we’re clearly talking about billions of dollars of investment across a whole range of technologies.”
Coons said he hoped to see movement on his bill by early autumn.
“This is a rare bird as bills go… what’s very compelling about the political situation is that support in the House ranges from a liberal Democrat in Vermont to a conservative Republican in Texas,” Reicher said. “The question is, what’s the legislative vehicle that it would be attached to? But there’s any number of ways it could be adopted.”