Published on December 20th, 2012 | by Adam Johnston2
US Lawmakers Target Tax Changes For Renewable Energy Projects In 2013
A new year on the horizon means the potential for change. If a group of bi-partisan politicians on Capital Hill in Washington have it their way, changes to the US tax code could help to boost renewable energy projects.
Last week, Reuters reported that 29 Democrat and Republicans are proposing changes that gives renewable energy projects (including: biofuels, wind, solar, and others) “special” tax treatment through master limited partnerships (MLP’s).
Notably, these structures are already often used by various energy companies to help them raise capital:
“The structures allow companies to raise money in the stock market, while having income taxed only at the unit holder level, thus avoiding corporate income taxes.”
The new idea being floated around in the US capital comes at a time when Congress has until the beginning of January to straighten the financial situation or face the impending “fiscal cliff.”
Meanwhile, the financial uncertainty due to the fiscal cliff is causing some problems within the wind industry, such as the potential expiration of the Production Tax Credit, which has helped boost the nation’s wind industry considerably but may expire on January 1st.
Could this renewable energy MLP idea fly, considering some Democrats would like to have fossil fuel subsidies done away with, and most Republicans are weary about giving any help to renewable energy projects.
Could MLP be a way to boost cleantech investment while limiting government spending?
The group of 29 bi-partisan lawmakers on both sides of the spectrum thinks so.
Delaware Democratic Senator Chris Coons said in the article that the policy would not hamper oil, gas, or pipeline investment, while helping to support cleantech projects because of the MLP tax structure.
“Why not have a predictable, clear, long-term tax advantage financing vehicle for both, for a genuinely all-of-the-above energy strategy?” Coons said to journalists last week.
Coons, along with Kansas Republican Senator Jerry Moran and the leading Republican on the Senate Energy committee Lisa Murkowski, are three of the bill’s co-sponsors in the Senate.
Meanwhile, a similar bill in the House of Representatives co-sponsored by Democrats Mike Thompson (California), Peter Welch (Vermont), and Republican Ted Poe (Texas) is targeting a similar tax vehicle to advance renewable energy projects.
Whether these bills get through the Senate and the House of Representatives remains to be seen. However, keep your eyes peeled, as this could be one tool that could help move the investment structure of renewable energy forward in the US.