With the Senate Republican tax bill racing towards a contentious vote despite numerous obstacles, a group of American energy trade bodies have penned an open letter raising urgent concerns that claim a provision, if it remains as written, would have dire impacts on the country’s renewable energy industry.
The issue in question is the current language of the Base Erosion Anti-Abuse Tax (BEAT) provisions in the jauntily named Senate Tax Cuts and Jobs Act (also known in some circles as the Donor Relief Act). The joint letter — signed by the American Council on Renewable Energy (ACORE) together with the American Wind Energy Association (AWEA), Citizens for Responsible Energy Solutions, and the Solar Energy Industries Associations (SEIA) — claims that, “As drafted, the BEAT program would have a devastating, if unintended, impact on the wind and solar energy investment and development.”
The US renewable energy industry has already won one fight over the Republican tax plans, with House Republicans’ plans to devastate tax credits for wind, solar, and electric vehicles, removed by the Senate. However, the BEAT provisions as currently drafted undermine the US renewable energy industry’s capacity to use renewable energy tax credits. According to the joint letter (PDF), “multi-national companies covered under the BEAT provisions, the renewable tax credits would, as drafted, be subject to a new 100 percent tax.”
“It is important to note that, while the BEAT provisions are intended to promote U.S. investment and job growth, the program’s treatment of renewable energy tax credits — which are generated exclusively through investment in U.S. projects — would have the opposite impact, dramatically reducing American wind and solar energy investment and job creation. These sectors are important national economic drivers, generating nearly $50 billion in annual U.S. investment.”
“Renewable tax credits, which are already phasing down, would be subject to a new 100% tax under the Senate bill, while the array of tax benefits for fossil fuels, in some cases more than 100 years old, remain untouched,” said ACORE CEO Gregory Wetstone. “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.”