- A bipartisan and bicameral group of lawmakers has introduced a bill to allow clean energy technology companies to form master limited partnerships (MLP), a move aimed at boosting private investment.
- Currently, only investors in fossil fuel-based technologies can access the tax advantages of the MLP structure. Lawmakers supporting the Financing Our Energy Future Act say a “straightforward, powerful modification of the federal tax code” could expand that structure to include solar, wind, combined heat and power, energy storage and others.
- A separate bipartisan measure introduced last week, the Carbon Capture Improvement Act of 2019, would authorize the use of tax-exempt private activity bonds (PAB) to finance the purchase of carbon capture equipment at power plants and industrial facilities.
Both bills take a similar approach to growing a range of technologies: changing the tax code.
The Financing Our Energy Future Act, was re-introduced on Friday. It would allow companies focused on a wide range of clean energy technologies to create MLPs.
“Clean energy technologies have made tremendous progress in the last several decades, and they deserve the same shot at success in the market as traditional energy projects have experienced through the federal tax code,” Coons said in a statement.
Updating the tax code “levels the playing field” for a wide array of energy sources, said Coons. “Clean and traditional alike.”
The bill is cosponsored by 10 senators including Sens. Angus King, I-Maine, Susan Collins, R-Maine, and Cory Gardner, R-Colo.
Additionally, about two dozen groups have endorsed the bill, including the American Council for an Energy-Efficient Economy, the American Council on Renewable Energy, Amazon, the Carbon Capture Coalition (CCC), Ceres, Energy Storage Association, (ESA) the National Association of State Energy Officials, Natural Resources Defense Council and the Solar Energy Industries Association.
Allowing storage as an MLP-eligible asset “would allow energy infrastructure providers to build and acquire energy storage technologies at lower cost, accelerating the transition to a more resilient, efficient, sustainable and affordable energy infrastructure,” ESA CEO Kelly Speakes-Backman said in a statement.
Along with the MLP bill, CCC last week also announced its support for the Carbon Capture Improvement Act, which would finance carbon capture equipment through PABs.
“Private activity bonds are a well-developed financial instrument that has proven successful over decades in reducing the cost of financing for a broad range of private infrastructure projects that provide significant public benefits,” CCC said in a statement.
Introduced by Sens. Rob Portman, R-Ohio, and Michael Bennet, D-Colo., the legislation would allow businesses to utilize PABs issued by local or state governments to finance carbon capture projects. According to Portman, the bonds are beneficial to consumers and businesses because they are tax-exempt and can be paid back over a longer period of time.
“Carbon capture is a common-sense solution,” Portman said in a statement, adding that the measure is supported by business, energy and environmental groups.
If more than 65% of carbon dioxide emissions from a given facility are captured and injected underground, the bill would allow 100% of the eligible equipment to be financed with PABs. Less than 65%, and tax-exempt financing would be permitted on a pro-rated basis.