Sens. Chris Coons, D-Delaware, and Jerry Moran, R-Kansas; and Reps. Mike Thompson, D-California, and Ron Estes, R-Kansas, reintroduced June 13 bipartisan legislation to level the energy playing field by giving investors in a range of clean energy projects access to a decades-old corporate structure whose tax advantage is currently available only to investors in fossil fuel-based energy projects.
The Financing Our Energy Future Act is a modification of the federal tax code that could unleash private capital by helping an emerging class of energy-generation and renewable fuel companies to form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.
“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,” said Coons. “By updating the code, the bipartisan Financing Our Energy Future Act levels the playing field for a broad range of domestic energy sources — clean and traditional alike — to support the all-of-the-above energy strategy we need to power our country for generations to come. This practical, market-driven solution will unleash private capital and create jobs, and that’s why it has earned broad support from Republicans and Democrats in Congress as well as think tanks, business leaders, and investors. Updating the tax code in this way will help increase parity and ensure that these energy technologies can permanently benefit from the incentives that traditional energy sources have depended on to build infrastructure for more than 30 years.”
A master limited partnership is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. By statute, MLPs are currently only available to investors in energy portfolios for oil, natural gas, coal extraction, and pipeline projects.
These projects get access to larger and more liquid sources of capital than are available for traditionally financed energy projects, making them highly effective at attracting private investment. Investors in clean energy projects, however, have been explicitly prevented from forming MLPs, starving a fast-growing portion of America’s domestic energy sector of the capital it needs to build and grow.
Newly eligible energy resources would include solar, wind, marine and hydrokinetic energy, fuel cells, energy storage, combined heat and power, biomass, waste heat to power, renewable fuels, biorefineries, energy efficient buildings and carbon capture, utilization and storage.
In the Senate, the Financing Our Energy Future Act is cosponsored by Sens. Angus King, I-Maine; Susan Collins, R-Maine; Tom Carper, D-Delaware; Lisa Murkowski, R-Alaska; Martin Heinrich, D-New Mexico; Joni Ernst, R-Iowa; Cory Gardner, R-Colorado; Debbie Stabenow, D-Michigan; Mike Crapo, R-Idaho; and Michael Bennet, D-Colorado.