Master Limited Partnerships Parity Act would give renewable energy projects access to a tax advantage currently available only to oil, gas, and coal projects
WASHINGTON – June 24, 2015 – (RealEstateRama) — U.S. Senators Chris Coons (D-DE) and Jerry Moran (R-KS), and Representatives Ted Poe (R-TX-02) and Mike Thompson (D-CA-05) re-introduced bipartisan legislation to level the energy playing field by giving investors in renewable 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 Master Limited Partnerships Parity Act is a straightforward, powerful modification of the federal tax code that could unleash significant private capital by helping additional energy-generation and renewable fuel companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.
“Renewable 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,” Senator Coons said. “By updating the tax code, the bipartisan Master Limited Partnerships Parity Act levels the playing field for all domestic energy sources – renewable and non-renewable – 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 academics, outside experts, business leaders, and investors.”
“In order to grow our economy and increase our energy security, sound economic tools like master limited partnerships should be expanded to include additional domestic energy sources,” Senator Moran said. “MLPs have a proven record of success through real growth in our country’s energy infrastructure. This legislation builds on a successful model, and I look forward to working with my Senate colleagues on policies that will drive innovation, create American jobs, and grow our economy.”
“It is time for the United States to make Middle Eastern turmoil irrelevant to our energy security,” saidRepresentative Poe. “In order to do this we must pursue a comprehensive energy strategy that empowers all sources of domestically produced energy. This common-sense bill will help do just that. It is time for Washington to get out of the way and make it easier not harder to produce energy in this country.”
“We need to take an all-of-the-above approach to America’s energy future,” said Representative Thompson. “This bipartisan bill will make it easier and more attractive for private capital to be invested in renewable energy. By leveling the playing field and treating renewable energy the same way we do oil and gas, we can create jobs, strengthen our national security, reduce our dependency on foreign oil and move closer to energy independence.”
A master limited partnership (MLP) 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 have only been available to investors in energy portfolios for oil, natural gas, coal extraction and pipeline projects.
These projects get access to capital at a lower cost and are more liquid than traditional financing approaches to energy projects, making them highly effective at attracting private investment. Investors in renewable 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 power generation from renewables, renewable fuels, and related energy activities: Solar (PV and CSP), Wind, Hydropower, Marine/Hydrokinetic, Fuel Cells, Electricity Storage, Combined Heat and Power, Biomass, Waste Heat to Power, Renewable Fuels, Biodiesel, Biorefineries, Energy Efficient Buildings, Carbon Capture and Storage
In the Senate, The MLP Parity Act was also cosponsored by Senators Debbie Stabenow (D-MI), Lisa Murkowski (R-AK), Michael Bennet (D-CO), Susan Collins (R-ME), Angus King (I-ME) and Cory Gardner (R-CO).
In the House, the MLP Parity Act was also cosponsored by Paul Gosar (R-AZ-04), Mark Amodei (R-NV-02), Peter Welch (D-VT-AL), Jerry McNerney (D-CA-09), Mike Coffman (R-CO-06) and Earl Blumenauer (D-OR-03).
The MLP Parity Act has been endorsed by the following organizations: States: National Association of State Energy Officials (NASEO); Businesses: Bloom Energy, Duke Energy, DuPont, First Solar, Gamesa, NRG Energy, Sempra Energy, Vestas, Virent, Williams; Trade Associations: Advanced Biofuels Association, Advanced Ethanol Coalition, Alliance to Save Energy, American Council on Renewable Energy, American Wind Energy Association, Biomass Power Association, Biotechnology Industry Organization, Combined Heat & Power Association, Energy Storage Association, Geothermal Energy Association, Fuel Cell and Hydrogen Energy Association, Growth Energy, Heat is Power Association, International District Energy Association, National Enhanced Oil Recovery Initiative, Real Estate Roundtable, Solar Energy Industries Association; Environmental Advocates: Clean Air Task Force, Union of Concerned Scientists; Think Tanks and Research Institutes: Clean Energy Trust, Third Way; Finance & Investment: CalCEF, CERES; Labor: Laborers’ International Union of North America
A summary of the bill can be downloaded here: http://coons.senate.gov/download/mlp-parity-act-summary-
A section-by-section summary of the bill can be downloaded here:
The legislation itself can be downloaded as a PDF here: http://coons.senate.gov/download/mlp-parity-act-114
Below are statements of support for the MLP Parity Act:
Dan W. Reicher, Executive Director, Stanford University Steyer-Taylor Center for Energy Policy and Finance & Interim President and CEO, American Council on Renewable Energy (ACORE):“The MLP Parity Act is one of those rare birds on Capitol Hill: a bill with broad bipartisan support, a deep policy rationale, and serious potential for both economic and environmental benefits.”
Richard Kauffman, Chair of Energy and Finance, New York Governor Andrew M. Cuomo: “The MLP Parity Act helps clean energy compete on a level playing field with other industries that use stock and bond markets. Let’s evolve our financing to match our innovative energy economy.”
Phyllis Cuttino, Director, Clean Energy, The Pew Charitable Trusts: “The Master Limited Partnerships Parity Act would expand a tax incentive that is currently available only to oil and gas projects to include clean energy sources as well. By opening up low-cost financing to a broader range of technologies, this legislation would help grow our domestic energy industry and increase the United States’ competitiveness. Thank you to Senators Coons and Moran and Representatives Poe and Thompson for their leadership on this legislation.”
David Terry, Executive Director, National Association of State Energy Officials: “We thank Senator Coons for strongly supporting key options for financing renewable energy projects, including master limited partnerships. This continues the trend of the Senator providing thoughtful leadership in the energy arena.”
Rhone Resch, President and CEO, SEIA: “Today, solar is the fastest-growing source of renewable energy in America, employing 174,000 workers at 8,000 U.S. companies. Senator Coons’ MLP proposal would help to build on this tremendous success by leveling the playing field between clean, renewable energy and long-entrenched energy sources in America. SEIA applauds Sen. Coons for putting forward an idea that has the potential to attract private sector investment for critically-important solar projects.”
Barry Granger, Vice President for Government Affairs, DuPont: “We appreciate Senator Coons thoughtful and supportive legislation to encourage investment in cellulosic ethanol and advanced biofuels by extending the tax-efficient Master Limited Partnership structure to investments in these forms of energy. These tax policies have proven effective in encouraging investment in oil and gas infrastructure and can similarly provide a much needed incentive for further developing the domestic renewable fuels industry.”
James C. Greenwood, President and CEO, BIO: “The MLP Parity Act will help level the playing field between renewable fuels and fossil fuels in tax policy that shapes private investment decisions. We are especially pleased that this legislation also covers renewable chemicals, for the first time establishing tax parity for this growing biotech sector. This will clear a path for increased industrial biotechnology innovation and commercialization activities that drives employment and economic growth and reduces dependence on foreign oil.”
Brooke Coleman, Executive Director, Advanced Ethanol Council: “The advanced and cellulosic ethanol industry strongly supports the efforts of Senators Coons and the other co-sponsors of Master Limited Partnership Parity Act to level the playing field for advanced technologies when it comes to MLPs. The MLP Parity Act would take a meaningful inequity out of the federal tax code, allow advanced technologies to compete for financing on a more level playing field, and put the country in a better position to create jobs and compete in the emerging $2 trillion global clean energy marketplace. Oil and gas producers are essentially using MLPs to access the retail investment market more quickly and efficiently, which in turn makes it easier to finance new oil and gas projects. It makes no sense for the federal government to continue to offer this financing vehicle to fossil fuels only. We commend this bipartisan group for tackling this issue.”
John Prunkl, President and CEO, Primary Energy Recycling Corporation and Chair, Heat is Power Association: “We own and operate one of the largest waste heat to power projects in the U.S. for the benefit of a large steel producer in the Midwest. The economic and environmental benefits of this project are undeniable and have helped position our customer as a low cost producer of steel in the region while helping them produce their product with a smaller environmental impact. The MLP Parity Act would lower the cost of capital for waste heat to power projects like ours, making these projects easier to finance and more attractive to a broader range of customers, while supporting jobs and the local economy. We applaud the sponsors’ efforts to level the playing field for energy generation resources like ours that improve the competitiveness of our nation’s industrial sector and generate power with no additional fuel, combustion or emissions.”
Kateri Callahan, President, Alliance to Save Energy: “We applaud Alliance Honorary First Vice-Chair Senator Chris Coons and Senator Jerry Moran, sponsors of the Master Limited Partnerships (MLP) Parity Act, for this common sense bill encouraging private investment in energy efficiency projects. Bringing parity between investors in clean energy and investors in oil, natural gas, coal extraction, and pipeline projects makes sense. The MLP Parity Act will help to bolster energy productivity, create jobs, and save consumers and businesses money.”
Kurt Waltzer, Managing Director, Clean Air Task Force: “The Clean Air Task Force strongly supports the MLP Parity Act. In order to address climate, we need to have several affordable low and zero carbon technology options. This bill is particularly important for Carbon Capture and Storage – a critical path technology for addressing climate change that is in the early stage of its deployment. Having MLP financing available for CCS would help reduce the financing costs of early-mover projects. Reducing financial barriers for early projects is a necessary step for getting more steel in the ground, and thereby driving down costs through learning and innovation.”
Brad Crabtree and Patrick Falwell, Co-Directors, National Enhanced Oil Recovery Initiative: “On behalf of participating energy, industrial, and technology companies, labor unions, environmental organizations, and state officials, the National Enhanced Oil Recovery Initiative applauds the MLP Act’s sponsors for expanding MLP eligibility to increase private investment in carbon capture and storage projects. Capturing carbon dioxide from power plants and many other industrial facilities for use in enhanced oil recovery produces more American oil, creates good-paying jobs, generates net new revenue for the federal treasury, and reduces CO2 emissions.”
Mike McAdams, President, Advanced Biofuels Association: “We are grateful for Senator Coons’ leadership at a critical point for America’s domestic biofuels industry as we are moving from the beaker to the barrel, in record time. The legislation provides an innovative financial mechanism that could significantly reduce the cost of financing as companies are reaching a game-changing milestone. Substantial investments by private companies in research and development have been the catalyst for today’s success in bringing advanced biofuels to commercial markets, but stable and consistent public policies are crucial to encourage and allow additional investment dollars that will help get us across the finish line. By creating a new and more appealing option for investors, the bill helps level the playing field and ultimately promotes a more cost competitive advanced biofuel alternative to conventional fuel.”
Matt Carr, Executive Director, Algae Biomass Organization: “The members of the Algae Biomass Organization applaud Senator Coons for his work to create a more level playing field for investment in renewable energy projects through the MLP Parity Act. Algae-derived fuel producers are confident that when the tax code and other federal programs are applied blindly to renewable and traditional energy projects, renewable energy will see a significant increase in private investment, making renewable energy more cost competitive. The increased competition will help drive down energy bills for all ratepayers. Senator Coons’ MLP Bill is essential to creating fair competition in the energy market.”
Robert P. Thornton, President & CEO, International District Energy Association: “When Super Storm Sandy hit in 2012 and knocked out power to 8.1 million people in 21 states, the need for more robust and resilient energy infrastructure became alarmingly obvious and urgent for cities, communities, campuses, industry and healthcare. Today, mayors and CEO’s alike are seeking public/private partnerships to accelerate capital investment in district energy and combined heat & power microgrids to deliver more efficient and sustainable local energy solutions. The Master Limited Partnership Parity Act offers significant potential to catalyze growth of these community-scale clean energy resources. By providing a new source of liquid private capital, the Act can play a vital role in strengthening the infrastructure of our nation’s cities, communities, institutions and military bases.”
Steve Clemmer, Director, Energy Research and Analysis, Union of Concerned Scientists: “Giving renewable energy projects access to low-cost financing available from publicly-traded MLPs would help level the playing field with fossil fuels and give all Americans the opportunity to invest in the transition to a cleaner, low-carbon economy. This innovative financing tool would expand the investor base and lower the cost of financing renewables projects by roughly 40 percent, addressing an existing market barrier currently inhibiting development. Such a change means more clean energy projects being built and continued economic benefits in this growing sector.”
Joe Keefe, President & CEO, Pax World Mutual Funds: “We’re looking for exposure to clean energy opportunities throughout our $3.8 billion portfolio. The ability to invest in clean energy infrastructure is particularly interesting. However, like many investors, we invest through the capital markets and are thus not in a position to finance individual renewable energy and energy efficiency projects. Smart changes, like those proposed for Real Estate Investment Trusts and Master Limited Partnerships, could provide opportunities for investment by firms like Pax as well as individual investors.”
George Gay, CEO, First Affirmative Financial Network: “Investments like those possible through clean energy MLPs are exactly the type of investments our clients want to make. Like many Americans, they want to support projects that provide clean energy and create jobs domestically. Our typical client already has a large portion of their investment portfolio dedicated to energy projects through Master Limited Partnerships. They are investments we know and trust and their use for clean energy could be a great way to fund clean energy projects, spark job creation, catalyze economic growth, and provide investment opportunities for responsible investors.”
Lowell Miller, Founder, President/CIO, Miller/Howard Investments Inc.: “There is no apparent logic to the current exclusion of renewable energy companies from the ability to form publicly traded partnerships. A large part of the intent in permitting energy companies to become MLPs was to encourage the development of domestic energy resources and infrastructure. Entity-level taxation was eliminated, and enabled a greater pass-through of revenues to shareholders, thus creating a “yield” vehicle and an additionally attractive feature of the entity’s equity. To fail to include renewable energy is, in effect, to say that the government and its tax system wants to implicitly encourage carbon-based energy development and to discourage—or not encourage—renewable energy development. It’s doubtful that a poll of citizens would agree with this standpoint.”
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