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Public Statements

Statements on Introduced Bills and Joint Resolutions

Floor Speech

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Date:
Location: Washington, DC

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Mr. COONS. Mr. President, when it comes to America's energy policy, Republicans and Democrats alike have made it clear they support an all-of-the-above energy strategy.

As the Presiding Officer knows, serving on the Energy Committee along with me, there is broad agreement on the need for a comprehensive approach that will develop secure, homegrown, efficient energy sources for our next generation.

I believe an across-the-board policy that accepts the likely reality of our current dependence on our fossil-based fuels going forward, as well as the vital need to develop and deploy new, promising, clean energy fuels of the future, is essential. Such a policy will provide certainty to our markets, opportunities to our families and companies and communities, and ensure that we are not--as some would say--picking winners and losers in the energy space.

Yet there is today an obstacle standing in the way of a truly comprehensive strategy that at least both parties say they want. It is a provision in our Federal Tax Code that has its metaphoric thumb on the scale, tipping the balance in favor of traditional fossil fuels. That is why I am so glad I have been able to work with my colleague and friend Senator Moran of Kansas to today introduce bipartisan legislation that will level the playing field and bring parity to one piece of Federal tax policy relating to energy.

Investors in oil, natural gas, coal, and pipelines have for nearly 30 years been able to form publicly traded entities called master limited partnerships, or MLPs. These partnerships include a passthrough tax structure that avoids double taxation and leaves more cash available to distribute to investors. They have for investors the liquidity and the return that is commonly associated with equity and the tax advantage that is associated with partnerships, and they have been able to aggregate and deploy a significant amount of private capital in the traditional fossil fuel marketplace, roughly $350 billion today across 100 MLPs. They have access to private capital at a lower cost, something that capital-intensive alternative energy projects in the United States badly need now more than ever.

As a result, MLPs should be a great source for raising private capital for clean energy projects as well as they have been for fossil fuel projects. The only problem is, under current law, only fossil fuel-based energy projects can attract this type of private energy investment. That is right--we are currently in our tax policies working against our broadly stated commitment as a country to an all-of-the-above energy policy with a statute that explicitly excludes clean energy projects from forming these MLPs. This inequity is starving a growing portion of America's domestic energy sector of the very capital it needs to build and grow and compete. So Senator Moran and I, along with other colleagues, decided to fix it. We came together and said it was time to level the playing field.

Sometimes when I have the opportunity, I have gone for a run here in Washington or, even better, in my home State in Delaware. Something any runner can tell you is that going up and down hills is what saps your strength. When a surface is flat, you can go farther, you can go faster, and it is the same with our Federal Tax Code. When it comes to evening things out, we have two choices. We can either lower everything to a common level by eliminating MLPs--by saying this tax advantage shouldn't be given to its traditional beneficiaries in gas and oil and coal, or we can raise the level of opportunity and attract greater investment by broadening the fields that can take advantage of MLPs to include wind and solar, biomass, geothermal, cellulosic, biodiesel.

In my view, the better strategy, the better approach is the bipartisan one that takes our colleagues at their word and says we intend to stop picking winners and losers and, instead, embrace an all-of-the-above energy strategy. Senator Moran and I have chosen this option and believe that rather than eliminating MLPs, bringing everything together and making renewables on the same level playing field with fossil fuels has a better promise for the future of the American energy economy.

This is a relatively straightforward proposal. Our bill, the Master Limited Partnerships Parity Act, will bring new fairness to the Tax Code in this specific area. It recognizes revenue from projects that sell electricity or fuels produced from clean energy sources as qualifying MLPs.

This change will encourage investment in domestic energy resources, and could bring substantial new private capital off the sidelines to finance renewable projects ranging from wind and solar to geothermal and cellulosic ethanol, just at a time when we so badly need it.

Harnessing the power of the private market is essential if alternative energy projects are to grow and create jobs all across America. Two experts in energy finance, Felix Mormann and Dan Reicher from Stanford's Steyer-Taylor Center for Energy Policy and Finance, wrote an op-ed this past week in the New York Times endorsing this legislation.

They said:

If renewable energy is going to become fully competitive and a significant source of energy in the United States, then further technological innovation must be accompanied by financial innovation so that clean energy sources gain access to the same low-cost capital that traditional energy sources like coal and oil and natural gas enjoy.

In the search for common ground on energy policy, this kind of simple fairness is the sort of thing I hope we can all agree on. That is why the MLP Parity Act carries the strong support of a wide range of business groups, financial experts, and energy organizations.

David Crane is the CEO of Fortune 300 company NRG Energy. NRG has generating assets across a wide range of traditional fuel sources and clean and alternative energy sources. Mr. Crane said:

The MLP Parity Act is a phenomenal idea. It's a fairly arcane part of the tax law, but it's worked well and has been extremely beneficial to the private investment in the oil and gas space. The fact that it doesn't currently apply to renewables is just a silly inequity in our current law.

We are also grateful for the support of national organizations such as the American Wind Energy Association, the Solar Energy Industries Association, the American Council on Renewable Energy, and many others, and thank them for their hard work in promoting this commonsense energy future for our country.

I also wish to specifically thank Dr. Chris Avery and

Franz Wuerfmanns dobler who worked in my office so well in preparing this and moving this forward as public policy. And I wish to thank Josh Freed of Third Way for bringing this to our attention and producing one of the first policy papers on how master limited partnerships can be a great financing vehicle for clean energy.

I have no doubt there is significant growing opportunity worldwide in alternative fuels. There is a clean energy future coming. The only question is whether American workers, American communities, and American companies will benefit from this, or will simply be bystanders and watch our competitors pass us by. I think if we are going to lead, we have to work together. The private sector can and will provide the financing and the researchers to develop critical innovations and deploy them, but the Federal Government--the Congress in particular--must set a realistic and positive policy pathway to sustain these innovations and let the market work to its fullest potential. The Master Limited Partnerships Parity Act moves us toward that goal. By leveling the playing field for fair competition, this market-driven solution could provide vital and needed support for the kind of comprehensive energy strategy we need to power our country for generations to come.

Some of us who will support this bill also support things such as the ITC, the PTC, and other clean energy financing vehicles. Others may not. On the specific question of master limited partnerships, the bill we introduced today simply allows us to come together in a bipartisan way to open it up to all energy sources, and to build a sustainable energy financing future on this planet.

Once again, I want to thank my cosponsor, Senator Moran. I look forward to working with all of my colleagues, on the Energy Committee and throughout the Senate and the House, to move forward this important legislation.

Mr. President, I ask unanimous consent that the text of the bill be printed in the RECORD.

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