U.S. Senators Chris Coons (D-Del.), Jerry Moran (R-Kan.), Debbie Stabenow (D-Mich.) and Lisa Murkowski (R-Alaska) re-introduced bipartisan legislation Wednesday to level the energy playing field by giving investors in renewable energy projects access to a decades-old corporate structure whose tax advantage is available now 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 fuels companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.
"The bipartisan Master Limited Partnerships Parity Act levels the playing field to help clean and renewable energy projects compete fairly with traditional energy projects," Senator Coons said. "This market-driven solution supports the all-of-the-above energy strategy we need to power our country for generations to come. Our legislation will unleash private capital, create jobs and modernize our tax code. That's why it has earned broad support from Republicans and Democrats in Congress, as well as academics, outside experts, business leaders and investors." Senator Coons is a member of the Senate Energy and Natural Resources Committee.
"Master Limited Partnerships have a proven record of success," Senator Moran said. "Expanding the eligibility to emerging technologies will provide Americans with access to increased investment opportunities as well as the energy these entities will create. Capital formation remains one of the most difficult aspects of bringing a product to market. Our MLP Parity Act will reduce the cost of this capital and provide American consumers with more American energy sources. I look forward to working with my colleagues to advance this commonsense legislation."
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 growing portion of America's domestic energy sector of the capital it needs to build and grow.
"Clean energy entrepreneurs are inventing new technology, saving consumers money, reducing our dependence on foreign oil and creating American jobs," Senator Stabenow said. "We cannot afford to lose these new technologies to China and other countries because we continue to give special treatment to oil companies while ignoring opportunities in clean energy. It's time to level the playing field and grow these new job-creating industries here at home." Senator Stabenow is the chair of the Senate Finance Subcommittee on Energy, Natural Resources, and Infrastructure.
"The Master Limited Partnership structure has helped the oil and natural gas industry deliver the abundant and affordable energy that powers our economy today," Senator Murkowski said. "Through a small change in the tax code, this legislation will provide renewables with the same opportunity." Senator Murkowksi is the ranking member of the Senate Energy and Natural Resources Committee.
The MLP Parity Act introduced Wednesday is improved and expanded from the version introduced in 2012. The bill continues to include eligibility for renewable power generation and biofuels resources. In addition to providing greater clarity on how expansion of the law would be implemented, the bill further widens the scope of projects that qualify for master limited partnership status to include energy efficient buildings, waste-heat-to-power, carbon capture and storage, and biochemicals. The updated version of the bill also provides increased clarity and specificity on how it would be implemented if made law.
Senator Ron Wyden, chair of the Senate Energy and Natural Resources Committee, also supports the MLP Parity Act. "Senator Coons is taking exactly the right approach by putting renewables on a level playing field with fossil fuels on Master Limited Partnerships," Chairman Wyden said. "My aim is for Congress to accomplish that as part of comprehensive tax reform."
The MLP Parity Act was also introduced in the House on Wednesday by Reps. Ted Poe (R-TX-02), Mike Thompson (D-CA-05), Peter Welch (D-VT-AL) and Chris Gibson (R-NY-19).
The MLP Parity Act has been endorsed by the following: Businesses: Imperium Renewables, Inc., FAIR Coalition, FloDesign Wind Turbine, Leucadia Energy, LLC, Myriant Corporation, NRG, OwnEnergy, Renewable Biofuels, Inc., Summit Power Group, Virent; Trade Associations: Advanced Biofuels Association, Advanced Ethanol Coalition, Alliance for Industrial Efficiency, American Biogas Council, Biomass Power Association, Energy Recovery Council, Energy Storage Association, Geothermal Energy Association, Growth Energy, Heat is Power Association, International District Energy Association, National Enhanced Oil Recovery Initiative, Ocean Renewable Energy Association, Offshore Wind Development Coalition, Real Estate Roundtable, Semiconductor Equipment and Materials International, Solar Energy Industries Association; Environmental Advocates: Clean Air Task Force, Environmental and Energy Study Institute; Think Tanks and Research Institutes: Clean Energy Trust, New England Clean Energy Council, Third Way; Finance & Investment: CalCEF, CERES
Below are statements of support for the MLP Parity Act:
Josh Freed, Vice President for Clean Energy, Third Way: "The MLP Parity Act helps take government out of the role of picking energy winners and losers. Master Limited Partnerships have a long history of success raising private capital to finance oil and gas pipelines in the United States. This relatively small change to the tax code empowers investors, rather than Congress, to determine what kind of energy projects make financial sense. "
Jim Lanard, President, Offshore Wind Development Coalition: "MLPs will help to support the establishment of a sustainable offshore wind industry, since they can reduce the cost of capital and attract more investors. While extension of the Investment Tax Credit (ITC) remains our industry's number one legislative priority, MLPs will serve as a nice complement to ITCs."
Brooke Coleman, Executive Director, Advanced Ethanol Council: "The advanced ethanol industry strongly supports the efforts of Senator Coons and the co-sponsors of Master Limited Partnership Parity Act to level the playing field for advanced technologies when it comes to MLPs. Oil and gas producers are using MLPs to access the retail investment market, which in turn makes it easier to finance new oil and gas projects. Advanced, renewable technology developers are explicitly excluded from eligibility for MLPs. It makes no sense for the federal government to continue to offer this financing vehicle to fossil fuels only. The MLP Parity Act would take a meaningful inequity out of the federal tax code and put the country in a better position to create jobs and compete in the emerging $2 trillion global clean energy marketplace."
Tony Straquadine, Chairman, The Heat is Power Association; Manager of Government Affairs, Alliance Pipeline: "The waste heat to power industry strongly supports the efforts of Senators Coons and Moran and the other co-sponsors of the Master Limited Partnership Parity Act to ensure that projects using a broad array of energy generation technologies can avail themselves of the MLP structure. The ability of waste heat to power projects to qualify for MLPs will make those projects easier to finance, will be attractive to a broader range of energy investors, and will produce emission-free power from an otherwise wasted resource. We applaud your 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 combustion and no emissions."
Robert P. Thornton, President & CEO, International District Energy Association: "Since district energy and combined heat and power systems are capital intensive investments, the Master Limited Partnership Parity Act offers significant potential to advance the growth of these highly efficient and resilient 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."
Collin O'Mara, Secretary, Department of Natural Resources and Environmental Control, State of Delaware: "Senator Coon's vision to expand Master Limited Partnerships to include projects that harness all energy resources simply makes sense. At a time when we need to spur private sector investment, create domestic jobs, transition to a clean energy future, and fulfill our climate responsibilities, what better tool can we unleash than expanding upon a tried and true financing vehicle that has spurred billions of dollars of energy investments over the past decades and helped bring energy resources to all corners of our nation. By spurring private investment into large-scale renewable energy projects, like solar, fuel cells, geothermal, and offshore wind, we will drive down the costs of projects and catalyze greater innovation, commercialization, and deployment of the very technologies that are critical to our nation's economic and environmental future."
Jim Collins, President, DuPont Industrial Biosciences: "We appreciate the leadership of Senator Coons and his Senate cosponsors and Representative Poe and his House cosponsors on the Master Limited Partnership Parity Act. This constructive bicameral, bipartisan legislation will facilitate the commercialization of advanced renewable fuel technologies by extending the tax-efficient Master Limited Partnership structure to these investments. These tax policies have proven effective in encouraging investment in oil and gas infrastructure and can similarly help in the domestic advanced biofuels industry, bringing investment and jobs to rural America while expanding domestic energy production and reducing our vulnerability to oil price shocks."
Ted Michaels, President, Energy Recovery Council: "The Energy Recovery Council commends Senator Coons, Senator Moran, and the sponsors for introducing this important legislation which will provide renewable technologies with access to much needed capital. This legislation is another critical step in recognizing the value of renewable energy and ensuring that technologies such as waste-to-energy can continue to pursue growth opportunities."
Vice Admiral Dennis McGinn (USN-Ret.), President and CEO, American Council On Renewable Energy: "We commend Senator Coons for his leadership in introducing important legislation to level the playing field and promote greater private investment in our nation's abundant and affordable renewable energy resources and fuels. Enabling master limited partnership investment in renewable energy and infrastructure can help lower project costs, leading to more economic investment and a more diverse energy mix."
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."
Rhone Resch, president and CEO, Solar Energy Industries Association: "This bill is an important step toward leveling the playing field between clean, renewable energy and long-entrenched energy sources in America, by providing the solar industry with access to private capital in the same manner enjoyed by the oil and gas industry for almost 30 years. Today, the U.S. solar industry employs nearly 120,000 Americans, with solar deployment growing and costs to consumers dropping. Senator Coons' MLP proposal would build on this success, and SEIA applauds him for putting forward an idea that has the potential to attract private sector investment in critically important solar projects. This bill represents smart public policy, and solar represents a clean, safe, affordable and inexhaustible supply of energy for our nation. We look forward to working with Senator Coons and other stakeholders on this important issue."
Kurt Waltzer, Special Projects Director, Clean Air Task Force: "The Clean Air Task Force strongly supports the MLP Parity Act. Carbon Capture and Storage is a critical path technology for addressing climate change and we need more pioneer projects. If adopted, this bill will cut the cost of getting that steel in the ground".
David Gardiner, Executive Director, Alliance for Industrial Efficiency: "We applaud Senators Coons (D-DE), Moran (R-KS), Stabenow (D-MI) and Murkowski (R-AK) for their bi-partisan leadership in introducing the Master Limited Partnership Parity Act. The Alliance for Industrial Efficiency is particularly pleased that the bill extends low-cost financing to Combined Heat and Power and Waste Heat to Power, proven clean energy sources that could provide as much as 20 percent of U.S. electric capacity."
Judi Greenwald and Brad Crabtree, Co-Directors, National Enhanced Oil Recovery Initiative: "On behalf of participating industrial and other 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."
Rob Gramlich, Interim CEO, American Wind Energy Association: "America's wind energy sector is a success story that has proven its strength by recruiting $18 billion in annual private investment in America's energy infrastructure in recent years despite short-lived policy certainty. We commend Senators Chris Coons (D-DE), Jerry Moran (R-KS), Debbie Stabenow (D-MI), Lisa Murkowski (R-AK) and Representatives Ted Poe (R-TX-2), Mike Thompson (D-CA-5), Peter Welch (D-VT-AL), and Chris Gibson (R-NY-19) for their leadership in promoting the eligibility of master limited partnerships (MLPs) to include renewable energy projects. MLPs work well for conventional energy infrastructure and will be one critical tool to ensure that federal incentives continue to drive private investment into the U.S. wind energy market. We look forward to working with Senator Coons, Representative Poe, and the other bill co-sponsors to proceed with legislation that allows wind power developers to efficiently utilize MLP structures."