WASHINGTON – Yesterday, U.S. Senators Chris Coons (D-Del.) and Jerry Moran (R-Kan.) reintroduced bipartisan legislation that, according to new research, would reduce U.S. power plant emissions by more than six percent 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. U.S. Representatives Mike Thompson (D-Calif.) and Ron Estes (R-Kan.) reintroduced a similar bill in the House of Representatives this week.
S. 1034, the Financing Our Energy Future Act is a straightforward, powerful modification of the federal tax code that would unleash $15 billion in annual capital spending in wind, solar, and electricity storage, according to new research published by the Stanford University’s Woods Institute for the Environment. By enabling renewable energy-generation and fuel companies to form master limited partnerships (MLPs), clean energy projects will access the funding advantages of corporations and the tax advantages of partnerships. In 2020, the House of Representatives passed the Financing Our Energy Future Act as part of H.R. 2, a comprehensive infrastructure bill. Now, lawmakers are calling on both chambers to pass the Financing Our Energy Future Act into law.
“Clean energy technologies have made tremendous progress in the last several decades, and we need to level the playing field for renewables compared to fossil fuel projects in the federal tax code,” said Senator Coons. “The bipartisan and bicameral Financing Our Energy Future Act will increase investments in a broad range of clean energy sources, create jobs, and significantly reduce emissions in the U.S. power sector by ensuring that clean energy technologies can benefit from the incentives that traditional energy sources have relied on for decades. This bill has earned broad bipartisan and industry support and is a common-sense way to promote clean energy infrastructure as we rebuild from the pandemic.”
“The United States has the largest and most liquid capital markets in the world, particularly for innovative and developing companies, yet many emerging energy companies lack access to the same tax advantages others in the sector utilize to be competitive,” said Senator Moran. “Expanding sound economic tools like master limited partnerships (MLPs) increases innovation and economic growth, while providing companies a broader investment pool that drives potential to drastically reduce the time and cost associated with deploying new technologies. The Financing Our Energy Future Act would strengthen our energy independence and security by providing parity for companies across the energy sector spectrum to utilize the MLP structure for increased access to capital and project development.”
“Ensuring we use the full power of renewable energy sources is critical to our work to lower greenhouse gas emissions and help tackle climate change,” said Representative Thompson. “That’s why I am proud to join with colleagues in both chambers and both parties to introduce the Financing Our Energy Future Act. This bill expands the use of master limited partnerships so that renewable energy projects can take advantage of these tax structures and attract more private investment. This bill will expand renewable energy use and create jobs, strengthening our economy and improving the future of our planet.”
“To secure reliable and affordable energy for our nation, we must pursue policies that enable energy independence and prevent Washington from picking winners and losers,” said Representative Estes. “Allowing our clean energy sector to utilize master limited partnerships will encourage more private sector innovation and growth – benefiting our economy and environment.”
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 covered in S. 1034 would include solar, wind, hydropower, marine and hydrokinetic energy, fuel cells, energy storage, combined heat and power, biomass, waste heat to power, renewable fuels, biorefineries, carbon capture, utilization and storage (CCUS), advanced nuclear, and renewable chemicals.
In the Senate, the Financing Our Energy Future Act is cosponsored by Senators Angus King (I-Maine), Susan Collins (R-Maine), Tom Carper (D-Del.), Joni Ernst (R-Iowa), Debbie Stabenow (D-Mich.), Mike Braun (R-Ind.), Mark Warner (D-Va.), Mike Crapo (R-Idaho), and Michael Bennet (D-Colo.).
S. 1034, the Financing Our Energy Future Act, is endorsed by the Clean Air Task Force, Third Way, BPC Action, Center for Climate and Energy Solutions (C2ES), National Association of State Energy Officials (NASEO), ClearPath Action, Ceres, Energy Infrastructure Council, American Sustainable Business Council, Growth Energy, Sunnova Energy Corporation, Midwest Cogeneration Association, International District Energy Association, Alternative Fuels & Chemicals Coalition, Carbon Capture Coalition, Heat is Power Association, Advanced Biofuels Business Council, Consumer Energy Alliance, Nuclear Innovation Alliance, and JSA Sustainable Wealth Management.