Sens. Moran, Coons introduce bill to allow renewable energy companies to form MLPs

U.S. Sens. Jerry Moran (R-KS) and Chris Coons (D-DE) introduced legislation to give investors in clean energy projects the same tax advantage available to investors in fossil fuel-based energy projects.

The Financing Our Energy Future Act would modify the federal tax code to all renewable fuel companies to form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.

“The United States has the largest and most efficient capital markets in the world, yet our renewable energy companies rarely have access to those markets,” Moran said. “In order to grow our economy and increase our energy security, sound economic tools, like MLPs, should be expanded to include additional domestic energy sources. The Financing Our Energy Future Act will allow the renewable energy sector to utilize the MLP structure for project development, making it accessible to a broader and deeper investment pool that can drastically reduce the time and cost associated with deploying new energy technologies.”

A master limited partnership (MLP) is taxed as a partnership, but ownership interests are traded like corporate stock. MLPs are currently only available to investors in energy portfolios for oil, natural gas, coal extraction, and pipeline projects, which get access to larger and more liquid sources of capital than traditionally financed energy projects. Investors in clean energy projects, however, have been prevented from forming MLPs, which hurts a fast-growing portion of America’s domestic energy sector.

“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,” Coons said. “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 companion bill was introduced in the U.S. House of Representatives by Reps. Ron Estes (R-KS) and Mike Thompson (D-CA).

Companies that produce 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 would all be eligible under this bill.