Bloomberg BNA -- Congress should expand a tax incentive reserved for the fossil fuel industry known as master limited partnerships to the renewable energy industry, a coalition of chief executive officers said in a report released Feb. 25.
That recommendation was among dozens a energy policy proposals in a report released by the Business Roundtable that also included approval of the Keystone XL pipeline by the Obama administration and ensuring that future regulations on hydraulic fracturing are “consistent” with industry best practices and state regulations.
The group, which represents the leaders of companies such as the Dow Chemical Co. and Chevron Corp., said it released the report because of a lack of comprehensive energy policy coming from the federal government.
“Unfortunately, the nation's energy policy has evolved through decades of ad hoc measures, resulting in an incoherent patchwork of subsidies, mandates, and regulations,” according to the report, Taking Action on Energy: A CEO Vision for America's Energy Future. “The result is a policy labyrinth that, on balance, is more likely to inhibit than unleash the private-sector investment needed to transform the energy sector.”
Master Limited Partnerships
Included in the report's recommendations was extending formation of master limited partnerships to renewables, a policy change that some in the clean energy industry have been advocating as other tax incentives are set to expire or are considered at risk in the face of comprehensive tax reform.
"Congress should provide wind-powered electricity generation with a smooth transition to an era of unsubsidized competitiveness."
A master limited partnership is a special business structure that permits a company to raise capital like a corporation, but to pay tax like a partnership. By statute they have only been available to investors in energy portfolios for oil, natural gas, coal extraction, and pipeline projects.
Sen. Chris Coons (D-Del.), a member of the Senate Energy and Natural Resources Committee, is expected to reintroduce legislation that would extend master limited partnerships to renewables in March, and Sen. Lisa Murkowski (R-Alaska), the committee's ranking member, and other Republicans have expressed support for the measure (24 DTR G-8, 2/5/13).
Gradual Phaseout of Wind Tax Credit
In addition, the Business Roundtable report said Congress should phase out the wind energy industry's 2.2 cent per-kilowatt-hour tax credit, which was extended until 2014 by the American Taxpayer Relief Act (Pub. L. No. 112-240) approved Jan. 1 (03 DTR GG-1, 1/4/13).
“Congress should provide wind-powered electricity generation with a smooth transition to an era of unsubsidized competitiveness by extending the wind production tax credit so that the benefit is gradually reduced and ultimately eliminated,” the report said.
The American Wind Energy Association, the wind industry's top U.S. trade group, released a proposal in December showing how the credit could be phased out over a six-year period (240 DTR G-7, 12/14/12).
The report also said, “it will be important to ensure that any future federal regulations applicable to hydraulic fracturing are consistent with industry best practices and not duplicative or inconsistent with state regulations.”
Both the Environmental Protection Agency and the Interior Department's Bureau of Land Management are moving forward with regulations that would affect hydraulic fracturing, the report said.
‘Expeditious' Approval of Keystone Pipeline
Other recommendations in the report included an “expeditious approval” of the Keystone XL pipeline and other privately funded infrastructure projects that would increase domestic energy production.
The 1,700-mile Keystone XL pipeline, which could carry Canadian oil sands to Texas Gulf Coast refineries, is currently awaiting final approval from the Department of State.