Renewables Tapping Partnership Tax Plan Backed by Big Oil

Renewable energy companies moved a step closer to accessing a tax financing structure that’s worth more than $350 billion as the American Petroleum Institute said it would back Congressional plans to expand the program.

Allowing wind farms and solar-power plants to organize under a corporate structure known as master-limited partnerships would help wean them from federal subsidies, Jack Gerard, president of the oil industry’s main lobby group, said today at the Bloomberg New Energy Finance Summit.

MLPs already offer tax breaks to fossil-fuel producers and pipeline companies. Expanding their use to include renewables would provide an incentive for investors and spur development of wind and solar power, he said.

“MLP is a perfect example of an investment vehicle that can facilitate renewable energy,” Gerard said during a panel discussion in New York today.

Alaska Senator Lisa Murkowski, the top Republican on the energy committee, said yesterday there’s bipartisan support for allowing renewable-energy companies to use MLPs and she’s working on legislation that Delaware Senator Chris Coons, a Democrat, intends to introduce this week.

MLPs let companies raise funds like a corporation and pay taxes as a partnership. They are traded on public exchanges and the market value of U.S. MLPs exceeds $350 billion, according to data on Coons’s website.

‘Big Impact’

“The fossil fuel industry is moving in the right direction,” Bill Richardson, a former governor of New Mexico and Energy Secretary under President Bill Clinton, said today in an interview at the conference. “It will have a big impact if it results in deeds and not just words.”

Renewable-energy producers want to follow KKR & Co. (KKR) and Blackstone Group LP (BX) in tapping the Reagan-era tax break when U.S. renewable energy tax credits expire at the end of this year. Support from the oil and gas industry could help win votes for the measure, said Ethan Zindler, an analyst at New Energy Finance.

“If it means it’s not a zero sum game between renewables and oil that’s a good thing,” Zindler said. Politically, “it could provide cover for anyone who was on the fence.”

Murkowski said fossil-fuel producers support the plan.

“Many of these oil and gas companies have substantial interests in renewable energy, and the ones I’ve talked to don’t see it as competition,” Murkowski said yesterday in an interview at the conference. “There may be some conservatives that see renewables as ‘pie in the sky,’ but I haven’t seen any real opposition from the oil industry.”

Providing Certainty

Revamping the tax code is a “hugely important issue, especially when it comes to energy,” she said during a speech at the conference.

“Our goal must be to provide certainty as far out as possible,” Murkowski said. “That doesn’t mean subsidies should continue to grow more expensive even as the costs of technologies fall, but, hopefully, we can provide at least a three-to-five year window where investments can be made without a material shift in policies,” she said in remarks prepared for the conference and released by her office in Washington.

She also said she’s promoting an “advanced energy trust fund” that would use a share of revenue from energy production on lands that are now off limits to fund energy research.

“It offers a chance to reduce our costly dependence on foreign oil, to keep energy affordable and abundant and to boost R&D without raising taxes or increasing the deficit.”

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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