EXCLUSIVE Maison Blanche supports the fiscal partnership plan in the renewable energy sector
WASHINGTON, Sept.22 (Reuters) – The White House is backing a plan by House Democrats to allow renewable energy companies to form tax-efficient partnerships that the oil and gas industry has used for decades to build the pipeline and storage infrastructure in the United States, according to three people familiar with the matter.
The expansion would allow the renewable energy industry – from wind and solar to biofuels like ethanol – to form master limited partnerships, known as MLP, which combine the advantages of corporate finance with the tax advantages of partnerships.
The expansion is included in Democrat-backed $ 3.5 trillion spending legislation that is being considered in the House.
“An expansion could allow retail investors to invest directly in renewable energy projects, rather than being able to invest only in companies likely to deal with renewable energy,” said Clark Sackschewsky, head of the fiscal market. at BDO USA in Houston.
The sources, speaking on condition of anonymity, confirmed White House support for the plan, which is expected to cost the U.S. Treasury nearly $ 1 billion in lost tax revenue over a decade.
Some environmentalists had urged the White House to support a competing plan that would eliminate MLPs for the fossil fuel industry, arguing that the structure offers financial incentives to spur oil and gas growth at a time when the president’s administration Joe Biden is trying to cut carbon emissions. .
The oil and gas industry has funded billions of dollars in pipeline and storage products under MLPs since President Ronald Reagan first signed legislation in 1986 allowing them as a means to boost energy investment.
The Alerian MLP Index, an indicator of energy infrastructure MLPs, is currently valued at nearly $ 200 billion.
This index includes the largest pipeline transportation and storage companies, including Enterprise Products Partners and Energy Transfer.
The renewable energy industry has long sought to access the corporate structure as a way to level the playing field.
“It’s a matter of justice and fairness. This change could really jump-start many projects and help support low-carbon fuels, ”said Geoff Cooper, director of the Renewable Fuels Association.
Several pipeline companies, mostly oil and natural gas pipeline companies, have restructured in recent years after US regulators said they would no longer be allowed to recapture a tax deduction as part of the fees they charge shippers at a “cost of service” rate. structure.
“The whole MLP structure is problematic from a governance perspective, which has significantly dampened investor interest,” said Andrew Logan, senior director of oil and gas at Ceres, adding that this could mitigate the impact of expanding MLP eligibility.
Reporting by Jarrett Renshaw and Laura Sanicola; Editing by Will Dunham and Franklin Paul and David Gregorio
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