Any conversation about boosting renewable energy investments starts with reforming the federal tax code. Why? Because the tax code provides substantial government support for oil, gas and nuclear without doing the same for renewables.
You do not need a degree in economics to know that if the tax code de-risks a $100 million investment in deep water drilling but does not do the same for a similar investment in cellulosic biofuels, investors are going to gravitate to the safer investment when trying to unearth the next gallon of motor fuel. That is exactly what is happening, and is one of the primary reasons that the United States remains so dependent on fossil fuels.
It is actually quite comical to watch the fossil fuels industry deny that they receive special treatment. A colleague on this very listserv asks rhetorically “parity with what?” Well, let’s talk about that …
Senator Coons and his colleagues are right to start with Master Limited Partnerships. An MLP is a special provision in the Code that allows energy project developers to access retail investors for project development by simply setting up an LLC-like subsidiary and selling shares. More than $200 billion (with a “b”) in private investment channeled through MLPs in 2010 alone. The problem is renewables are explicitly not eligible. Senator Coons is leading the charge to make renewables eligible for MLPs. The fix is smart and simple, and should pass immediately.
But in answering the question “parity with what?” … MLPs are the tip of the iceberg. (more…)