As it stands, Master Limited Partnerships (MLPs), a method by which the federal government subsidizes the energy sector are only offered to traditional sources, namely oil, coal and natural gas. However, a bill introduced by Senators Christopher Coons (D-Delaware) and Jerry Moran R-Kansas), labeled the Master Limited Partnerships Parity Act, could change that by making MLPs open to other resources, such as renewable energy. MLPs also enable investors who form them to be exempt from certain IRS tax codes.
“Master limited partnerships have been largely responsible for the tremendous growth in our country’s energy infrastructure, said Sen. Moran. “In order to grow our economy and increase our energy security, sound economic tools like the MLP should be expanded to include additional domestic energy sources.”
Many believe that fast tracking this piece of legislation into law could not come at a better time, especially since both federal renewable energy tax credits and government spending stimulus designed to prevent collapse of the U.S. banking system are expiring.
Making MLPs available to companies involved in renewable energy would enable them to raise lower cost capital during an era where tighter lending rules are the norm, meaning that without them, the only real option is a limited market for tax equity financing.
If the act is passed, it would also enable specific MLPs to be created for different areas of renewable energy, such as solar power, wind power, hydroelectric, hydrokinetic, geothermal and hydrogen fuel cells. Additionally the act would also allow MLPs for renewable fuels, such as ethanol, bio fuel, even algae based energy sources.
This legislation simply builds on a successful model,” said Senator Moran “and I look forward to working with my Senate colleagues on policies that will drive innovation, create American jobs, and grow our economy.”