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Can fossil-fuel tax benefits boost the renewable energy industry?

Midwest Energy News

Tuesday, January 29, 2013

Since the 1980s, U.S. oil and gas companies have benefited from a tax loophole big enough to build a pipeline through.

By organizing as a type of partnership instead of a corporation, companies that extract, process or transport “depletable” natural resources have been exempt from corporate income taxes.

That word — “depletable” — specifically excludes renewable energy, but a long-simmering effort to change that now appears to be gathering some steam in Washington…

The first master limited partnership, or MLP, was devised in 1981 by a Minneapolis drilling and exploration company, Apache Oil Corp., now based in Houston. The structure offered a way to sell publicly tradable stock without being taxed as a corporation…

MLPs aren’t a “magic potion,” however, warns Joe Condo, vice president and general counsel for Chicago renewable developer Invenergy, which has lobbied for MLP changes for several years.

“One concern we have is that some folks who support MLP are saying maybe this is a replacement for [production tax credits],” says Condo. “We don’t agree with that.”

The Bipartisan Policy Center, a Washington, D.C., think tank, agrees. In a 2011 policy brief it concluded, “Because MLP s would only increase the eligible investor pool … by themselves they would most likely not supplant the tax incentives currently in place.”

2013-01-29 00:00:00
Midwest Energy News