Bill aims to extend master limited partnerships to renewables

By Erin Voegele | June 25, 2015

U.S. Sens. Chris Coons, D-Del., and Jerry Moran, R-Kan., and Reps. Ted Poe, R-Texas, and Mike Thompson, D-Calif., have announced the reintroduction of the Master Limited Partnerships Parity Act. The legislation aims to level the energy playing field by giving investors in renewable energy access to a corporate tax structure currently only available to investors in fossil-based energy projects. According to information released by Coon’s office, the bill would unleash significant private capital by helping additional energy-generation and renewable fuel companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.

A master limited partnership is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. By statute, MLPs have only been available to investors in energy portfolios for oil, natural gas, coal extraction and pipeline projects. According to the senators and representatives, these projects get access to capital at a lower cost and are more liquid than traditional financing approaches to energy projects, making them highly effective at attracting private investment. Investors in renewable energy projects, however, have been explicitly prevented from forming MLPs, starving a fast growing portion of America’s domestic energy sector of the capital it needs to build and grow.

In the Senate, The MLP Parity Act was also cosponsored by Senators Debbie Stabenow, D-Mich.; Lisa Murkowski, R-Alaska; Michael Bennet, D-Colo.; Susan Collins, R-Maine; Angus King, I-Maine; and Cory Gardner, R-Colo. In the House, the MLP Parity Act was also cosponsored by Paul Gosar, R-Ariz.; Mark Amodei, R-Nev.; Peter Welch, D-Vt.; Jerry McNerney, D-Calif.; Mike Coffman, R-Colo.; and Earl Blumenauer, D-Ore.

“Renewable energy technologies have made tremendous progress in the last several decades, and they deserve the same shot at success in the market as traditional energy projects,” Coons said. “By updating the tax code, the bipartisan Master Limited Partnerships Parity Act levels the playing field for all domestic energy sources—renewable and non-renewable—to support the all-of-the-above energy strategy we need to power our country for generations to come. This practical, market-driven solution will unleash private capital and create jobs, and that’s why it has earned broad support from Republicans and Democrats in Congress as well as academics, outside experts, business leaders and investors.”

“In order to grow our economy and increase our energy security, sound economic tools like master limited partnerships should be expanded to include additional domestic energy sources,” Moran said. “MLPs have a proven record of success through real growth in our country’s energy infrastructure. This legislation builds on a successful model, and I look forward to working with my Senate colleagues on policies that will drive innovation, create American jobs, and grow our economy.”

“It is time for the United States to make Middle Eastern turmoil irrelevant to our energy security,” Poe said. “In order to do this we must pursue a comprehensive energy strategy that empowers all sources of domestically produced energy. This common-sense bill will help do just that. It is time for Washington to get out of the way and make it easier not harder to produce energy in this country.”

“We need to take an all-of-the-above approach to America’s energy future,” Thompson said. “This bipartisan bill will make it easier and more attractive for private capital to be invested in renewable energy. By leveling the playing field and treating renewable energy the same way we do oil and gas, we can create jobs, strengthen our national security, reduce our dependency on foreign oil and move closer to energy independence.”

The bill is endorsed by a variety of organizations, including DuPont, NRG Energy, Virent, the Advanced Biofuels Association, Advanced Ethanol Council, American Council on Renewable Energy, Biomass Power Association, Biotechnology Industry Organization, and Growth Energy.

“We appreciate Senator Coons thoughtful and supportive legislation to encourage investment in cellulosic ethanol and advanced biofuels by extending the tax-efficient Master Limited Partnership structure to investments in these forms of energy,” said Barry Granger, vice president for government affairs at DuPont. “These tax policies have proven effective in encouraging investment in oil and gas infrastructure and can similarly provide a much needed incentive for further developing the domestic renewable fuels industry.”  

“The MLP Parity Act will help level the playing field between renewable fuels and fossil fuels in tax policy that shapes private investment decisions,” said James Greenwood, president and CEO of BIO. “We are especially pleased that this legislation also covers renewable chemicals, for the first time establishing tax parity for this growing biotech sector. This will clear a path for increased industrial biotechnology innovation and commercialization activities that drives employment and economic growth and reduces dependence on foreign oil.”

“The advanced and cellulosic ethanol industry strongly supports the efforts of Senators Coons and the other co-sponsors of Master Limited Partnership Parity Act to level the playing field for advanced technologies when it comes to MLPs,” said Brooke Coleman, executive director of the AEC. “The MLP Parity Act would take a meaningful inequity out of the federal tax code, allow advanced technologies to compete for financing on a more level playing field, and put the country in a better position to create jobs and compete in the emerging $2 trillion global clean energy marketplace. Oil and gas producers are essentially using MLPs to access the retail investment market more quickly and efficiently, which in turn makes it easier to finance new oil and gas projects. It makes no sense for the federal government to continue to offer this financing vehicle to fossil fuels only. We commend this bipartisan group for tackling this issue.”

"We are grateful for Senator Coons' leadership at a critical point for America's domestic biofuels industry as we are moving from the beaker to the barrel, in record time,” said Mike McAdams, president of the ABFA. “The legislation provides an innovative financial mechanism that could significantly reduce the cost of financing as companies are reaching a game-changing milestone. Substantial investments by private companies in research and development have been the catalyst for today's success in bringing advanced biofuels to commercial markets, but stable and consistent public policies are crucial to encourage and allow additional investment dollars that will help get us across the finish line. By creating a new and more appealing option for investors, the bill helps level the playing field and ultimately promotes a more cost competitive advanced biofuel alternative to conventional fuel." 

The members of the Algae Biomass Organization applaud Senator Coons for his work to create a more level playing field for investment in renewable energy projects through the MLP Parity Act,” said Matt Carr, executive director of the ABO. “Algae-derived fuel producers are confident that when the tax code and other federal programs are applied blindly to renewable and traditional energy projects, renewable energy will see a significant increase in private investment, making renewable energy more cost competitive.  The increased competition will help drive down energy bills for all ratepayers.  Senator Coons' MLP Bill is essential to creating fair competition in the energy market.”