One of the major barriers to renewable energy expansion is the unequal treatment renewables receive in tax credits and incentives. As we’ve highlighted, fossil fuels enjoy much more preferential treatment through permanent tax credits and incentives. Tax credits and incentives for renewables, on the other hand, must be continually reauthorized and at the end of last year, Congress let four of the largest renewable tax credits expire. The uncertainty of support leaves the renewable energy market more unstable and stunts its growth potential.
Democratic Senator Chris Coons from Delaware and Republican Senator Jerry Moran from Kansas introduced legislation to addres this issue and level the playing field. The proposed legislation would open up the “master limited partnership” (MLP) tax structure to renewable energy investors. An MLP combines the funding advantages of corporations and the tax advantages of partnerships by allowing projects to gain access to capital at a lower cost and projects are more liquid than traditional financing approaches, making them very attractive to private investment. The incentive is currently available only to investors in fossil fuel projects, like oil, natural gas, and coal extraction.
Despite a diverse coalition that includes business and environmental interests, the prospects of the bill, or any energy legislation, seem grim. This reality points to a deeper barrier to renewable energy development -- partisan politics. Currently, support for renewable energy development runs largely along party lines and conservatives seem to be doing whatever they can to derail clean energy development. Yet, this wasn’t always the case as support for renewable energy development was roughly equal among conservatives and liberals as recently as 2008.
The increasing polarization around clean energy doesn’t help anyone. A recent Brooking Institution post pointed out the new lows that were achieved by the highly politicized hearings around green jobs counting. Congressman Darrel Issa, whose ties to the oil and gas industry run deep, made Bureau of Labor Statistics officials go through a list of jobs to see whether or not they were counted as “green.” Brookings released their own count of green jobs last fall and the jobs counted as “green” were by and large in agreement with BLS findings. Despite the continued search, there is no grand green conspiracy to mislead the public. Green jobs are not only very real, they are strong economic drivers.
A while back, we noted how much time was spent grilling Secretary Chu over Solyndra (five and a half hours) versus grilling the heads of major banks responsible for the recent economic meltdown (less than 3.5 hours total, even though there were four people questioned.) The recent Issa hearings indicate the House GOP’s intent to continue to use them as a way to depress renewable energy development. Given that we are experiencing twelve consecutive months of record-breaking heat, we don’t have time for pointless Congressional hearings. But something tells me there are more hearings, not solutions, to come.