Clean Energy Businesses Urge Continued Action on Tax Extenders
Washington, DC – Business Council for Sustainable Energy (BCSE) President, Lisa Jacobson, made the following statement as a follow up to testimony she provided at a March 14 hearing of the House Tax Policy Subcommittee in which she urged continued congressional action on important clean energy tax measures.
“As we approach Tax Day on April 15, BCSE urges Congress to support legislation to provide durable tax policy that is equitable across eligible clean energy technologies.
“Renewable energy, energy efficiency and natural gas deliver jobs, increased economic growth, greater energy productivity and fewer emissions for the United States. This market dynamism and success is partly credited to tax policy frameworks that have benefitted some, but not all, clean energy technologies.
“Current law provides a mix of tax incentives for the production of energy and for investment in plant property for a range of technologies. It also includes incentives in the areas of sustainable transportation and energy efficiency.
“While Congress has made significant inroads on tax policy, much remains to be done in these important sectors. The tax code is currently structured in a manner that puts otherwise competitive clean energy technologies at a disadvantage in the marketplace. In the renewable energy sector, these technologies include: biomass, geothermal, landfill gas, waste to energy, hydropower, marine and hydrokinetic.
“Additionally, extensions and some modifications are needed for credits related to energy efficiency, energy storage and geothermal technologies. Finally, all these technologies should be eligible for Master Limited Partnerships which would use tax structures to drive private investment into infrastructure.” Jacobson said.
For a complete copy of Jacobson’s March testimony go here.
BCSE Statement on Extension of Clean Energy Tax Measures in Bipartisan Budget Act
Washington, DC – Business Council for Sustainable Energy (BCSE) President Lisa Jacobson issued the following statement following passage of Bipartisan Budget Act of 2018 containing extension of energy tax provisions.
“BCSE is pleased that Congress has enacted clean energy tax provisions as part of the Bipartisan Budget Act this week. However, the lack of parity between clean energy tax measures continues to hinder investment and job creation in a number of sectors that contribute to a diverse, reliable and affordable energy system.
“The Bipartisan Budget Act includes one-year, retroactive extensions for a range of clean energy tax measures, including incentives for energy efficiency as well as the Production Tax Credit for biogas, biomass, active geothermal, waste to energy, hydropower, and marine and hydrokinetic. It also provided a five-year extension with a phase down for several technologies that are eligible for the Investment Tax Credit, fiber-optic solar, fuel cells, small wind energy, microturbines and combined heat and power.
“BCSE had called for multi-year extensions of all the pending energy extenders and also sought to modify or expand tax measures to level the sustainable energy playing field for waste heat to power, energy storage, and commercial geothermal. BCSE is disappointed that the Bipartisan Budget Act did not adopt those proposed changes.
“Looking ahead, BCSE urges Congress and the Trump Administration to address the pending tax issues and provide a multiyear extension for the energy efficiency and PTC technologies that were only extended until December 31, 2017. It will also work to ensure that tax measures benefiting waste heat to power, energy storage and commercial geothermal are addressed.”
In terms of investment, growth and jobs, the current stakes for tax reform couldn’t be higher for American energy producers. Clean energy generation and storage is now a $200 billion industry that supports more than 3 million jobs and hundreds of millions of consumers across the United States. With conferees now named and set to meet on the greatest tax reform package of a generation, it’s clear that our nation stands on the cusp of a major tipping point for clean energy policy.
How the House and Senate members of the conference committee come together on a few key areas will determine if clean energy continues to surge, or if the rug is pulled out from this dynamic sector and the United States falls further behind China. At issue is tax parity among energy generation technologies and whether tax reform will actually simplify the code for investors and businesses.
There is much to celebrate already. Businesses large and small are eagerly awaiting a dramatic reduction in the corporate tax rate and the allowance for 100 percent expensing. These provisions will ensure that U.S.-based firms are more competitive internationally and will fast-track domestic investment. Businesses in every sector of the economy will have more flexibility and agility in competitive global markets. And by immediately writing off the full cost of new equipment, businesses can make additional investments sooner, improve operations, and invest in employees and workplace training.
These benefits hold true for the clean energy sector, but are undermined by the Senate bill’s new tax on businesses working in multiple countries and the retention of the corporate alternative minimum tax. As currently drafted, the base erosion anti-abuse tax provisions in the Senate bill would add more complexity to the existing tax system and potentially subject many planned renewable energy projects to a new 100 percent tax. Further, it weakens the current tax equity financing framework and shuffles the principal mechanism for monetizing credits. Its retroactive application undercuts commitments made in good faith by investors and developers, and will dramatically reduce American clean energy investment and job creation in the wake. While these provisions were put in the bill to prevent companies from paying fewer U.S. taxes, as written the BEAT provisions will stunt job growth in a sector that is otherwise growing 12 times faster than the rest of the U.S. economy.
And instead of having businesses do their taxes twice and pay the higher of the two, the corporate AMT should be repealed as proposed in the House bill. Without a fix, the AMT provisions in the Senate measure will nullify the value in other parts of tax reform that are critical to spurring innovation and economic growth.
Mature markets don’t need help from Uncle Sam, but Congress shouldn’t unravel deals based on a bipartisan agreement in 2015 that scheduled the phase-out of tax credits for the solar and wind industry. Unfortunately, the House bill would dissolve this agreement by cutting the value of the remaining tax credits going forward, and applying these changes retroactively. Maintaining the 2015 agreement in these areas will ensure near-term certainty for businesses, communities and investors that back these energy projects. In just a few years, these credits will sunset as planned.
The House took a significant step forward in leveling the tax credit playing field for solar, qualified fuel cell, wind, microturbine, combined heat and power, and thermal energy. Tax credits were also extended for residential energy efficiency property and modified for advanced nuclear power facilities. These additional clean energy tax credits—and their planned sunset schedules — create parity among energy generation technologies in the short- and long-run and should be included in the final tax bill.
Congress has a once-in-a-generation chance to use tax reform as a tool for long-term growth and better competition in the energy sector. As tax reform legislation moves forward, CRES Forum encourages the conferees to assure that the workers and businesses which comprise America’s clean energy sector can continue to lift to the U.S. economy as well as an American-made energy future.
About the Author
Charles Hernick is director of policy and advocacy at Citizens for Responsible Energy Solutions (CRES) Forum, a nonpartisan, nonprofit organization committed to educating the public and influencing the national conversation about clean energy.
In a letter, the BCSE called for structuring of the tax could that would provide benefits to all qualifying technologies based on the energy, as well as environmental and public benefits they provide. Further, they said that without a transition period on proposed changes to existing tax laws, there could be a disruption of the market and job losses. Unpredictability, they noted, is bad for investment and bad for jobs.
Neither branch of Congress escaped their attention, either.
“Regarding specific comments on the pending tax reform legislation, we note that the Senate version of the bill does not have an energy title, but includes provisions that would impose severe and negative impacts on energy financing and deployment for certain energy sources,” the BCSE wrote. “The House version includes energy provisions that change the tax treatment of a range of energy technologies – some favorably and some in an extremely problematic manner.”
Additionally, the House legislation does not provide clarification of eligibility for energy storage or waste heat to power investment tax credits. Neither measure supports a restoration of production tax credit for biogas, biomass, hydropower and similar sources, either. That bill would also strike electric vehicle credits and eliminate the issuance of tax credit bonds after Dec. 31, 2017.
On the Senate side, they were concerned by a lack of incorporation and preservation efforts toward a slew of technologies. They also took umbrage at a new tax known as the Base Erosion Anti-Abuse Tax (BEAT) that hit renewable tax credits on multinational companies with a 100 percent tax. Further, the BCSE stated that without repeal of the Alternative Minimum Tax provisions, reductions in the corporate tax rate would hinder corporations’ ability to claim production tax credits.
December 8, 2017
By Anthony Adragna, Morning Energy, Politico
The Business Council for Sustainable Energy released a letter Thursday outlining its priorities and suggestions for the final compromise version of the tax bill. It finds flaws in both versions with some in the House’s “extremely problematic” for how the treat a variety of energy technologies. “We urge Congress to address these issues during the conference on the tax reform legislation or in a year-end extenders bill,” it suggests.
BCSE Calls on Congress to Act on Urgent Energy Tax Measures to Preserve and Expand Investment and Jobs
Washington, DC – The Business Council for Sustainable Energy (BCSE) released a letter today urging action this year on critical energy tax provisions. including recommendations for the tax reform legislation conference committee.
“The Council appreciates the historic effort to reform the US tax system with the aim of boosting employment and economic prosperity for consumers and businesses. Energy tax measures should be structured such that benefits are provided to all qualifying technologies in accordance with the energy, environmental and other public benefits they generate. The tax code should not pick winners and losers, but should allow all fuel sources to compete on an even playing field.
“Further, consistent and predictable tax policy is fundamental to investment and job creation. Therefore, should changes be made to existing tax laws, adequate transition is needed to avoid market disruptions and job losses.
“Regarding specific comments on the pending tax reform legislation, we note that the Senate version of the bill does not have an energy title, but includes provisions that would impose severe and negative impacts on energy financing and deployment for certain energy sources. The House version includes energy provisions that change the tax treatment of a range of energy technologies – some favorably and some in an extremely problematic manner. We call on Congress to urgently address these issues.”
To see the full letter with specific comments on measures in the House and Senate versions of the Tax Cuts and Jobs Act, go here.