By Erin Voegele, Biomass Magazine.
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.