Third Way Perspectives
May 1st, 2013
Comprehensive tax reform is long overdue, but it’s also going to be difficult and may not happen during this, or even the next, session of Congress. In the meantime, we can’t hold up other tax code fixes, especially in vital areas, such as energy. The MLP Parity Act, a fix to our unequal tax code, shouldn’t be delayed just because it doesn’t fix all of the problems with our current tax code.
As it stands now, the government is implicitly telling investors what to invest their money in. Master limited partnerships are attractive investments, passing profits through to investors without being taxed at a corporate level. This appealing financial structure draws in more capital and lowers the cost of capital for projects owned by an MLP. Unfortunately, under our current tax code, qualifying projects are generally oil and gas related – pipelines, extraction, refining or exploration – excluding many types of energy, from biomass to nuclear to wind. As a result, a project such as a wind farm is less attractive to investors and must offer a higher return than a comparable natural gas project.
This bias in the tax code unfairly picks energy winners and losers, incentivizing the types of energy projects that were common in 1981 when master limited partnerships were first created. Although our fuel supply has changed, the tax code has not, leaving clean energy out of the investment pool. While it may not fix all the inequity in our arcane and complex tax code, the MLP Parity Act is a much needed first step towards an even playing field for our energy future.
This piece was originally featured in National Journal.
November 2nd, 2012
Everyone from Mayor Bloomberg and Businessweek to Bill Clinton and LA Times are linking Hurricane Sandy to climate change. Do we know for certain that this highly destructive hurricane is the result of climate change?
The short answer is: we don’t. There will always be contrary opinions, but when we look across all the weather events of the past 10, 20, or 50 years, the trend is clear. Climate is the average of weather over a period of time, and we’re seeing 100-year floods occurring every 3-20 years. We’re seeing each year become one of the hottest years on record. And we’re seeing more severe droughts more frequently. This has contributed to a rise in sea level across the East Coast, which makes cities like New York and destinations like the Jersey Shore more prone to flooding when storms do hit.
Why should you care? Read the rest of this entry »
October 23rd, 2012
- Thanks to continued partisan gridlock, major congressional action on energy is unlikely after the 2012 elections. However, this could change if there is a deal to address the budget deficit or if one party makes significant gains in seats.
- Domestic oil and natural gas production will continue to grow under either Barack Obama or Mitt Romney.
- A second Obama administration would be likely to seek to accelerate the commercialization and deployment of clean energy through a mix of tax incentives, encouraging private financing, and regulation of conventional and climate pollutants.
- A Romney administration would be likely to focus on increasing domestic conventional energy production by reducing environmental regulation, particularly on coal-burning power plants, and opening more public land to oil and natural gas development. Excluding basic research, government incentives for clean energy would most likely be eliminated.
In 2008, the price of natural gas in the United States was roughly $8 per thousand cubic feet (tcf), coal was used to generate more than 47 per cent of all electricity, and there was a consensus among Democrats and Republicans that climate change was real, caused by humans, and needed to be addressed immediately. It seemed only a matter of time before the country adopted a cap-and-trade system similar to one backed by both parties’ presidential nominees.
Four years later, the energy landscape has changed dramatically. Cap-and-trade is on the ash heap of history, and climate change and clean energy have become enormously politicized. The price of natural gas has dropped as low as $2.25 per tcf thanks to the hydraulic fracturing drilling process (fracking) that has given the United States access to more than 500 trillion cubic feet of natural gas and sent domestic coal use into a precipitous decline. That same fracking technology has led to a domestic oil boom, with imports dropping to 42 per cent of use, the lowest level in two decades. Clean energy, particularly wind and solar, also saw a boom in the early years of the Obama administration thanks to the American Recovery and Reinvestment Act of 2009 (ARRA).
The growth in domestic shale oil and gas production seems inevitable. But the broader future of US energy faces much more uncertainty. There are enormous differences in how the two candidates would approach regulation of energy production and generation, climate change and America’s competition in the global clean energy race. Polling shows that these issues will have little impact on the decisions voters make. But they will have enormous implications for the price and source of the energy Americans consume, the success of America’s energy industries and the fate of international efforts to stem climate change.
August 20th, 2012
This piece was originally posted on the Huffington Post.
Last week, two next-generation battery manufacturers in the Boston area announced major investments from Chinese firms.
Yes, if your goal is to grow the Chinese economy. The deals for A123 Systems and Boston-Power will result in major technology transfers to China and likely lost American jobs. The deals are the result of a campaign by Tea Party Republicans to kill the U.S. clean energy industry in its cradle. That’s because the GOP Congressional leadership appears more interested in turning clean energy into a wedge issue than in having America win what energy market analysts see as a $2.3 trillion dollar global market within the next decade. Read the rest of this entry »
July 10th, 2012
Climate deniers want to keep having this debate. It gives them the excuse to call for more studies, which is the most effective way in Washington to avoid solving a problem. It’s the same strategy deployed by cigarette makers as far back as 1946 in their ultimately failed attempt to fight scientists’ link between smoking and cancer.
As these dead-enders (to coin a phrase) trap us in what they hope will be an endless discussion over whether climate change is real, the rest of the world is moving to clean energy and energy efficiency. That’s creating a potentially $2.3 trillion global clean energy market that is driving innovation, reducing energy costs, and spurring manufacturing. Read the rest of this entry »
June 8th, 2012
By Jeremy Twitchell and Josh Freed
In a week rife with political bickering over government’s role in energy R&D, a bipartisan duo of senators proposed a tiny piece of legislation that could once and for all place fossil fuels and clean energy on the same playing field.
The Master Limited Partnerships Parity Act would allow clean energy projects to form under the same low-tax business structure that has enabled the oil and gas industry to raise $350 billion in private capital. As we noted in a Third Way report released in 2011, master limited partnerships, or MLP’s, are attractive to investors because they face the low tax rate of a partnership, but have the capitalization potential and liquidity of a publicly traded corporation.
With a 200-word tweak to the tax code, Sens. Chris Coons (D-Del.) and Jerry Moran (R-Kan.) propose to unleash a torrent of private investment on the clean energy market. If Congress has been running its energy policy like a beauty pageant, as the accusation goes, then this proposal puts every contestant behind a curtain and makes private investors – not Congress – the judges. Read the rest of this entry »