[audio:http://wamcradio.org/EarthWise/wp-content/uploads/2013/10/EW-10-01-13-MLPs-Energy.mp3|titles=EW 10-01-13 MLPs Energy]
Energy is essential to a robust economy. At least until the 1980s, fossil fuels were the only game in town. Over the years, the US government has designed a number of marketplace incentives to encourage investment in the energy sector.
Master Limited Partnerships, or MLPs, are one example. Taxed as a partnership, MLPs have ownership interests that are traded like corporate stock on a market. Investors are not locked in – they can buy when they have money to invest and sell when they need that money for other purposes.
MLPs have paved the way for lower cost, more liquid funding. But, where energy projects are concerned, they are currently limited to fossil fuels and related infrastructure. This gives oil, natural gas, coal extraction, and pipeline projects an edge in attracting private investment. And it starves renewable energy projects of capital essential to innovation and growth.
A bipartisan bill called the MLP Parity Act has been introduced in Congress to correct this imbalance. In the Senate, it’s co-sponsored by Democrats Chris Coons and Debbie Stabenow, and Republicans Jerry Moran and Lisa Murkowski. In the House, the bill was introduced by Republicans Ted Poe and Chris Gibson, as well as Democrats Mike Thompson and Peter Welch.
According to Senator Coons, its adoption would “level the playing field to help clean and renewable energy projects compete fairly with traditional energy projects.”
It remains to be seen if the bill will pass. But one thing is certain: we desperately need federal tax codes that favor private investment in clean energy.
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–This segment was contributed by Tom Konrad Ph.D. CFA. Tom also writes about green investing for Forbes.
Web Links
The Master Limited Partnerships Parity Act
http://www.coons.senate.gov/issues/master-limited-partnerships-parity-act
Photo, taken on April 30, 2012, courtesy of Mark Thompson via Flickr.
Earth Wise is a production of WAMC Northeast Public Radio. Support for Earth Wise comes from the Cary Institute of Ecosystem Studies in Millbrook, NY.