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Author Topic: Fossil Fuel Subsidies - The Invisible Ones are Worse Than the Obvious Ones!  (Read 8355 times)

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AGelbert

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    • Renwable Revolution
Let’s Even the Playing Field for Renewable Energy  

 
Bill Ritter
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BILL RITTER: What is the most cost-effective way to subsidize investment in renewable energy sources? The word “subsidy” is loaded with connotations that the government is “picking winners” when it provides support to certain energy industries and not to others. Instead, the question should be, “What is the most cost-effective way to level the playing field for renewable energy?”

It is important not to demonize well-designed energy subsidies when they are clearly in the national interest. There has been no time in modern history that the federal government has not provided tax breaks and other benefits to one energy industry or another, going back to land grants for timber and coal production in the 1800s. In principle, targeted subsidies are warranted when an important emerging energy technology cannot achieve commercialization without help.

There is another way, however, that government can stimulate investments in a wide variety of energy resources. This type of fiscal policy provides tax incentives for private capital to flow into the energy resources that investors believe offer the highest returns or the greatest potential.

Two examples that have drawn attention recently are real-estate investment trusts (REITs) and master limited partnerships (MLPs). Both provide tax advantages and access to low-cost capital for fossil-energy investors. Until recently, neither extended the same benefits to renewable energy.

In May, the Obama administration used its executive authority to allow REITs for certain types of solar-generating equipment. That was a first step to what we might call “investment parity” in federal policy. The next logical step is to give renewable-energy investors the same access to MLPs as fossil-energy investors have.

Legislation to do this, the Master Limited Partnership Parity Act, has bipartisan support in Congress, but it reportedly has stalled.     Some members have conditioned their support on the elimination of the production tax credit (PTC) for wind energy and the investment tax credit (ITC) for solar energy. According to one report, these members argue it would be redundant to open MLPs to renewable-energy technologies while targeted solar and wind tax credits remain in place. 

Yet, fossil fuels enjoy a variety of targeted tax benefits as well as MLPs.  Denying the same mix to renewable energy investors perpetuates federal policies that have long picked fossil fuels as the winners. The PTC/ITC and MLPs should not be an either/or issue. Both belong in an intelligent mix of tax policies that create more robust market competition on a more level playing field. 

In addition, opening MLPs to renewable-energy investment is consistent with the “all of the above” energy strategy advocated both by President Obama and the Republican Party. I am confident that as various renewable energy technologies become ready for full-scale commercialization, they will compete very well.

In the absence of access to MLPs, private investors and state governments are creating other ways to capitalize emerging clean-energy technologies. Renewable-energy bonds, green-energy banks, crowdfunding and “yield cos” are among recent innovations.

Nevertheless, a great deal of private capital remains sidelined, waiting for stable and equitable federal energy policies. If we really believe in letting all market-ready energy options slug it out in robust competition, then we shouldn’t ask that federal policies fix the fight. But that is what happens when renewable-energy investors are barred from the tax incentives that investors in fossil fuels enjoy. 

Bill Ritter served as Colorado’s 41st governor. He is currently the director of the Center for the New Energy Economy at Colorado State University.

http://blogs.wsj.com/experts/2014/09/30/lets-even-the-playing-field-for-renewable-energy/


Serious Hangover for Fossil Fuelers coming soon. :icon_mrgreen:
He that loveth father or mother more than me is not worthy of me: and he that loveth son or daughter more than me is not worthy of me. Matt 10:37

 

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