The Republican tax reform bill released Friday keeps intact subsidies for electric cars, wind farms, and solar panels, but it leaves in place added charges to banks that finance renewable projects, which renewable energy groups oppose.
“We are grateful for the elimination of provisions that would have decimated future renewable energy growth and even penalized past investment in wind and solar power, but we remain concerned about the potential impacts of the new Base Erosion Anti-Abuse Tax on renewable energy finance,” said Gregory Wetstone, president and CEO for the large umbrella group American Council on Renewable Energy.
The BEAT provision was included in the Senate’s tax bill, inserted to discourage large multinational companies from keeping money offshore. It would reduce the tax deductibility enjoyed by financial institutions that help finance offshore renewable energy projects.
The measure also captured wind and solar energy tax credits that developers sell to investors such as Goldman Sachs and JPMorgan Chase.
“Even as we recognize that important progress was made in the effort to repair those provisions, we also note that the applicability of the new tax was expanded by conferees,” Wetstone said.
Still, Wetstone cannot say for sure how the BEAT provision will affect companies invested in wind and solar, and how the financial institutions that invest in wind and solar power will respond. Banks that control the tax equity market allow wind and solar firms to use the guaranteed subsidy from the government to back loans to build projects.
“Many tax equity investors are potentially subject to the BEAT tax and will only be able to determine if they are covered under the complex formula in the new law once they have completed their year-end tax calculations,” according to the group.
The tax bill language released Friday also keeps intact a tax credit for first-time buyers of plug-in hybrid electric vehicles.
“This credit supports innovation and job creation while helping drivers access advanced vehicle technology,” said Genevieve Cullen, president of the Electric Drive Transportation Association. The group represents automakers like Toyota, battery companies, and others on electric vehicle policy.
“Keeping the plug-in vehicle credit in place is the right policy for consumers and for the nation. We appreciate the conferees’ support and will continue to work with Congress to advance U.S. competitiveness through electric mobility,” she said.
While taking steps to cut consumption of fossil fuels, the bill also opened a small part of the Arctic National Wildlife Reserve to drilling, which has been a long-time goal of the Republican Party. Drilling will be used to up revenue while pursuing the president’s goal on energy dominance.
“If we can successfully pass this legislation, the ultimate result will be more domestic jobs, larger paychecks, and greater energy security – and that is exactly what Alaska and our country need right now,” said Sen. Lisa Murkowski, R-Alaska, chairwoman of the Energy and Natural Resources Committee.