Members of Congress have said it over and over again: The United States needs an all-of-the-above strategy for our energy future. But what does that actually mean?
An all-of-the-above approach should be more than just rhetoric. It should be about taking real steps to harness all of our energy resources and focus them toward a common goal: an energy-independent future for the United States. If we’re going to succeed in securing homegrown and affordable sources of energy for the next generation, we need to use all the options at our disposal.
America is home to a wealth of untapped energy resources with the power to transform our energy landscape and accelerate our energy independence. Traditional sources of energy like oil and natural gas currently dominate U.S. energy production, and our domestic supplies continue to grow. These sources will be a key part of our energy portfolio well into the future, but they are only part of the equation.
The U.S. has led the world in the development of new technologies that will allow us to tap our nation's vast supply of clean and renewable energy. Once prohibitively high, the cost of technologies like solar panels and wind turbines has fallen significantly during the past five years. These innovations are poised to bring new energy sources into the marketplace, but their widespread deployment has been stifled -- in part by a lack of reliable financing.
For nearly 30 years, oil, natural gas, coal extraction and pipeline projects have used a beneficial tax structure called Master Limited Partnerships to obtain low-cost private capital. An MLP is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. This structure prevents double taxation and leaves more cash available for distribution back to investors.
Because they are so attractive to investors, MLPs have played a key role in drawing the private investment needed to finance capital-intensive projects like oil and gas pipelines. They could do the same for renewable energy projects, but our outdated tax laws prevent them from doing so. By statute, MLPs are currently available only to investors in fossil fuel-based energy portfolios, starving a growing portion of our domestic energy sector of the capital it needs to build and grow.
The Master Limited Partnerships Parity Act — legislation I introduced last year with a bipartisan coalition of senators — would extend this valuable investment tool to wind, solar, geothermal and other renewable energy projects, leveling the energy playing field and expanding access to low-cost capital for a broader range of energy sources.
A House version of the bill, championed by Texas Republican Ted Poe and California Democrat Mike Thompson, has more than 30 bipartisan cosponsors. The bill also has support from more than one hundred businesses, trade associations and investment firms. Furthermore, the U.S. Chamber of Commerce recently echoed the call for MLP energy parity in a January 2014 report.
This small tweak could bring billions of dollars off the sidelines and into the renewable energy marketplace, accelerating the deployment of affordable alternative energy and creating new jobs in a fast-growing field. It would, at last, harmonize our tax code with the all-of-the-above energy parity called for by Democrats and Republicans alike.
The bill is simple, but its implications for our energy supply are substantial. We can’t afford to handicap our growing renewable sector and squander promising new sources of domestic energy. By extending this powerful market tool to additional forms of energy development, we can go beyond political rhetoric and start delivering on an all-of-the-above strategy for our energy future.
Sen. Chris Coons is a Democrat from Delaware.