Sourcing Renewables - June 21, 2021
New Coalition Advocates for Clean Energy Tax Code Changes
A new coalition founded by Advanced Energy Economy, Ameresco, Apex Clean Energy, Brookfield Renewable Partners, Intersect Power, Third Way, and CleanCapital is advocating for changes to the tax code that support the clean energy transition.
The Partnership for Clean Energy Investment (PCEI) includes a diverse group of companies, think tanks and investors. The group is urging the adoption of guaranteed maximum private sector investment in the energy transition through a system of 100% direct pay.
Under the current system of favor, called tax equity financing, clean energy developers trade the future tax credits that they would receive -- such as the production tax credit (PTC) and investment tax credit (ITC) -- in exchange for upfront investment. Under this system, the banks involved could use the tax credits to reduce their own tax liability from regular financial activities, however, this has created a bottleneck in renewable investment.
Direct pay for clean energy tax credits could increase infrastructure investment and economic growth. This system disperses tax credit funds directly to those building clean energy projects, rather than issuing a tax credit retroactively.
The PCEI is committed to acting as an advocate for the 100% direct pay system and for legislative action to make it a reality.