Subjects: POL, ENP, AVO
Multi-Sector Coalition Forms to Unleash Full Potential of Energy Transition
WASHINGTON, June 17, 2021 /PRNewswire/ -- A broad coalition of companies, think tanks and investors have come together to form The Partnership for Clean Energy Investment, a diverse group of stakeholders focused on advancing much-needed changes to the tax code to unlock a new generation of clean energy opportunities.
The founding members ? Advanced Energy Economy, Ameresco, Apex Clean Energy, Brookfield Renewable Partners, Intersect Power, Third Way, and CleanCapital ? are united in their commitment to establishing a better system of renewable energy financing to help decarbonize the electric system and unleash more energy innovation than what is currently possible.
The Partnership for Clean Energy Investment (PCEI) represents stakeholders committed to investing in a cleaner future. To deliver the promise of U.S. leadership in renewable energy investment, climate action, and economic prosperity, PCEI recognizes that urgent action is needed. In fact, 59% of solar projects and 67% of wind projects that were scheduled to start construction in 2020-2021 were still in need of financing according to a Bloomberg NEF report issued late last year. Our members ? the workers and thinkers driving the clean energy transition ? want to change that.
Right now, the production tax credit (PTC) and investment tax credit (ITC) are America's primary tools to help incentivize development and financing of clean energy projects. Both are reliant on "tax equity" markets that exist due to a fundamental misalignment between the laudable goals of the PTC and ITC and their real-world application. Many developers of clean energy find themselves with little or no initial tax liability, since projects will not generate taxable profits until after development is complete. That makes it difficult to access the clean energy policy incentives Congress has directed.
An ad hoc system has emerged in response called tax equity financing in which clean energy developers trade the future tax credits for building wind and solar to banks in exchange for upfront investment. The banks then use the tax credits to reduce their own tax liability from their regular financial activities. Banks charge a significant premium for this service and many are unable to participate.
This system makes it more difficult and expensive for companies to secure capital and puts a major bottleneck into renewables investment at the time when the opportunity for the energy transition is greatest.
A rising tide of policymakers, corporate leaders, and environmental groups are already recognizing that it's time to move past the cyclical uncertainty of the tax equity market and guarantee maximum private sector investment in U.S. leadership of the energy transition. In order to unleash capital to meet ambitious climate goals and support American economic and clean energy leadership we need an equivalently ambitious policy: 100% direct pay.
PCEI's goal is simple: 100% direct pay for clean energy tax credits in order to unlock infrastructure investment, unleash economic growth, and deliver on climate and clean energy goals. The Partnership for Clean Energy Investment will:
- Serve as a proactive, vocal and inclusive organization that underscores the urgency of 100% direct pay;
- Play a leading role in advocating for legislation and action that ensures additional jobs and infrastructure investment; and
- Illustrate how renewable energy can mitigate climate change and allow America to lead on the global stage.
What is "Direct Pay"?
Direct pay puts tax credit resources directly into action improving America's clean energy investment trajectory. Tax credit funds would be dispersed directly to those building eligible clean energy projects, rather than a tax credit that they can't use.
100% direct pay is the only solution that unlocks billions of dollars in new clean energy investments and paves the way for 21st century opportunities. It's simply a better deal for taxpayers and is the single most important action that Congress can take to show investors that the energy revolution is happening here. It's the path to maximizing private investment in American jobs and economic recovery and the key to ensuring U.S. projects access capital at low cost, high speed, and greater certainty.
About The Partnership for Clean Energy Investment
The Partnership for Clean Energy Investment is a joint initiative of renewable energy developers, financiers, utilities, corporate power purchasers and more committed to advocating for urgent action to unleash capital for renewable investment to meet the challenges of climate change, accomplish clean energy goals, and drive economic prosperity. To learn more about the Partnership and its members, visit PartnershipforCleanEnergyInvestment.com
For more information, please contact:
Shannon Maher Bańaga, The Partnership for Clean Energy Investment Spokesperson
[email protected] | +1 202-346-8880
SOURCE The Partnership for Clean Energy Investment
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