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Governors' Wind Energy Coalition

December 3, 2017


The Senate narrowly passed the tax reform bill early yesterday morning and inserted an eleventh hour provision that would create a tax on equity investments for renewable energy projects.

Last minute efforts by several senators to collaborate on language that would exempt both the production and investment tax credits from the Base Erosion Anti-Abuse Tax (BEAT) were not successful.

The BEAT provision could eliminate the supply of tax-equity investments — a  critical source of clean energy finance, and thereby cripple the nation’s renewable energy industry.  Many companies that invest in tax equity for wind and solar projects could conclude that the new tax policies make those deals worthless.

In tax equity deals, renewable energy developers sell portions of their projects’ tax credits to corporations — often banks and some insurance companies — that can use the credits to reduce their own tax bills.

Most tax-equity investors are multinational companies. The issue now is that the Senate version of the bill includes a provision that imposes a minimum tax on these companies’ foreign transactions. If they have to pay a minimum tax, they may no longer have any need for the credits acquired through tax-equity deals.

Although the BEAT provision is intended to promote U.S. investment and job growth, it could have the opposite effect on the renewable energy industry’s multinational partners.  As of this writing, the actual impact of the provision is not clear.

We’re drafting a letter to members of the conference committee.  The general message of the draft is that both the House and Senate versions of the tax overhaul bills violate — whether intentionally or inadvertently — Congress’s commitment to thousands of Americans working in the nation’s renewable energy industry to gradually phase out the tax credits.

As soon we have more details on the legislative pathway and the identity of the conferees, we’ll refine and strengthen the governors’ message to members of Congress.

We’ll keep you posted.


Note: News clips provided do not necessarily reflect the views of coalition or its member governors.