Smarter Finance for Cleaner Energy makes the argument that innovation in the advanced energy sector will be stifled so long as conventional energy projects have better access to low-cost capital. This policy proposal, published by the Steyer-Taylor Center for Energy Policy and Finance and the Brookings Institution’s Metropolitan Policy Program, strongly argues that Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs) should be opened to renewable energy investment.
Both MLPs and REITs are established investment vehicles, and would certainly increase access to larger pools of funding at a lower cost than the capital currently available to the renewable energy sector. Such access to capital would drive industry growth, and ultimately allow renewables to gain subsidy independence.
According to Smarter Finance, over 80 percent of MLP capital is used to fund oil, gas, and other traditional energy investment. Recent IRS decisions have also allowed REIT investment in a range of infrastructure and energy projects, including power transmission lines and natural gas pipelines. As pointed out in this policy proposal, there is not only widespread industry support for extending MLPs and REITs to renewable energy investment, but there is also bipartisan support in Congress for the extension. Hopefully policy proposals like Smarter Finance for Cleaner Energy, combined with an extensive base of support, generate enough congressional momentum to enact such a bill.