A Podcast With Keith Martin on Marine Renewables Tax Iniatitives for the New Congress
OREC is mobilizing quickly to take advantage of opportunities on the Hill to implement more favorable tax policies for marine renewable technologies in order to stimulate private investment and effectively reduce the capital costs of these projects. First, OREC seeks to amend 26 U.S.C. sec. 168 so that marine renewables may use a five year accelerated depreciation period for project assets, the same methodology available to other renewables. Currently, marine renewables projects are depreciated over a twenty year period.
Second, OREC is attempting to secure a full 2.1 cent/kwh PTC, instead of the half credit (1.0 cents/kwh) included in last year’s financial bailout legislation. In addition, with the economic turmoil on Wall Street, many big banks no longer have an appetite for PTCs, either because they’re not profitable anymore or, in the case of Lehman, because they’ve been vaporized, explains the New Republic Blog. Consequently, OREC along with the wind and solar industry is exploring the possibility of refundable PTCs, by which the government would write entities that hold PTCs a check if they lacked tax liability for the PTC to offset. But already, the refundable tax credit concept is turning out to be a non-starter, due to concerns about dispensing cash when the budget is so tight.
Another tax alternative under consideration would allow renewable companies to choose between a production tax credit or an investment tax credit. OREC proposed the PTC/ITC option two years back and in recognition of our member companies’ differing stages of technology development and diverse business strategies and is glad to see that it has now been resurrected.
Tax issues are extremely complex, yet can have a substantial impact on investment decisions in renewables. Moreover, with a new President and a wobbly economy, there’s a certain urgency to act quickly, which means that proposals are perpetually a moving target. To help our members understand and try to keep abreast of these issues, OREC counsel Carolyn Elefant interviewed project finance expert and renewable tax policy guru, Keith Martin of member law firm, Chadbourne & Parke. Please listen to the podcast for a succinct, but comprehensive synopsis of the renewable-related tax proposals currently under consideration.
Click to listen : Keith_Martin_Podcast