Senate Tax Bill Could Be 'Devastating' to Wind and Solar Power
Now, renewable energy trade associations are raising the alarm about an eleventh-hour provision called the Base Erosion Anti-Abuse Tax (BEAT) program that "would have a devastating, if unintended, impact on wind and solar energy investment and deployment," according to a letter addressed to the Senate.
The BEAT provisions "undermine our capacity to use renewable energy tax credits, which have value only if they can be monetized," a letter, signed by the Solar Energy Industries Association, the American Council on Renewable Energy, American Wind Energy Association and Citizens for Responsible Energy Solutions, warned.
As Utility Dive explained, while the BEAT provision is meant to make it harder for corporations to dodge taxes, it also renders impractical the monetization of the Production Tax Credit (PTC) for wind power projects and the Investment Tax Credit (ITC) for solar projects.
Tax credits have fueled the renewable energy industry's boom. The current PTC and ITC allows developers to deduct 30 percent of the cost of installing a solar or wind energy system from their federal taxes.
Greg Wetstone, president and CEO of the American Council on Renewable Energy, told Utility Dive that the BEAT provision would affect $50 billion in annual investment in renewable energy projects.
"This should not be happening now," he said. "It came out of nowhere." Apparently, the provision was inserted on Thanksgiving eve during a last-minute markup of the tax bill in the Senate finance committee.
Greentech Media delved further:
That problem is the Base Erosion Anti-Abuse Tax (BEAT) provision, which targets "earnings strippings," where large companies with foreign operations reduce their tax bills through cross-border payments they can then deduct in the U.S. The BEAT provision aims to circumvent that stripping with a minimum tax of 10 percent of taxable income.
BEAT would require every company to do two calculations: one quantifying 10 percent of a company's taxable income, including cross-border payments, and another quantifying the corporation's tax liability, excluding any tax credits the company received from tax equity investments.
The BEAT provision applies to all but R&D credits. If a company has invested in renewables, the second number could be lower than the first. If that's the case, the company would have to pay the difference in taxes.
"This is Defcon One," Wetstone also told TIME. "It would simply undermine the financial structure that is critical for renewable energy and bring a booming sector to a halt."
Environmental groups have also spoken out against the heavily contested tax bill.
Michael Brune, executive director of the Sierra Club, condemned the House version "for [gutting] incentives for renewable energy and electric cars while ignoring the tens of billions of dollars the government hands out to fossil fuel corporations (which, of course, would also see their taxes slashed)."
Here's the letter from the renewable energy trade groups in full:
We are writing on behalf of the thousands of leading investors, developers, manufacturers, and corporate energy consumers in the U.S. renewable energy sector to alert you to urgent concerns with the Base Erosion Anti-Abuse Tax (BEAT) provisions in the Senate Tax Cuts and Jobs Act. As drafted, the BEAT program would have a devastating, if unintended, impact on wind and solar energy investment and deployment.
While we are grateful that the Senate tax proposal leaves the current phase-down schedules for wind and solar energy tax credits unchanged, the bill's BEAT provisions undermine our capacity to use renewable energy tax credits, which have value only if they can be monetized. For multi-national companies covered under the BEAT provisions, the renewable tax credits would, as drafted, be subject to a new 100 percent tax. Not surprisingly, major financial institutions have indicated that, under such a regime, they would no longer participate in tax equity financing, the principle mechanism for monetizing credits. The tax equity marketplace would collapse under these provisions, leading to a dramatic reduction in wind and solar energy investment and development.
It is important to note that, while the BEAT provisions are intended to promote U.S. investment and job growth, the program's treatment of renewable energy tax credits – which are generated exclusively through investment in U.S. projects – would have the opposite impact, dramatically reducing American wind and solar energy investment and job creation. These sectors are important national economic drivers, generating nearly $50 billion in annual U.S. investment.
It is also extremely problematic that the BEAT provisions apply retroactively to tax credits generated by operating, as well as new, projects, and would penalize companies that have relied on the tax code. Companies holding tax credits would do their best to sell them immediately, even at great discounts, a phenomenon that would flood the marketplace and further damage tax equity markets. We do not believe it fair or appropriate for Congress to reduce the value of tax incentives that have been relied upon in good faith by investors and developers. Such a result is especially concerning in this case, given that the wind and solar power sectors agreed to the phase-down of their own tax credits as part of the bipartisan compromise captured in the PATH Act of 2015.
We respectfully, and urgently, ask that the BEAT program be amended to exempt the production and investment tax credits from the calculation of the base erosion tax, just as the research and development tax credit is exempted from the provision in the current draft. Please feel free to let us know if we can provide additional information regarding any aspect of this issue.
The growing Texas solar industry is offering a safe harbor to unemployed oil and gas professionals amidst the latest oil and gas industry bust, this one brought on by the novel coronavirus pandemic, the Houston Chronicle reports.
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By Aaron W Hunter
A chance discovery of a beautifully preserved fossil in the desert landscape of Morocco has solved one of the great mysteries of biology and paleontology: how starfish evolved their arms.
The Pompeii of palaeontology. Aaron Hunter, Author provided<h2></h2><p>Although starfish might appear very robust animals, they are typically made up of lots of hard parts attached by ligaments and soft tissue which, upon death, quickly degrade. This means we rely on places like the Fezouata formations to provide snapshots of their evolution.</p><p>The starfish fossil record is patchy, especially at the critical time when many of these animal groups first appeared. Sorting out how each of the various types of ancient starfish relate to each other is like putting a puzzle together when many of the parts are missing.</p><h2>The Oldest Starfish</h2><p><em><a href="https://www.biorxiv.org/content/10.1101/216101v1.full.pdf" target="_blank" rel="noopener noreferrer">Cantabrigiaster</a></em> is the most primitive starfish-like animal to be discovered in the fossil record. It was discovered in 2003, but it has taken over 17 years to work out its true significance.</p><p>What makes <em>Cantabrigiaster</em> unique is that it lacks almost all the characteristics we find in brittle stars and starfish.</p><p>Starfish and brittle stars belong to the family Asterozoa. Their ancestors, the Somasteroids were especially fragile - before <em>Cantabrigiaster</em> we only had a handful of specimens. The celebrated Moroccan paleontologist Mohamed <a href="https://doi.org/10.1016/j.palaeo.2016.06.041" target="_blank" rel="noopener noreferrer">Ben Moula</a> and his local team was instrumental in discovering <a href="https://www.sciencedirect.com/science/article/abs/pii/S0031018216302334?via%3Dihub" target="_blank" rel="noopener noreferrer">these amazing fossils</a> near the town of Zagora, in Morocco.</p><h2>The Breakthrough</h2><p>Our breakthrough moment came when I compared the arms of <em>Cantabrigiaster</em> with those of modern sea lilles, filter feeders with long feathery arms that tend to be attached to the sea floor by a stem or stalk.</p><p>The striking similarity between these modern filter feeders and the ancient starfish led our team from the University of Cambridge and Harvard University to create a new analysis. We applied a biological model to the features of all the current early Asterozoa fossils in existence, along with a sample of their closest relatives.</p>
Cantabrigiaster is the most primitive starfish-like animal to be discovered in the fossil record. Aaron Hunter, Author provided<p>Our results demonstrate <em>Cantabrigiaster</em> is the most primitive of all the Asterozoa, and most likely evolved from ancient animals called crinoids that lived 250 million years before dinosaurs. The five arms of starfish are a relic left over from these ancestors. In the case of <em>Cantabrigiaster</em>, and its starfish descendants, it evolved by flipping upside-down so its arms are face down on the sediment to feed.</p><p>Although we sampled a relatively small numbers of those ancestors, one of the unexpected outcomes was it provided an idea of how they could be related to each other. Paleontologists studying echinoderms are often lost in detail as all the different groups are so radically different from each other, so it is hard to tell which evolved first.</p>