Corporate tax changes proposed in President Joe Biden’s $2 trillion spending plan threaten to undercut his ambitious climate goals and undermine clean-power development, according to energy companies that oppose it.
The latest version of the spending package, which is still being debated in the U.S. Congress, includes a minimum tax of 15% on a corporation’s book income. That would sharply diminish the benefits of other financial incentives in the legislation designed to hasten the build-out of green power, the American Clean Power Association said in a letter to Senate leaders and seen by Bloomberg News.
The objection comes at a pivotal moment for the Biden administration, with Democratic leaders scrambling to pass the spending package, known as the Build Back Better Act, amid pushback from both Republicans and moderate Democrats. The clean-energy companies, which include American Electric Power Co., NextEra Energy Inc. and Orsted AS, say that the minimum tax would threaten Biden’s goal of a carbon-free grid by 2035, adding to the chorus of corporate opposition to the changes.
The proposal would do away with accelerated depreciation, which clean-energy developers have used to book higher tax deductions on projects over a shorter period of time, helping to reduce the costs. That would raise the expense of renewable energy projects by 15% to 20% and result in the loss of 130 gigawatts of clean-energy deployments over the next decade, the association said.
“Any impact on deployment will mean fewer renewable energy projects and make meeting President Biden’s ambitious climate goals more difficult,” said the letter, which was sent earlier this month to Senate Majority Leader Charles Schumer and Senator Ron Wyden, chairman of the Senate Committee on Finance.
The companies argue that the changes would undercut the legislation’s other incentives for clean power development, including a 10-year extension of the renewable energy production and investment tax credits, along with the option for developers to claim the subsidy as direct payment instead of a tax credit.
The Edison Electric Institute, the lobbying group for U.S. investor-owned utilities, has raised similar concerns and asked for the tax provision to be removed from the package.
“The adoption of a book minimum tax on electric companies would impede the deployment of clean energy, cost billions of dollars in lost investments, and result in the loss of thousands of jobs, while raising the costs of the clean energy transition for customers,” Thomas Kuhn, president of the Edison Electric Institute, said in a letter sent to U.S. House and Senate leaders earlier this month.
The clean power group also asked Democratic leaders to allow for renewable energy projects to qualify for accelerated depreciation even if a minimum corporate tax is included in the final bill. Other companies that signed the group’s letter include Equinor US, EDF Renewables North America LLC and Berkshire Hathaway Energy.
— With assistance from Jennifer A. Dlouhy
