Sen. John Thune, a member of the tax reform conference committee, told Bloomberg on Thursday that a repair included in the final version of the tax bill would keep the Base Erosion Anti-Abuse Tax (BEAT) provision from completely eroding tax equity financing for renewable energy projects.
"It's a fix that I think everybody in the end can live with, and will allow the credits that have been used to finance these projects to continue to be used to finance these projects,” Thune told Bloomberg.
The BEAT provision requires multinational companies to calculate tax owed using two calculations. One calculation determines 10 percent of a company’s taxable income and the other determines tax liability, minus any tax credits including from renewable investments. Because multinationals would be required to pay the difference if one figure is lower than the other, the provision eliminates tax benefits for investing in renewables, undermining billions of dollars in support for renewables projects.
Thune was light on details regarding the “tentative” fix, but did say lawmakers wanted to make sure the wind industry went unharmed. A source working with Senate staff on possible fixes said the repair could be an amendment to BEAT that preserves 90 percent of the Production Tax Credit's value. The Investment Tax Credit (ITC) and the PTC phase-downs will also reportedly make it into the final bill. The conference committee said it would sign a report on the final text on Friday.
Even with Thune’s comments, concrete details surrounding the bill remain scarce. Just yesterday, several sources and legislators said a deal had not been reached on the provision. That's in part because Republicans working on the bill have kept the actual text as close to the vest as possible.
“There’s nothing tangible," said Isaac Brown, managing partner with 38 North Solutions on Wednesday, adding that he heard rumors that Democrats on the bill’s conference committee wouldn’t even see the text until Friday. Brown said Republicans were staying “very tight-lipped.”
On Wednesday, Sen. Lisa Murkowski asked the clean energy industry to “not panic” as legislators sorted out the final version. But many working in the sector remain unnerved by the process. The House version of the bill cut the PTC and the ITC. While the final Senate version kept a ramp-down of those credits in place, it included the BEAT provision and a change to the corporate tax credit that would make companies less likely to try to lower their tax rate using renewables credits.
Republicans say they will unveil the final text on Friday. Trade organizations and renewables advocates are largely withholding comments until they can see the final wording.
"We're encouraged by reports of progress in the House-Senate conference -- including indications that the direct assault on renewable energy in the House measures will not be included in the final bill. We also understand there may be a repair to the BEAT program,” said Gil Jenkins, a spokesperson at the American Council on Renewable Energy, in a Wednesday email. “However, we don’t yet know the details of the repair and are unsure if it will be sufficient to allow renewable energy projects access to the financing that is essential for the use of tax credits.”
If Republicans are to meet the extremely fast-tracked schedule they’ve set out, they’ll vote on a final version of the bill sometime next week. That will put it on President Trump’s desk by Christmas. Clean energy advocates plan to work feverishly to sort out the ITC and PTC, the BEAT provision, and the corporate tax issues before then. But Brown said lawmakers may already be looking past this piece of legislation to the next -- one that will patch up its mistakes.
“My expectation will be that members will be hearing from advocates up until the moment they vote next week, just because as the bill comes to light, there are going to be intended and unintended consequences that result from a bill of this size,” Brown said. “We’re already hearing that even after this bill passes, next week in all likelihood, Republican leadership is already talking about a bill early next year to make technical corrections.”