Energy Legislation: Finance and Tax Perspectives

The EE Noon seminar held April 2, 2009 featured presentations and discussions from Peter Flynn of Bostonia Partners, LLC (an Alliance Associate) and Timothy Urban of Washington Council Ernst & Young. Titled “Energy Legislation: Finance and Tax Perspectives,” this session involved a detailed discussion of the future of energy projects and technology development in light of current tax legislation, upcoming reforms, recent market volatility and the potential of the current administration and Congress to transform the energy sector.

Legislative Trends

Urban kicked off the session with an analysis of energy and climate change legislation trends occurring under the 111th Congress and guided by President Barack Obama’s energy agenda.  Urban’s experience leading Washington Council’s energy practice contributed to a very informative discussion that focused on the role of tax committee dynamics and reforms in determining these patterns. He addressed the impact of tax policy on the development and financing of green employment, renewable energy and electricity technology, energy standards, building improvements and biofuels. Urban also stressed what he considers to be a 'golden rule' of tax policy: that it should incentivize efficiency and aim to reduce consumption, rather than simply crediting and reimbursing energy consumers indiscriminately.

Credit Markets

Next, Flynn provided an overview of the current state of the credit markets in the wake of a severe credit crisis, a historic correction in housing prices and falling stock prices in 2008, and the impact of these events on energy efficiency financing. Flynn described market and credit conditions that have promoted a general trend towards less speculative risk, as well as an increase from 2008 in the amount of investors in a “flight to quality” as they assess costs and benefits of energy projects. The future of private sector investment in energy efficiency, according to Flynn, lies not only in the success of American Recovery and Reinvestment Act funds devoted to energy programs, but also to continued incentives to invest beyond the scope of the stimulus package.