Tax Act May Spur More Investment in RNG, Biogas Projects
by Doug Lamb and Durham McCormick (Biomass Magazine/Coalition for Renewable Natural Gas) … While the tax code is clearly not responsible for a bulk of the current boom in RNG, the recent tax reform signed into law at the end of 2017 may very well be an additional catalyst to help spur RNG investment to new heights.
The Tax Cut and Jobs Act, H.R. 1, reduces corporate and individual tax rates. It provides noncorporate owners a new, 20 percent deduction for qualifying business income for pass-through entities. But it is the Tax Act’s less-known provisions that may make the difference for owners and developers of biogas and RNG projects.
For biogas and RNG facility owners, 100 percent bonus depreciation means a new ability to receive major tax advantages when they purchase new or used equipment to upgrade their facility. New tax-favored investments in treating equipment, for instance, can be used to convert an on-site electric project to a RNG project selling gas into the transportation fuel market. Other tax-favored investments might include equipment that improves plant efficiency, or greater gas flow from well-field collection.
Third, H.R. 1 gives and takes away as it eliminates several tax advantaged financing provisions. The canceled Clean Renewable Energy Bonds and Qualified Energy Conservation Bonds previously provided numerous options for financing landfill gas to electricity, biogas production and related projects. New opportunities arise, however, as the Tax Act also eliminates the corporate alternative minimum tax. This provides a significant marketability enhancement for private activity bonds, including solid waste disposal and sewage disposal bonds that are often used for biogas and RNG projects. READ MORE