On January 7, the Dept. of the Treasury and the IRS released final rules for the Clean Electricity Investment and Production Tax Credits — also known as the technology-neutral credits — in tax code sections 45Y and 48E.
The Clean Electricity Credits encourage innovation by allowing new zero-emissions technologies to develop over time, while also providing durable incentives for companies to make investments in clean energy technologies that are already contributing to the clean energy investment and manufacturing boom.
The final rules provide important clarity and certainty around what clean electricity zero-emissions technologies qualify for the credits — including wind, solar, hydropower, marine and hydrokinetic, geothermal, nuclear and certain waste energy recovery property. Treasury and the IRS anticipate releasing the first Annual Table confirming this list of qualifying technologies imminently. The final rules also provide guidance to clarify how combustion and gasification technologies can qualify in the future — including on how lifecycle analysis assessments compliant with the statute will be conducted.
“The final rules issued today will help ensure America’s clean energy investment boom continues — driving down utility costs for American families and small businesses, creating good-paying construction jobs, and strengthening energy security by making the U.S. more resistant to price shocks,” said U.S. Secretary of the Treasury Janet L. Yellen.
The existing Production Tax Credit and Investment Tax Credit will be available to projects that began construction before 2025. Qualifying projects placed in service after December 31, 2024 will be eligible for the new Clean Electricity Credits.
“The United States must adopt an all-of-the-above energy strategy to meet surging demand for electricity across the country. This tax credit is critical for driving investments in American-made energy projects across a range of technologies, particularly solar, which is adding more capacity to the energy grid than any other fuel source,” said Abigail Ross Hopper, president and CEO of SEIA, in a press statement.
“Critically, this tax credit further incentivizes solar and storage projects to use U.S.-made components like solar modules, trackers and batteries,” she continued. “Attempts to revoke these rules will only make it easier for China to win the race for global solar market dominance while killing American jobs and much needed economic opportunity. We urge lawmakers to protect these tax credits to drive job growth and continue to buildout American-made clean energy.”
The final rules reflect careful consideration of stakeholder comments and largely maintain the rules as proposed. The final rules also confirm that future changes to the list of zero-emissions technologies or the designation of a lifecycle analysis model that may be used to determine emissions rates will need to be accompanied by an analysis prepared by the U.S. Department of Energy’s National Labs, in consultation with interagency and other experts.
The National Labs are already analyzing the lifecycle emissions of electricity production using certain biomass technologies, based on the requirements in the final rules. Treasury expects this analysis, when complete, will provide additional clarity for taxpayers.
To receive the full value of the credits, taxpayers must meet standards for paying prevailing wages and employing registered apprentices, helping ensure more clean energy jobs are good-paying jobs, and growing career opportunities for workers in the clean energy sector. The technology-neutral Clean Electricity Production and Investment Tax Credits are also eligible for bonus credits related to siting projects in energy communities and meeting certain standards for using domestic content, further supporting robust and geographically diverse job creation and economic opportunity in the growing clean energy sector.
News item from the Dept. of the Treasury
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