The U.S. Treasury Department recently issued the final rules for the Clean Electricity Investment and Production Tax Credits.
The tax credits, also known as the technology-neutral credits, encourage innovation by allowing new zero-emissions technologies to develop over time. They also provide durable incentives for companies to make investments in clean energy technologies.
“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,” U.S. Secretary of the Treasury Janet Yellen said.
Further, the tax credits are central to cutting energy costs for American families and businesses while producing enough power to meet growing demand. According to the Department of Energy, the tech-neutral credits, along with other Inflation Reduction Act and Bipartisan Infrastructure Law provisions, are expected to save Americans up to $38 billion on electricity bills through 2030.
“America’s clean energy boom is no coincidence, it’s President Biden’s industrial strategy in action: utilizing a range of incentives to accelerate innovative carbon cutting technologies and make the nation more energy resilient,” U.S. Secretary of Energy Jennifer Granholm said. “Today’s final guidance helps provide clean energy producers the clarity needed to deploy more clean energy solutions at scale to drive down costs for more American families and deliver future-facing careers for America’s workforce.”
The final rules provide 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. Further, the 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 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 final rules also confirm that future changes to the list of zero-emissions technologies or the designation of a lifecycle analysis model will require an analysis 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. Treasury expects this analysis, when complete, will provide additional clarity for taxpayers.
To get the full value of the credits, taxpayers must meet standards for paying prevailing wages and employing registered apprentices. The credits are also eligible for bonus credits related to siting projects in energy communities and meeting certain standards for using domestic content.