Today, the Department of Treasury (Treasury) and the Internal Revenue Service (IRS), in partnership with the Department of Energy (DOE), issued the first of two notices to provide guidance on how taxpayers can benefit from a crucial manufacturing program in the Inflation Reduction Act.
The Advanced Energy Project Credit, which was first enacted by the American Recovery and Reinvestment Act of 2009, awards up to a 30% investment tax credit for qualifying advanced energy projects. The Inflation Reduction Act significantly expanded the program by dedicating an additional $10 billion in tax credits to both build out U.S. manufacturing capacity and, for the first time, support investments that reduce greenhouse gas emissions from industrial facilities. Eligible projects include those that would enable the production or recycling of specified energy property, such as wind turbines, solar panels, heat pumps, batteries, and electric vehicle components; projects that would result in the processing, refining, or recycling of critical materials, including critical minerals essential to advancing U.S. energy security; and projects that would re-equip industrial or manufacturing facilities to cut their emissions by at least 20%.
As the U.S. enters a new era of clean energy manufacturing leadership, the Biden-Harris Administration is dedicated to ensuring that all communities benefit from the growth of the clean energy economy. To that end, 40 percent of the total funding for the program–$4 billion—will be set aside for investments in energy communities that have seen closures of coal mines or retirements of coal-fired power plants in recent years. The program also links the value of the tax credit to strong worker protections, driving the creation of good-paying jobs across the clean energy supply chain and ensuring workers are trained to fill openings in these growing industries.
To be considered for the first round of program funding, taxpayers must first submit a concept paper through DOE’s online portal between May 31, 2023 and July 31, 2023. Forthcoming program guidance, to be issued by May 31, will provide additional details regarding the application process, the criteria for DOE review, and relevant program deadlines.
The Biden-Harris Administration remains committed to strengthening and expanding America’s manufacturing base and creating good, place-based jobs while driving toward an equitable clean energy future. Today’s guidance is the latest example of the whole-of-government approach that the Administration is taking to spur economic revitalization for the benefit of all Americans.