The Future of Clean Electricity Credits

The New Era of clean energy

The U.S. Department of the Treasury and IRS have introduced proposed guidance on the Clean Electricity Production Credit and Clean Electricity Investment Credit, in line with President Biden’s Inflation Reduction Act. This move aims to provide clarity to clean energy project developers, aligning with the administration’s Investing in America Agenda to enhance energy production, security, and job creation.

Incentivizing clean energy Projects

Under the Inflation Reduction Act, existing Production and Investment tax credits will be phased out and replaced by Clean Electricity credits, applicable to projects commencing construction before 2025. These new credits offer incentives to any clean energy facility that achieves net zero greenhouse gas emissions, ensuring long-term certainty for investors and developers.

Eligible Technologies

The proposed guidance outlines specific technologies that meet the high environmental standards set by the Act, including wind, solar, hydropower, nuclear, geothermal, and waste energy recovery property (WERP). Additionally, energy storage technologies qualify for the Clean Electricity Investment Credit.

Government Endorsements

Treasury Secretary Janet L. Yellen emphasized the Act’s impact on driving investment, reducing consumer energy costs, and mitigating emissions. Senior Advisor to the President John Podesta highlighted the guidance’s importance in supporting zero-emission innovations and achieving climate objectives.

Assistant to the President and National Climate Advisor Ali Zaidi pointed out the expected benefits, such as decreased electricity costs and increased deployment of clean energy. The proposed rules, based on existing tax credits, provide clarity and assurance to developers.

Public Engagement

The Treasury welcomes public feedback on the proposed rules, open for a 60-day period after publication in the Federal Register. A public hearing is scheduled for August 12 and 13. External studies view the Clean Electricity Production and Investment Credits as essential for accelerating emission reductions and advancing clean energy goals.