The Biden-Harris Administration Announces Upcoming $6 Billion Tax Credit Allocation Round to Build Clean Energy Supply Chains and Drive Advanced Energy Project Investments, Including Approximately $2.5 Billion Reserved for Historic Energy Communities
WASHINGTON – Today, as part of the Biden-Harris Administration’s economic agenda, the U.S. Department of the Treasury (Treasury), the U.S. Department of Energy (DOE), and the Internal Revenue Service (IRS) released additional information on key provisions in the Inflation Reduction Act to strengthen energy security and drive investment to hard-hit coal communities and underserved communities.
Treasury and IRS established the expanded Qualifying Advanced Energy Project Tax Credit (§ 48C) program under § 48C of the Internal Revenue Code. Today, Treasury and the IRS released a notice that provides additional information about the second allocation round under the program.
“President Biden’s economic agenda ensures all communities benefit from the growth of the clean energy economy by driving investment in areas of the country that have often been overlooked,” said Deputy Secretary of the Treasury Wally Adeyemo. “These investments will improve the nation’s energy security and create good-paying jobs in vital fields like clean-energy manufacturing and critical materials processing. They will also allow for existing energy infrastructure to be retooled for the clean energy economy. All this work will contribute to lower energy costs for families who have struggled to pay their utility bills.”
“Every community can benefit from President Biden’s agenda to Invest in America through the revitalization of domestic manufacturing, the strengthening of domestic clean energy supply chains and the modernization of our nation’s industrial sector,” said Deputy Secretary of Energy David Turk. “The guidance announced today, building on the initial $4 billion in allocations, will help usher in investments that will further spur the creation of quality jobs in every pocket of our country including traditional energy communities, while strengthening our energy resilience and security.”
“The Qualifying Advanced Energy Project Credit program is a game-changer for clean energy investment,” said John Podesta, Senior Advisor to the President for International Climate Policy. “This credit will help companies tap the talent and innovative potential of the energy communities and workers who have powered our nation for more than a century.”
The Inflation Reduction Act provided $10 billion in new funding for the Qualifying Advanced Energy Project Credit program, renewing and expanding a tax credit created in 2009 through the American Recovery and Reinvestment Act. Congress required that at least $4 billion be reserved for projects in communities that have been directly impacted by the closure of a coal mine or coal-fired power plant (§ 48C energy communities). It provides incentives for clean energy manufacturing and recycling, industrial decarbonization, and critical materials processing, refining, and recycling. A broad variety of projects are eligible to apply for an investment tax credit of up to 30 percent, ranging from manufacturing of fuel cells and components for geothermal electricity and hydropower, to producing carbon capture equipment or installing it at an industrial facility, to critical minerals processing. Projects must meet prevailing wage and apprenticeship requirements to receive the full 30 percent tax credit.
The § 48C program received significant interest from industry in Round 1, which allocated a total of $4 billion, including approximately $1.5 billion going to projects in 48C energy communities with closed coal mines or coal plants. The $4 billion available for allocations in Round 1 was significantly oversubscribed, with applicants submitting concept papers—a project proposal—seeking nearly $42 billion in tax credits across all categories of projects, including nearly $11 billion for projects in § 48C energy communities.
Today’s notice describes how interested parties can apply for an allocation in Round 2 of the § 48C program, totaling up to $6 billion, with approximately $2.5 billion going to projects in § 48C energy communities. To apply to Round 2, taxpayers will have a similar application process. Taxpayers must first submit concept papers describing the proposed project. Taxpayers whose concept papers receive a favorable review will be encouraged to submit a full application. DOE will evaluate concept papers and applications across multiple criteria and policy factors prior to making allocation recommendations to Treasury, including (1) commercial viability; (2) greenhouse gas emissions impacts; (3) strengthening U.S. supply chains and domestic manufacturing for a net-zero economy; and (4) workforce and community engagement.
The §48C portal will open and allow users to register and submit Round 2 concept papers starting no later than May 28th, 2024. The deadline for concept papers will be 5:00 PM Eastern time on the 30th day after the § 48C portal opens for registration and concept paper submissions. Taxpayers that submitted concept papers or applications in Round 1 must submit a concept paper and full application to be considered for Round 2. More information for potential applicants, including a § 48C mapping tool, is available on the Department of Energy’s § 48C webpage. Treasury and DOE will hold a joint informational webinar in May for potential applicants, with registration information to be provided on DOE’s § 48C program website.
Learn more about the Qualifying Advanced Energy Project Credit (48C).
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