Treasury releases guidance on Advanced Manufacturing Production Credit
The U.S. Department of the Treasury and Internal Revenue Service (IRS) released guidance last week on the section 45X Advanced Manufacturing Production Credit established by the Inflation Reduction Act (IRA).
The Notice of Proposed Rulemaking (NPRM) for the section 45X Advanced Manufacturing Production Credit proposes clarifying definitions and confirms credit amounts for eligible components, including solar energy components, wind energy components, inverters, qualifying battery components, and applicable critical minerals. It also proposes definitions for key terms to incentivize production in the United States and to clarify the circumstances under which taxpayers can claim the credit.
In addition, it safeguards to prevent potential fraud, waste, or abuse, including safeguards against duplicative crediting of the same component, crediting of activities that are not value-added, or extraordinary circumstances in which components are produced but not put to productive use.
“President Biden’s Investing in America agenda is doing just that: helping onshore clean energy supply chains and deliver economic prosperity to every pocket of America,” Secretary of Energy Jennifer Granholm said. “The Advanced Manufacturing Production Credit will supercharge a new era of American manufacturing and bring good-paying clean energy jobs back to American communities.”
Businesses have announced investments of more than $600 billion in clean energy and manufacturing, with more than $140 billion announced for the manufacturing of clean energy technologies, electric vehicles, and batteries since Biden signed the Inflation Reduction Act into law. That is nearly double the total investment in those sectors in the two years before the bill’s passage.
“These new investments across industries and throughout clean energy supply chains are creating good-paying jobs and driving down the cost of clean energy for Americans,” Secretary of the Treasury Janet Yellen said. “New manufacturing investments are disproportionately going to communities that have lacked opportunity and are key to increasing long-run growth and the productivity of our economy.”
An analysis produced for the Treasury found that 76 percent of clean investment dollars in manufacturing announced since the Inflation Reduction Act passed have been for projects in counties with average weekly wages below the U.S. average weekly wage, while 66 percent are landing in counties with college graduation rates below the U.S. aggregate rate.
The NPRM will be open for public comment for 60 days. Comments will be considered before the Treasury issues final rules.
The American Clean Power Association (ACP) weighed in with a statement in support of the proposal.
“Today’s guidance is a critical next step for U.S. manufacturers as they work to make announced facilities a reality. By creating and expanding supply chains to make clean energy technologies here at home, we will strengthen America’s energy security, create good-paying American jobs, and boost the nation’s economy,” ACP Chief Advocacy Officer JC Sandberg said.
The Solar Energy Industries Association (SEIA) also commended the proposal.
“This guidance provides important clarity for American manufacturers that are eagerly awaiting the certainty they need to invest and create jobs. SEIA has been a steadfast advocate for effective clean energy industrial policy, and today we secured several wins that will cement the United States as a global hub for solar and storage production,” Abigail Ross Hopper, president and CEO of SEIA, said “Companies that use contracted manufacturing facilities now have the flexibility to quality for the 45X production tax credit. The guidance also includes incentives for production of optimized inverter systems, a critical component for the growing residential solar sector.
