Biden administration announced $4B in tax credits to boost domestic clean energy, reduce emissions

Published on April 02, 2024 by Chris Galford

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According to a joint announcement from the United States Departments of Energy (DOE) and Treasury, along with the Internal Revenue Service (IRS), $4 billion in tax credits are headed to more than 100 projects to bolster domestic clean energy manufacturing and cut industrial greenhouse gas emissions.

Of these Qualifying Advanced Energy Project Tax Credits (48C), $1.5 billion supports projects in historic energy communities, offering more jobs and lowering energy costs. Nationwide, 35 states will benefit, thanks to the § 48C Program managed by DOE’s Office of Manufacturing & Energy Supply Chains (MESC).

48C began in 2009, but thanks to the Inflation Reduction Act of 2022, expanded with a $10 billion investment. It offers an investment tax credit of up to 30 percent of qualified investments for certified projects that meet prevailing wage and apprenticeship requirements. At least $4 billion will go to projects in designated § 48C Program energy communities, including those with closed coal mines or coal plants.

“From direct grants to historic tax credits, the President’s Investing in America agenda is making the nation an irresistible place to invest in clean energy manufacturing,” Secretary of Energy Jennifer Granholm said. “The President’s agenda places direct emphasis on communities that have traditionally powered our nation for generations, helping ensure those communities reap the economic benefits of the clean energy transition and continue to play a leading role in building up the next wave of energy sources.”

For the results of the first round allocations and application overview, § 48C included $2.7 billion in tax credits for clean energy manufacturing and recycling, $800 million in tax credits for critical materials recycling, processing, and refining, and another $500 million for industrial decarbonization. This was doled out based on concept papers submitted by applicants, who in the process sought nearly $42 billion in tax credits.

For the manufacturing and recycling side, this will benefit applicants requesting support to build up U.S. manufacturing capabilities critical to clean energy deployment, from clean hydrogen to grid work, electric vehicles, and wind energy, among others. The critical materials recycling work draws on electrical steel applications, lithium-ion battery recycling and rare earth projects. Finally, the industrial decarbonization approach focused on projects seeking to implement decarbonization measures across various sectors, such as chemicals, biofuels, ceramics, and building materials.

A second round of concept paper submissions should open this summer.