GHG Emissions, Finance, Industrial - March 21, 2024
Treasury Department, IRS Reach Milestone for Clean Energy Tax Credits
The U.S. Department of the Treasury and Internal Revenue Service (IRS) announced a new milestone in implementation of key provisions in the Inflation Reduction Act to expand the reach of clean energy tax credits.
The tax credits can help build projects more quickly and affordably, and over 45,500 projects have requested registration numbers through the new IRS Energy Credits Online (ECO) portal as of March 8, 2024.
The Inflation Reduction Act created two new credit delivery mechanisms — elective pay, also known as direct pay, and transferability — that enable state, local, and Tribal governments; nonprofit organizations; U.S. territories; and other entities to take advantage of clean energy tax credits.
“Before the Inflation Reduction Act, it was more challenging for companies to access tax incentives to finance projects and deploy new clean power. The law included two new mechanisms to fix this and translate credits into financing, ensuring more clean energy projects are built quickly and affordably, and more communities benefit from the growth of the clean energy economy,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo in a statement. “Meeting our economic and climate goals depends on the ability of companies to finance capital-intensive projects like building new factories, and initial data is encouraging. Increasing access to credits also underscores the connection between the economic and climate goals of the Inflation Reduction Act and our work to create a modernized IRS. The IRS has quickly delivered new technology that allows companies investing in the United States to take advantage of clean energy incentives and move projects forward.”
For the IRS ECO elective pay, transferability, and CHIPS functionality, as of March 8, 2024, around 500 entities have registered and requested registration numbers for more than 45,500 total facilities or projects.
Of the registered entities, approximately 50% are applicable entities that are able to use elective pay and 50% are generally considered taxable entities that would primarily use transferability. A wide variety of credits are being used, including:
- Investment Tax Credit (48)
- Production Tax Credit (45)
- Commercial Clean Vehicle Credit (45W)
- Alternative Fuel Vehicle Refueling Property Credit (30C)
- Credit for Carbon Oxide Sequestration (45Q)
- CHIPS Investment Tax Credit (48D) and
- Advanced Manufacturing Production Credit (45X).
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