U.S. Treasury Suggests Guidelines for Clean Energy Tax Credits
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The U.S. Department of the Treasury and Internal Revenue Service (IRS) have proposed guidelines for the Clean Electricity Production Credit and Clean Electricity Investment Credit, which aim to provide clarity for clean electricity project developers. This aims to support energy production, security, job creation, and the administration’s Investing in America Agenda. The credits, which will replace existing Production and Investment Tax Credits and are limited to projects starting before 2025, incentivize any clean energy facility achieving net zero greenhouse emissions, offering certainty to investors and developers.
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US Treasury and IRS Unveil Clean Electricity Tax Credit Guidance
The U.S. Department of the Treasury, supported by the Internal Revenue Service (IRS), recently introduced proposed guidance on the Clean Electricity Production Credit and Clean Electricity Investment Credit. These measures, initiated by President Biden’s Inflation Reduction Act, are designed to provide a clearer pathway for clean electricity project developers, boosting energy production, security, and job creation in alignment with the administration’s Investing in America Agenda.
The Inflation Reduction Act phases out existing Production and Investment Tax Credits, replacing them with Clean Electricity credits for projects starting construction before 2025. The newly introduced credits encourage development of any clean energy facility achieving net zero greenhouse gas emissions, providing a level of long-term assurance for investors and developers in the clean energy sector.
The proposed guidance includes specific technologies meeting high environmental standards set by the Act. These technologies range from wind, solar, hydropower, nuclear, geothermal, to waste energy recovery property (WERP). Energy storage technologies also qualify for the Clean Electricity Investment Credit.
Treasury Secretary Janet L. Yellen emphasized the Act’s potential in encouraging investment, reducing consumer energy costs, and managing emissions. Senior Advisor to the President, John Podesta, noted the guidance’s importance in supporting zero-emission innovations and achieving climate objectives. Assistant to the President and National Climate Advisor, Ali Zaidi, highlighted the anticipated benefits, including reduced electricity costs and increased clean energy deployment.
The Treasury seeks public input on the proposed rules, which will be accepted for 60 days after publication in the Federal Register. A public hearing will take place on August 12 and 13. According to external studies, the Clean Electricity Production and Investment Credits are essential for facilitating emissions reductions and furthering clean energy goals.
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