Home Marine Energy US govt’s clean electricity tax credits guidance aims to continue investment boom
U.S. Department of the Treasury and Internal Revenue Service (IRS) has released guidance on the Clean Electricity Production Credit and Clean Electricity Investment Credit, established by the Inflation Reduction Act, to support marine energy production and security among other things, and reduce energy costs.
This proposed guidance offers a tax credit for the production of clean electricity, regardless of technology. This replaces the production tax credit for renewable electricity generation, extended through 2024.
The guidance aims to support clean electricity projects, aligning with President Biden’s investing in America agenda. It’s designed to assist developers, promote American jobs, enhance energy production and security, and lower energy costs for consumers.
The Inflation Reduction Act phases out the existing Production Tax Credit and Investment Tax Credit for projects starting construction before 2025. It introduces the Clean Electricity Production Credit and Clean Electricity Investment Credit for projects placed in service after December 31, 2024.
The new Clean Electricity credits offer incentives for any clean energy facility that achieves net zero greenhouse gas emissions.
Credits also foster the growth of new zero greenhouse gas emissions technologies while offering investors and clean energy project developers clarity and confidence for the future, said the U.S. Department of the Treasury and IRS.
The Notice of Proposed Rulemaking (NPRM), developed with interagency experts, lists technologies that qualify as zero greenhouse gas emissions under the Clean Electricity Production Credit and Clean Electricity Investment Credit in the Inflation Reduction Act.
These technologies, aside from marine, include wind, solar, hydropower, and hydrokinetic, nuclear fission and fusion, geothermal, and certain waste energy recovery properties (WERP).
“The Inflation Reduction Act’s new technology-neutral Clean Electricity credits, which will come into effect in 2025, are one of the law’s most significant contributions to tackling the climate crisis,” said John Podesta, Senior Advisor to the President for International Climate Policy.
“Today’s initial guidance from Treasury will help provide long-term certainty to investors and developers, support new zero-emission innovations, and accelerate our progress toward a 100 percent clean power sector.”
Furthermore, the NPRM proposes rules clarifying the inclusion of interconnection-related costs for small-scale clean energy facilities eligible for the Clean Electricity Investment Tax Credit.
Eligible costs cover upgrades to local transmission and distribution networks needed to connect to the grid. This follows the approach in the Investment Tax Credit, modified by the IRA to include interconnection costs.
Treasury invites the public to offer comments on the proposed rules. Comments will be accepted for 60 days after publication in the Federal Register. A public hearing is scheduled for August 12 and 13, 2024.
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