Clean-energy manufacturers across the United States are rejoicing, as the Biden Administration is beginning to restart an extremely popular tax credit. As part of the Inflation Reduction Act, manufacturers of wind turbines, solar panels, fuel cells and other energy efficient will be receiving a $10b tax credit.
Overview
According to the Treasury Department, all clean energy products that promote the expansion of domestic manufacturing, reduce greenhouse gas emissions, or assist in the creation of a domestic supply chain for critical minerals can begin filing for the “advanced energy tax credit” by the end of May.
The program that was revived by the Biden administration will provide a 30% tax credit for many clean energy technologies. Some of these technologies include carbon capture systems, grid modernization projects, clean hydrogen production projects, electric vehicles, and fuel cell vehicles, as well as many other technologies that reduce the carbon footprint.
Allocation of Money
According to the Biden administration, the first round of funding is approximately $4 billion. $1.6 billion of that will be dedicated to projects in certain areas where coal mines and power plants have shut down. Furthermore, an additional $2.3 billion is expected to be used to refund the Recovery and Reinvestment Act of 2009.
This act was passed by the Obama administration but quickly ran out of funding. Efforts to refund the act have stalled in congress for several years. This changed however after the Democrats’ marquee climate bill was passed last year.
Wind & Solar
The Treasury Department has also announced a program that will provide up to 20% in an additional bonus tax credit for solar and wind projects in low-income communities. The bonus tax credit will be provided only if these projects increase the total value of the incentive to as much as two times more than the project’s cost.
Wrap Up
The agenda of the Biden administration is to incentivize clean energy for corporations all over the country. Time will tell if this new funding will motivate certain industries to move toward cleaner energy.