Fusion Energy included in Proposed IRA Clean Energy Tax Credits
The Inflation Reduction Act (IRA) is changing existing renewable energy tax credits into a technology neutral tax credit that supports any facility that does not produce greenhouse gases. Starting January 1, 2025, these will transition to the Clean Electricity Production Credit (section 45Y) and the Clean Electricity Investment Credit (section 48E) for new projects.
On May 29, the Treasury and IRS announced the proposed rule on how this tax credit would be implemented.
Last year, the Fusion Industry Association submitted comment letters advocating for the inclusion of fusion energy in these new credits.
The proposed rule recognizes a list of several technologies that meet high enough environmental standards to qualify for these credits. The specific types of facilities with a GHG emissions rate of zero or less that would be eligible for these credits include wind, solar, hydropower, geothermal, nuclear fission, fusion energy, and certain types of waste energy.
The explicit inclusion of fusion energy in the IRA tax credits is important in providing certainty to developers and their shareholders about the future development of fusion as a commercial energy source. Furthermore, it is important that fusion energy is recognized as a qualifying technology on its own and not as part of any “Advanced Nuclear” designation. Fusion energy is substantially different from nuclear fission; fusion has different benefits, costs, and risks, thus should receive separate treatment.
The FIA looks forward to submitting formal comments in support of this designation.
