US Expands the Qualifying Advanced Energy Project Credit to Accelerate Clean Energy Technologies
In a notice released on May 31, 2023, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) provided further technical guidance on the application process for the Qualifying Advanced Energy Project Credit (Section 48C of the Internal Revenue Code). The first round of the expanded 48C tax credit program will strengthen the supply chains for fusion-related technologies to address remaining challenges for fusion commercialization, such as the manufacturing of superconducting magnets, plasma-facing components, and diagnostics. Although the notice outlines several priority areas such as clean hydrogen production and solar energy, critical technologies for fusion will be given fair opportunities to thrive. With the support from this program and the recent Milestone Public-Private Partnership Awards, private companies will continue paving the path for fusion commercialization.
About the 48C tax credit program:
The tax credit was established by the 2009 Recovery Act and expanded by the 2022 Inflation Reduction Act under the partnership between the U.S. Department of Energy (DOE) and the Department of the Treasury and IRS. The program implements $10 billion to boost U.S. clean energy supply chains. This first round of allocation aims to support a diverse portfolio of investments, including small- and medium-sized manufacturers that are critical to the growth of regional economies and supply chains to ensure that no community is left behind in the clean energy transition.
“These investments will improve the nation’s energy security and create good-paying jobs in vital fields like clean-energy manufacturing and critical materials processing. They will also allow for existing energy infrastructure to be retooled for the clean energy economy. All this work will contribute to lower energy costs for families who have struggled to pay their utility bills.”
– Deputy Secretary of the Treasury Wally Adeyemo
The recent notice pertains to a $4 billion allocation to accelerate domestic clean energy manufacturing. Various clean energy projects can receive up to 30% tax credit after certification. Amongst the $4 billion allocation, $1.6 billion was reserved for projects in communities with closed coal mines or retired coal-fired power plants. Qualifying applicants to the program are required to demonstrate that their projects will, as the notice outlines:
- Directly or indirectly spur domestic job creation
- Effectively reduce anthropogenic greenhouse gas emissions
- Exhibit high capacity for both technological innovation and commercial viability
- Have a short project time from certification of the project to completion
You can find more information on the application process here.
“Every community can benefit from President Biden’s agenda to Invest in America through the revitalization of domestic manufacturing, the strengthening of domestic clean energy supply chains and the modernization of our nation’s industrial sector.”
– Deputy Secretary of Energy David Turk
Read more on the guidance released by the Department of the Treasury and IRS (Notice 2023-44).
