According to Bloomberg article published on February 14, 2023, the Biden administration is restarting a popular tax credit for manufacturers of solar panels, wind turbines, fuel cells and other clean energy equipment after getting a $10 billion infusion from the Inflation Reduction Act.
Clean energy projects that expand domestic manufacturing, reduce industrial greenhouse gas emissions or help create a domestic supply chain for critical minerals can begin applying for the “advanced energy” tax credit at the end of May, the Treasury Department announced Monday.
The program provides a 30% tax credit for for technologies including carbon capture systems, grid modernization projects, clean hydrogen production, and electric or fuel cell vehicles, as well as equipment that reduces emissions from industrial facilities, the department said in a notice. The first round of funding, some $4 billion, includes $1.6 billion devoted to projects in areas where coal mines and coal-fired power plants have shut down.
The Qualifying Advanced Energy Project Credit was first created as part of the American Recovery and Reinvestment Act in 2009, which provided $2.3 billion at the time. The program quickly ran out of cash, and efforts to refund it stalled in Congress until it was included in Democrats’ marquee climate bill last year, which provided some $370 billion in climate funding.
In addition, the Treasury Department announced it is establishing an Inflation Reduction Act program to provide up to 20% in an additional bonus tax credit for wind and solar projects located in low-income communities that could increase the total value of the incentive to as much as 50% of the project’s cost.
