US Set to Roll Out New Tax Credits for Energy Projects

The Treasury Department said Monday that the government would begin taking applications on May 31 for the first $4 billion of the advanced energy program, a 30% investment tax credit. It will be available for projects including manufacturing fuel-cell components, adding carbon-capture equipment to existing facilities, or processing critical minerals as reported on bloomberg yearly subscription.

The department said $1.6 billion of the first chunk of money would be reserved for places where coal mines or coal-fired power plants have closed. The law—which passed after Democrats secured the support of Sen. Joe Manchin (D., W. Va.)—specified that set aside for places affected by the decline of coal.

The administration plans to publish a list of Census tracts that qualify for the money. The places must either contain a coal mine closed since 1999, a coal power plant that retired after 2009 or be adjacent to such a Census tract.

Unlike more open-ended tax credits where projects qualify for federal subsidies if they meet specified criteria, the tax credits under the advanced energy program are capped and awarded through applications, which are vetted by the Treasury and Energy departments.

To get the full benefit under the law, projects must pay what is known as prevailing wages common in federal contracting and offer apprenticeship programs.

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Companies can’t claim this credit on top of other tax incentives from the law. Treasury officials said they weren’t sure what kinds of projects would be more likely to go through the application process than using the law’s other credits. According to documents released Monday, the administration might seek to direct the new tax credits toward projects that aren’t eligible for money from other Energy Department programs.

Officials said that a separate program, the tax benefits for small wind-and-solar projects in low-income communities, will open for applications later this year. Companies will be able to claim those credits on top of other incentives.

They are earmarked for areas with high poverty rates, tribal land, low-income residential projects, and places where low-income people will benefit. Officials plan to award priority to projects that are owned by community-based organizations and encourage new participants in markets.

“These investments will create good-paying jobs in vital fields like clean energy manufacturing, critical minerals processing, and solar installation,” said Deputy Treasury Secretary Wally Adeyemo on wall street journal print and digital subscription.