The U.S. Department of Energy, the U.S. Department of Treasury, and the Internal Revenue Service on March 29 announced $4 billion in tax credits for over 100 projects across 35 states to accelerate domestic clean energy manufacturing and reduce greenhouse gas emissions at industrial facilities.
Projects selected for tax credits under the Qualifying Advanced Energy Project Tax Credit (48C), funded by President Biden’s Inflation Reduction Act, span across large, medium, and small businesses and state and local governments, all of which must meet prevailing wage and apprenticeship requirements to receive a 30% investment tax credit.
Of the $4 billion tax credits, $1.5 billion supports projects in historic energy communities, DOE said.
DOE is partnering with Treasury and IRS to implement the Qualifying Advanced Energy Project Tax Credit (48C) funded by the President’s Inflation Reduction Act.
DOE’s Office of Manufacturing & Energy Supply Chains manages the Section 48C Program on behalf of IRS and Treasury.
Established by the American Recovery and Reinvestment Act of 2009, the Section 48C Program was expanded with a $10 billion investment under the Inflation Reduction Act of 2022.
At least $4 billion of the total $10 billion will be allocated for projects in designated § 48C energy communities -- communities with closed coal mines or coal plants as defined in Appendix C of IRS Notice 2023-44. The Section 48C Program provides an investment tax credit of up to 30% of qualified investments for certified projects that meet prevailing wage and apprenticeship requirements.
The Section 48C Program received significant interest from industry in Round 1.
Applicants submitted concept papers -- a project proposal -- seeking a total of nearly $42 billion in tax credits across all categories of projects, including nearly $11 billion for projects in designated energy communities census tracts.
DOE received approximately 250 full applications from projects requesting a total of $13.5 billion in tax credits. There was great variety in the size and scope of projects, with applicants requesting tax credits ranging from under $1 million to over $100 million.
Section 48C(e) Round 1 allocations and application overview
Clean energy manufacturing and recycling: $2.7 billion in tax credits (67% of round 1 tax credits)
Selected from applications requesting support for the buildout of U.S. manufacturing capabilities critical for clean energy deployment and span clean hydrogen (e.g., electrolyzers, fuel cells, and subcomponents), grid (e.g., cables, conductors, transformers, and energy storage), electric vehicles (e.g., battery components, power electronics), nuclear power, solar PV, and wind energy (including offshore wind components), "among other industries and components critical to supporting secure and resilient domestic clean energy supply chains," DOE said.
Critical materials recycling, processing, and refining: $800 million in tax credits (20% of round 1 tax credits)
Selected projects are investing in multiple electrical steel applications, lithium-ion battery recycling, and rare earth projects.
Industrial decarbonization: $500 million in tax credits (13% of round 1 tax credits)
Selected projects would implement decarbonization measures across diverse sectors, including chemicals, food and beverage, pulp and paper, biofuels, glass, ceramics, iron and steel, automotive manufacturing, and building materials. Low-carbon fuels, feedstocks, and energy sources are well-represented as a solution for decarbonization across these projects.
48C Portal
For selected projects to receive the tax credit, information will need to be submitted to the 48C portal within two years to certify the project. Within an additional two years following project certification, the project must be placed in service.
As required by statute, the Section 48C(e) program will publish the names of all organizations with certified projects and the amount of that allocation after projects are certified.
Prior to certification, law prohibits the Section 48C(e) program from providing identifying information about allocation recipients or their projects without the applicant’s consent.
Allocation recipients are not required to publicly share information about their allocation at this time, but some may choose to do so voluntarily. Allocation recipients who are interested in doing so may contact DOE about the potential to voluntarily participate in upcoming DOE announcements. Participation in upcoming announcements will not affect the recipient’s allocation in any way.
The U.S. Department of Treasury and Internal Revenue Service will issue a notice for the second round of the Section 48C program in the coming months, with the concept paper submission window anticipated this summer.
Learn more about the Qualifying Advanced Energy Project Credit (48C) and the Qualifying Advanced Energy Project Credit (48C) Program.
