Path to Clean Energy Economy Outlined by Treasury

Curious  how the Inflation Reduction Act’s tax incentives will support the building of an equitable clean energy economy? In a recently-issued fact sheet, the Treasury Department highlighted four key areas where the tax policy will drive clean energy:
  • Providing targeted incentives to drive investment and create opportunity in communities across the country
  • Encouraging clean energy project developers to meet strong labor standards, so that the benefits of building a clean energy economy are felt by workers
  • Lowering the costs of energy-saving property improvements and rooftop solar installation, saving working families and small businesses money on their monthly utility bills
  • Allowing state, local, and Tribal governments, as well as non-profit organizations and other tax-exempt entities, such as rural electric co-operatives, to receive tax credits as payments, expanding the range of actors that can invest in their communities

According to the fact sheet, the law will “provide bonuses for investing in low-income communities, as well as in communities that have historically depended on the energy sector for jobs and economic activity.”

To create an incentive to change, the IRA modifies and extends the clean energy Investment Tax Credit “to provide a 30 percent credit for qualifying investments in wind, solar, energy storage, and other renewable energy projects that meet prevailing wage standards and employ a sufficient portion of qualified apprentices from registered apprenticeship programs.”

It also modifies and extends the Renewable Energy Production Tax Credit “to provide a credit of 2.5 cents per kilowatt-hour in 2021 dollars (adjusted for inflation annually) of electricity generated from qualified renewable energy sources.”

Other tax credits extended and/or expanded include the Energy Efficient Home Improvement Credit, the Residential Clean Energy Credit, and the Energy Efficient Commercial Buildings Deduction.

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