Treasury Department and IRS Release Proposed Guidance on Clean Electricity Tax Credits to Spur Renewable Energy Development

The Treasury Department and the Internal Revenue Service have unveiled proposed guidance aimed at boosting renewable energy development through the Clean Electricity Production Credit and the Clean Electricity Investment Credit. The new tax credits, part of the Inflation Reduction Act, will sunset existing tax credits for projects starting construction after 2025, transitioning them to clean energy credits for projects placed in service after Dec. 31, 2024.

The proposed rules identify specific technologies that qualify for the credits, including wind, solar, hydropower, nuclear, geothermal, and more. Energy storage technologies are also addressed in the guidance. Clean energy technologies relying on combustion or gasification must undergo a lifecycle greenhouse gas analysis to demonstrate net-zero emissions.

Treasury Secretary Janet Yellen praised the Inflation Reduction Act for driving investment in clean power and reducing greenhouse gas emissions. The proposed rules aim to provide certainty to developers and investors in clean energy projects, with future changes to technology designations requiring analysis by the Department of Energy National Labs.

The public is encouraged to submit comments on the proposed rules, with a public hearing scheduled for August. Senate Finance Committee chairman Ron Wyden hailed the tax policy as a significant step in reducing carbon emissions and advancing clean energy technologies. The proposed guidance sets the stage for further growth in the clean energy sector and lower utility bills in the long run.