U.S. Treasury launches industry outreach on clean energy tax credits
5:18 pm Wednesday, October 26th, 2022
By David Lawder and Nichola Groom
(Reuters) – The U.S. Treasury on Wednesday launched a series of meetings with clean power groups, utilities, labor unions and others to develop detailed rules for some $270 billion in newly enacted incentives to jump-start green energy investments.
U.S. Treasury Secretary Janet Yellen met with 16 industry groups representing more than 1,000 firms in the clean energy supply chain, more than 2,000 utilities and more than 1 million American workers, the department said.
The new guidance will tell companies how they can take advantage of clean energy tax credits in the Inflation Reduction Act. The incentives are crucial for companies seeking to invest in solar and wind power, electric vehicles, clean energy manufacturing and energy efficiency.
The act extends 30% tax credits for wind, solar and other renewable energy sources, and offers incentives for carbon capture and tax credits of up to $7,500 on zero-emission electric vehicles. It also includes new credits to incentivize production of components like solar panels or batteries in U.S. factories.
Enphase Energy Inc, a supplier of power inverters, batteries and other devices for solar installations, said on Tuesday it plans to begin manufacturing products in the United States next year, but gave few details, citing the need for specific tax credit guidance, especially on the domestic content required to realize their full value.
Among such requirements are paying prevailing wage rates and offering apprenticeships. Other benefits are available for locating facilities in “brownfield” areas – industrial sites that are no longer in use – or those with high unemployment rates. The Treasury guidance is expected to specify definitions for these provisions.
“There are still many fine details that need to be ironed out,” Enphase Chief Executive Badrinarayanan Kothandaraman said on a quarterly earnings call.
Yellen during the meeting “underscored Treasury’s commitment to work expeditiously to provide guidance so that investments can move forward and our climate and economy can realize the benefits of the law as quickly as possible,” the Treasury said in a statement.
SPEED, BALANCE SOUGHT
Treasury Assistant Secretary for Tax Policy Lily Batchelder told Reuters the series of at least six roundtable discussions are aimed at addressing stakeholder concerns and quickly developing guidance.
“But we also need to make sure that guidance is correct and strikes the right balance,” Batchelder said, adding that Treasury staff were “working night and day to get out the guidance.”
Moving quickly is among the top priorities for companies, particularly for those considering investments in manufacturing, said Abigail Ross Hopper, president of the Solar Energy Industries Association, which will participate in Wednesday’s Treasury roundtable.
“I can’t imagine a single (firm) is going to spend a lot of capital until they have clarity around requirements to realize those credits,’ Hopper told Reuters in a Sept. 20 interview.
The roundtable follows Treasury’s issuance of six noticesrequesting public comments on topics such as tax credits for wind, solar and nuclear power, incentives for energy-efficient homes and clean vehicle credits.
On Thursday, Deputy Treasury Secretary Wally Adeyemo is scheduled to meet with leaders from labor unions, climate advocacy groups, climate advocacy and environmental organizations.
(Reporting by David Lawder; Editing by David Gregorio and Josie Kao)
