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The US Department of the Treasury announced it will open applications on May 31 for USD4bn worth of new tax credits for advanced energy manufacturing and decarbonization projects, as reported by Reuters on February 13. The program will provide a 30% tax credit for a range of technologies including carbon capture systems, grid modernization projects, clean hydrogen production, electric or fuel cell vehicles, and equipment that reduces emissions from industrial facilities. The first round of funding worth USD4bn is part of the total USD10bn advanced energy project tax credits approved by Congress, with 40% of the total funding being designated for projects in communities where coal mines and coal-fired power plants have been shut down.
The program is intended to fund clean energy projects that expand domestic manufacturing, reduce industrial greenhouse gas (GHG) emissions, or help create a domestic supply chain for critical minerals. It is fueled by the Biden Administration’s Inflation Reduction Act (IRA), which authorized an investment of USD369bn in energy security and initiatives mitigating climate change over the next ten years. Under the IRA, the Treasury Department will also offer a 10% or 20% additional bonus tax credit for wind and solar projects located in low-income communities, aside from the 30% general tax credit for these projects.
