On August 30, the U.S. Treasury Department and the Internal Revenue Service (IRS) published a Notice of Proposed Rulemaking (NPRM) for 48E(h)the Clean Electricity Low-Income Communities Bonus Credit Program, created by the Inflation Reduction Act. The program promotes cost-effective clean energy investments in low-income communities, on Indian lands, in affordable housing, or that directly benefit low-income households.
The proposed rules are a major step forward in implementing the Biden-Harris Administration’s Investing in America agenda, lowering costs for underserved communities and households and ensuring they share in the benefits of the growth of the clean energy economy.
The 48E(h) Clean Electricity Bonus Credit Program for Low-Income Communities builds on the Bonus Credit Program for Low-Income Communities, also known as 48(e). The transition from 48(e) to 48E(h) opens the program to additional clean energy technologies beyond wind and solar energy, such as hydropower and geothermal energy. This expansion also coincides with Treasury’s efforts to make the benefits of the Clean Electricity Production Credit and Clean Electricity Investment Credit available to clean energy facilities with zero or less greenhouse gas emissions.
“Incentives to develop clean energy in communities that have been overlooked and neglected for too long will spur investment and create opportunities, ensuring the growth of the clean energy economy benefits all Americans,” the U.S. vice president said. -Finance Secretary Wally Adeyemo. “The Biden-Harris Administration continues to prioritize lowering energy costs and strengthening our energy security, and today’s announcement represents a major step forward.”
The NPRM is designed to provide a broad range of taxpayers and regions with access to the 48E(h) program, prioritize financial benefits for low-income households, and ensure consistency with the statute and other guidance. Beginning in 2025, 1.8 GW of capacity reduction will be available annually for allocation under the program, which will continue until the later of the calendar year in which certain greenhouse gas emission reductions are achieved or until 2032. The allocated credit provides a percentage of 10 or 20 percent. point increase for qualified non-combustion and gasification installations of less than 5 MW on top of the 30% 48E tax credit for investments in clean electricity if the applicable wage and apprenticeship conditions are also met.
The NPRM, issued in August, includes best practices learned from the successful implementation of the 48(e) program in 2023 and 2024, including retaining much of the current program’s innovative Applicant Portal infrastructure. The portal created a paperless, user-friendly platform, making it easier for taxpayers to apply for the bonus credit.
The NPRM proposes updated definitions to expand the mechanisms for delivering financial benefits to account for future technologies and ensure that additional benefits flow to low-income subscribers. The NPRM also proposes maintaining a partial reservation for certain residential facilities (such as behind-the-meter rooftop solar) and reserving additional selection criteria for applications. The proposed additional selection criteria stipulate that at least 50% of allocations in each category support projects owned by tax-exempt entities (such as state, local, and tribal governments and nonprofit organizations), worker cooperatives, tribal enterprises, and community-based projects with high persistent poverty and high energy costs.
The Department of Energy’s Office of Energy Justice and Equity will continue to work with the IRS to administer the applicant portal and evaluate submitted applications.
The release of the NPRM marks a critical step in implementing the 48E(h) Clean Electricity Low-Income Communities Bonus Credit Program for the program’s opening in 2025. The Treasury Department invites comments during the 30-day comment period and will host a public hearing on October 17, 2024, and a tribal consultation on September 27, 2024.
News item from the Ministry of Finance
