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Clean Manufacturing Tax Credits for Coal Country

By May 6, 2024May 21st, 2024No Comments

May 6, 2024

The Biden Administration announced its second and final round of 48C tax credits which will allocate $6 Billion to advance clean energy manufacturing, to further critical minerals projects, and to reduce greenhouse gas emissions. Approximately $2.5 Billion are reserved for projects in designated energy communities, many located in Central Appalachia.

“The Qualifying Advanced Energy Project Credit program is a game-changer for clean energy investment. This credit will help companies tap the talent and innovative potential of the energy communities and workers who have powered our nation for more than a century.”

-John Podesta, Senior Advisor to the President for International Climate Policy

The Qualifying Advanced Energy Project Credit (§ 48C) program offers an exciting opportunity to spur manufacturing and clean energy investments in our region. Here are the nuts and bolts of the program:

48C Tax Credits

Under the Qualifying Advanced Energy Project Credit (§ 48C) program, eligible projects are 

(1) clean energy manufacturing and recycling projects, 

(2) projects that refine, process, or recycle critical materials and 

(3) projects that reduce greenhouse gas emissions through industrial decarbonization. 

To receive the full value of the 48C credit, the project must meet prevailing wage and apprenticeship requirements. 

How to Apply?

The  Qualifying Advanced Energy Project Credit program is jointly administered under the Department of Energy, the Department of Treasury, and the Internal Revenue Service. The application process will be administered by the Department of Energy, and applicants need to submit both a concept paper and a full application.

The Department of Treasury resealed its new guidance (Notice 2024-36) regarding this round of 48C credit allocations on April 29, 2024, and the Department of Energy will open its portal for concept papers no later than May 28, 2024. The submission deadline for concept papers will be 30 days after the portal has opened. According to the Department of Energy, “(c)oncept papers and applications will be evaluated across multiple criteria and policy factors, including (1) commercial viability; (2) greenhouse gas emissions impacts; (3) strengthening U.S. supply chains and domestic manufacturing for a net-zero economy; and (4) workforce and community engagement.” 

BlueGreen Alliance & RMI Webinar on 48C

The BlueGreen Alliance will host an informational webinar on Thursday, May 23rd, 2024 at 1 PM ET

Again, about $2.5 billion of this round’s tax credit allocations are reserved for designated energy communities, many of them located in Appalachia’s coal country. To qualify, a community has to meet the following criteria:

48C Energy Community

Regarding the 48C tax credits, the Inflation Reduction Act’s definition of an energy community includes communities with an eligible project located in 

(1) a census tract with a coal mine that closed after December 31, 1999,

(2) a census tract with a coal-fired electricity generating unit that has been retired after December 31, 2009, or

(3) a census tract immediately adjacent to one of the two above-mentioned census tracts.  

A 48C tax credit map showing census tracts that follow the IRA’s definition of energy communities can be found here.  

48C Tax Credits At Work in Energy Communities 

In its first round, the IRS allocated about $4 Billion for over 100 projects, with approximately $1.5 Billion of credits going to designated energy communities. Among the awardees is JSW Steel USA in Mingo Junction, OH, which will use the investment to increase domestic steel production used in the infrastructure and renewable energy sectors. JSW Steel USA has over 750 employees in the United States, and the investment will help retain and create manufacturing jobs in Ohio. 

Now the second round of 48C tax credit allocations is opening; let’s bring more clean energy investments and good paying jobs to Appalachia!

For further information, please check the DOE’s website about the 48c Tax Credit Program here.