DOE and Treasury issue further guidance on investment tax credits for advanced energy projects (48C)

The Inflation Reduction Act of 2022 extended the 48C tax credit program, initially enacted in the American Recovery and Reinvestment Act of 2009, and provided an additional $10 billion in credit allocations. In this unusual “grant-as-tax-credit” program the U.S. Department of Energy (DOE) will receive applications and make recommendations to the Department of Treasury for which projects should receive the tax credit. The taxpayer can claim the 48C credit on its income tax return for the taxable year in which the project is placed in service.

What is the purpose?

The purpose of the 48C program is to expand U.S. manufacturing capacity and quality jobs for clean energy technologies, to reduce GHG emissions in the US industrial sector, and to secure domestic supply chains for critical materials that serve as input for clean energy technology production. A broad array of equipment and manufacturing projects designed to generate or produce low carbon energy can qualify for this credit. Projects must fall into one of three categories – Clean Energy Manufacturing and Recycling Projects, Greenhouse Gas Emission Reduction Projects, or Critical Materials Projects.

What funding is available?

Of the $10 billion in available credits, $4 billion will be reserved for projects in energy communities (communities that have had a coal mine or coal fired power plant shut down since 1999 and 2009 respectively).

The program will proceed in rounds. In the first round, $4 billion in credits will be allocated, 40% of which will go to projects in energy communities (communities that have had a coal mine or coal fired power plant shut down since 1999 and 2009 respectively).

Projects will receive credits for 30% of qualifying investments if the project meets wage and apprenticeship requirements; 6% if those requirements are not met.

  • Wage requirements – any laborer and mechanic employed for the project are paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality where the project is located.

  • Apprenticeship requirements – No less than 10-15% of the total labor hours for the construction must be performed by qualified apprentices.

A project is not eligible for this credit if is receives credits under certain other programs.

What is the timeline?

To apply, an applicant must first submit a concept paper to DOE. Based on the concept paper, DOE will encourage or discourage full applications. A party can submit a full application even if they were discouraged from doing so.

Applicants must submit concept papers through the online portal for first round funding consideration by noon July 31st. Treasury suggests responses to concept papers will come in the Fall.  The acceptance process for the full application will begin seven days after the taxpayer receives the letter of encouragement or discouragement. The IRS will notify applicants of final allocation decisions for round one no later than March 31st, 2024.

Based on the full application, DOE will make recommendations to Treasury in a ranked order and allocate credits based on the DOE’s ranking until all the funding is used.

Accepted applicants have two years from the date of acceptance to provide evidence the requirements of certification have been met. Once an applicant receives certification, it will have two years from this date to place the project in service or else the project loses the allocation. Projects will also lose funding if they are not built as described and in the location identified in the application.  Projects do not qualify if they are placed in service prior to an allocation by the IRS.

What are the evaluation criteria?

For projects that meet eligibility and other threshold requirements, DOE will consider four technical review criteria:

  • Commercial viability – DOE will evaluate the taxpayer’s readiness to proceed with the project and the timeframe for getting the project in commission. DOE will also consider the strength of the proposed business and management plants, particularly the market size and growth potential, the market share and price competitiveness, source and certainty of project funding, and the management team’s track record of success.

  • GHG emissions impacts – DOE will select projects with the greatest net impacts on GHG emissions. DOE will evaluate the project’s end products impacts on reduction of GHG emissions, efforts to mitigate GHG emissions from the project facility, the extent to which technological innovation that reduces GHG emissions exceeds those of competitors, and the project’s ability to reduce direct and indirect emissions to comply with the national target of net-zero emissions by 2050.

  • Strengthening supply chains and domestic manufacturing for a net-zero economy – DOE has identified energy supply chain and manufacturing project priority areas that are viewed as current or anticipated supply chain gaps. These priority areas are clean hydrogen, the electric grid, electric heat pumps, electric vehicles, nuclear energy, solar energy, sustainable aviation fuels, and wind energy.

  • Workforce and community engagement – DOE will evaluate how and to what extent projects will lead to domestic job creation, reduce barriers that could increase project completion time, and avoid or reduce local pollution. Considerations here include the number and qualify of domestic jobs created, workforce and community engagement to ensure timely project completion, transition opportunities for workers in the fossil fuel sector, and accountability for the project’s local environmental impact.

For Greenhouse Gas Emissions Reductions Projects specifically, DOE will give priority to projects that deeply reduce GHG emissions levels significantly below the domestic industry average and the 20% reduction eligibility requirement.



Authored by Mary Anne Sullivan, Jamie Wickett, and Valerie Marshall.


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