The clean energy investment programs authorized by the Inflation Reduction Act took a step closer to becoming a reality Monday when the IRS said it would start accepting applications for a major tax credit on May 31.
The opening of applications will allow companies to tap into $10 billion in Qualifying Advanced Energy Project Credits, which is meant to incentivize clean energy manufacturing, recycling, and other environmentally friendly projects. Out of the total, $4 billion is set aside for projects in communities with closed coal mines and coal-fired power plants. The credit is one of an array of provisions in the Inflation Reduction Act intended to encourage clean energy production in the U.S. with the goal of reducing carbon emission and combating climate change.
The government also laid out rules for a separate tax credit that rewards building solar and wind energy projects in low-income communities. The IRS and the Treasury Department, which are overseeing the programs, will begin accepting applications for the Low-Income Communities Bonus Credit at some point in 2023. Monday’s announcement did not set a specific date. The credit is intended to ensure that the blitz of green energy projects created by the Inflation Reduction Act benefit Tribal nations, rural areas and communities of color. The goal is to create well-paying jobs, decrease pollution and spur economic development in those areas.
“These two important Inflation Reduction Act programs will help lower energy costs for low-income families, expand access to clean energy solutions, and accelerate investments in manufacturing, particularly in traditional energy communities, that are crucial to advancing U.S. energy security,” said John Podesta, White House Senior Advisor to the President for Clean Energy Innovation and Implementation, in a press release.