US issues rules for clean power tax credits, Trump sows angst over future

The US Treasury Department issued rules for technology-neutral clean electricity credits, affirming eligibility for nuclear, marine and geothermal power plants along with wind, solar, battery storage and hydropower.

The US has long used the tax code to subsidize renewable energy. The Section 45Y investment tax credit and Section 48E production tax credit issued Jan. 7 are intended to support a broader suite of zero-carbon electricity technologies, the department said.

Clean energy trade groups broadly hailed the 2022 Inflation Reduction Act subsidies as a game-changer for renewable electricity deployment.

"At long last, we have a well-designed, technology-neutral, level playing field for energy tax policy," Ray Long, president and CEO of the American Council on Renewable Energy, said in a Jan. 7 statement.

But the guidance comes less than two weeks before Republicans take control of the White House, in addition to both chambers of Congress. President-elect Donald Trump has vowed to claw back unspent funding for clean energy and is seeking to implement a "no windmills" policy. Renewable energy developers, investment analysts and other market observers see the potential for significant incentive cuts.

While industry groups and climate activists were largely supportive of Treasury's final rules, the incoming Trump administration loomed large in their reactions to the guidance. Some sought to make a conservative case for preserving the credits.

"President-elect Trump's first administration set in motion an agenda to make American energy dominant in all forms of energy, including clean energy innovation, and we want them to have all tools available to them for America to not only meet rapidly increasing electricity demand but to have America lead in new technologies," Jeremy Harrell, CEO of ClearPath Action, said.

ClearPath is a super PAC that supports Republicans who believe in climate action.

Likewise, Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, stressed the tax credits' importance to solar and battery component manufacturers in the US. Clean energy facilities that qualify for the facilities can earn bonus credits for sourcing domestic materials and meeting certain wage and apprenticeship standards.

"Attempts to revoke these rules will only make it easier for China to win the race for global solar market dominance while killing American jobs and much needed economic opportunity," Hopper said in a Jan. 7 statement. "We urge lawmakers to protect these tax credits to drive job growth and continue to build out American-made clean energy."

Details

The final rules clarify the types of clean energy facilities eligible for the credits, a list that now includes fusion power plants, hydrokinetic generators and certain waste energy recovery property. A table of these technologies will be released "imminently," Treasury said on Jan. 7.

Some of these clarifications were previewed in Treasury's December 2024 guidance for its previous Section 48 investment tax credit program. In addition to creating new tech-neutral credits, the Inflation Reduction Act extended the old program to the end of 2024 and opened it to new types of facilities.

Clean energy developers that started construction by Dec. 31, 2024, are eligible for the old credit. Projects placed in service after that date are eligible for the tech-neutral program, meaning that some developers could have a choice between credits.

The guidance also outlines how developing technologies may become eligible in the future. The US Energy Department's national labs are currently analyzing the lifecycle emissions of biomass generation to determine how these facilities may qualify, the department added. Any future changes to the list of eligible technologies, including the designation of a new lifecycle emissions model, must be backed by one of the DOE's labs.