The US government will begin accepting applications from clean energy-related supply chain projects later this year for an initial $4bn funding round coming out of a 30% tax credit that was revived as part the nation’s landmark climate law.
Projects eligible for the so-called qualifying advanced energy project credit (QAEPC) include those that create or expand a domestic supply chain for solar, wind, and other renewables and critical minerals such as graphite and lithium, manufacturing of fuel cells, and equipment for carbon capture systems.
Investments based on the QAEPC will also allow for existing energy infrastructure to be retooled for the clean energy economy, he added.
“These investments will create good-paying jobs in vital fields like clean energy manufacturing, critical minerals processing, and solar installation,” said Wally Adeyemo, deputy secretary at the Department of Treasury, which this week issued guidance for eligibility.
The US Inflation Reduction Act (IRA) signed by President Joe Biden in August provides $10bn in new funding for the programme which treasury will administer with the Internal Revenue Service, its tax collection arm.
The law stipulates that at least $4bn in credits be earmarked for projects located in ‘energy communities’ with decommisionned coal mines or retired coal-fired power plants, with $1.6bn set aside for that purpose.
The advanced energy project incentive is an up-front investment tax credit worth 30% of capital expenditure if new apprenticeship and wage requirements are met.
In 2009, Congress created the tax credit as part of the American Recovery and Reinvestment Act, the largest anti-recession spending package since World War 2. After an initial $2.3bn, the programme did not receive additional funding for more than 13 years with political control of Congress divided much of the time.
Democrats with thin majorities in both houses passed the climate legislation on party-line votes.
