Unlocking Clean Energy Potential: How New Treasury Rules Could Transform Low-Income Areas

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WASHINGTON, D.C. – In a significant stride toward equity in energy access, the U.S. Department of the Treasury and the Internal Revenue Service recently issued a Notice of Proposed Rulemaking (NPRM) for the Clean Electricity Low-Income Communities Bonus Credit Program. This initiative, part of the Inflation Reduction Act, is poised to drive clean energy investments in underserved regions.

The proposed rules aim to extend the benefits of the Biden-Harris Administration’s Investing in America agenda by promoting affordable clean energy in low-income neighborhoods, on Indian lands, and within affordable housing. Deputy Secretary of the Treasury Wally Adeyemo emphasized, “Incentives to develop clean power in communities that have been overlooked and left out for too long will drive investment and create opportunity.”

The 48E(h) program, a progression from the original 48(e) Low-Income Communities Bonus Credit, broadens its scope to include advanced clean technologies such as hydropower and geothermal energy, alongside traditional wind and solar. This expansion aligns with efforts to make the Clean Electricity Production Credit and Clean Electricity Investment Credit accessible to facilities with zero or negative greenhouse gas emissions.

Beginning in 2025, the program will offer 1.8 gigawatts of Capacity Limitation annually, continuing until certain emissions reductions are achieved or until 2032. It provides a boost of 10 or 20 percentage points for eligible facilities under 5 megawatts above the standard 30% investment credit, contingent on wage and apprenticeship standards.

The NPRM builds on successful practices from the 2023 and 2024 implementations of the 48(e) program, retaining the user-friendly Applicant Portal. Proposed updates include expanding financial benefits to accommodate future technologies and ensuring benefits reach low-income subscribers.

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Significantly, the proposal maintains sub-reservations for residential projects and sets aside allocations to favor projects owned by tax-exempt entities and those in communities burdened by persistent poverty and high energy costs.

This move exemplifies the administration’s efforts to an equitable energy transition, by ensuring that the economic and environmental benefits of clean energy technologies extend to all Americans, particularly those in historically marginalized communities. The NPRM marks a pivotal moment in the pursuit of a more inclusive clean energy economy.

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