In Notice 2018-15, the IRS has announced that it will no longer process applications or issue allocations for "clean renewable energy bonds" (CREBs), because no bonds issued after December 31, 2017, will qualify for the program.

Background

Section 54 allows for $2.4 billion of CREBs to be issued to finance certain renewable energy projects. One third of that amount may be issued to qualified borrowers that are public power providers, governmental bodies and cooperative electric companies.

CREBs can be used to finance facilities that generate electricity from the following sources: wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewables and trash combustion facilities.

In Notice 2015-12 and Notice 2017-66, the IRS solicited new applications from qualified issuers of new CREBs for projects to be owned by public power providers, because amounts were only still available for those taxpayers.

The Tax Cuts and Jobs Act ended many programs, including the CREB program.

End of allocation

Notice 2018-15 ends the current CREB allocation by amending Section 54C to exclude any bonds issued after December 31, 2017. Accordingly, the IRS will not process applications for, or issue allocations of, new CREBs volume cap under Notice 2015-12 or Notice 2017-66.

Implications

While this is not too surprising given that the CREB program was eliminated under the Tax Cuts and Jobs Act, there was some hope from industry that the previously funded but not allocated funds would still be made available as had previously been done with some expiring programs. While the ending of the CREBs program will hit those that participated in it hard, as it was designed to help those that for other reasons couldn't avail themselves of PTC or ITC, we note that CREBs represented a small portion of the overall renewable energy market and therefore should not have a significant macro-level impact.

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