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June 4, 2021

Biden Administration's proposals would expand and enhance qualifying advanced energy manufacturing credit

The Biden Administration's FY2022 budget and Treasury Green Book propose to authorize an additional $10 billion for new IRC Section 48C tax credits for advanced energy manufacturing projects. The Green Book proposes expanding the types of projects eligible for the credits and revising the evaluation process for selecting the projects.

The Green Book also proposes a direct-pay option, where taxpayers could elect a cash payment instead of the IRC Section 48C credit.


Under IRC Section 48C, Treasury has previously allocated $2.3 billion in tax credits to clean energy manufacturing projects, which are defined as those that re-equip, expand or establish a manufacturing facility for the production of the following:

  • Property designed to be used to produce energy from the sun, wind, geothermal deposits or other renewable resources
  • Fuel cells
  • Microturbines or an energy storage system for use with electric or hybrid-electric motor vehicles
  • Electric grids to support the transmission of intermittent sources of renewable energy, including storage of that energy
  • Property designed to capture and sequester carbon dioxide emissions
  • Property designed to refine or blend renewable fuels or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies)
  • New qualified plug-in electric drive motor vehicles or components designed specifically for use with those vehicles, including electric motors, generators and power control units or
  • Other advanced energy property designed to reduce greenhouse gas emissions as may be determined by the Treasury Secretary.

Treasury evaluates projects that apply for a credit allocation on whether they:

  • Are expected to have commercial viability
  • Provide the greatest domestic job creation
  • Provide the greatest net impact in avoiding or reducing air pollutants or anthropogenic emissions of greenhouse gases
  • Have the greatest potential for technological innovation and commercial deployment
  • Have the lowest levelized cost of generated or stored energy, or of measured reduction in energy consumption or greenhouse gas emission
  • Have the shortest project time from certification to completion

According to the Green Book, additional factors such as diversity of geography, technology, project size and regional economic development are also considered. An IRC Section 48C credit allocation, if awarded, equals 30% of the eligible investment in the project.

All $2.3 billion in IRC Section 48C credits were allocated through two application rounds, with the last allocations awarded in November 2013. The Congress has not authorized additional IRC Section 48C credits.

Budget proposal would authorize $10 billion in credits

The proposal would authorize the allocation of an additional $10 billion of IRC Section 48C credits, with $5 billion specifically earmarked for allocation to projects in coal communities.

To expand eligibility for the IRC Section 48C credits, the Green Book would revise the definition of a qualifying advanced energy project to include: "industrial facilities; recycling in addition to production; and expanded eligible technologies, including but not limited to energy storage and components, electric grid modernization equipment, carbon oxide sequestration, and energy conservation technologies." In addition, the selection criteria would be revised to include "evaluating wages for laborers and additional consideration for projects that create jobs in communities impacted by the closure of coal mines or coal power plants."

The Green Book would also allow recipients of the IRC Section 48C credits to elect a direct-pay option, under which taxpayers could elect to receive a cash payment instead of credits. The credits or cash payment would be available even if the IRC Section 48C credits exceed taxes due.

Taxpayers would have three years from the date the additional authorization is enacted to apply for the IRC Section 48C credits. If allocated the credits, taxpayers will have 18 months to provide evidence that program requirements have been met and must place the property in service within three years of the date the certification is issued.


While this is just a budget proposal at this point, taxpayers with clean energy manufacturing projects may want consider following this proposal so they can prepare to adjust their planning and submit an application should the proposed changes be enacted. When Treasury previously had $2.3 billion of credits to allocate, the applications were due shortly after the credits were authorized, so it was difficult for many companies to adjust their capital expenditure plans to take the new tax credit into account. Also, many projects qualified for and received awards from the last round of allocations based on their job creation and emission reductions, even though the projects may not have seemed at first blush like a fit for the credits. The IRC Section 48C credit program is more extensive than the manufacturing of solar panels, wind turbines and other items that are traditionally considered renewable energy related.


Contact Information
For additional information concerning this Alert, please contact:
Indirect Tax & State/Local Policy
   • Ali Master (
Credits and incentives and sustainability
   • Paul Naumoff (
   • Michael Bernier (
   • Akshay Honnatti (