The Inflation Reduction Act of 2022 (IRA) extended and modified a federal
investment tax credit for advanced energy manufacturing projects under
Section 48C of the Code. Section 48C provides incentives for clean energy
manufacturing and recycling, industrial decarbonization, and critical
materials processing, refining and recycling.
A broad variety of projects can apply for an investment tax credit of up to
30%, ranging from manufacturing of fuel cells and components for geothermal
electricity and hydropower, to producing carbon capture equipment or
installing it at an industrial facility, to critical minerals processing.
The Section 48C tax credit is based on an application and award process
that allocates tax credits to successful applicants for their qualifying
The IRA provided $10 billion in new funding for the Qualifying Advanced
Energy Project Credit program. Congress required that at least $4 billion
be reserved for projects in communities with closed coal mines or retired
coal-fired power plants. The initial funding round will include $4 billion,
with about $1.6 billion reserved for projects in these designated coal
On May 31, 2023, the IRS released
Notice 2023-44, which provides additional information about the application process and
technical guidance for the 48C program.
To apply, taxpayers submit concept papers describing their proposed
projects. Taxpayers whose concept papers receive favorable reviews will be
encouraged to submit full applications. Concept paper submissions will be
accepted June 30 – July 1, 2023.
The Department of the Treasury will consider only those projects with a
reasonable expectation of commercial viability. Further, § 48C(d)(3)(B)
provides that, in determining which qualifying advanced energy projects to
certify under this section, the Secretary should consider projects that:
- will provide the greatest domestic job creation (both direct and
indirect) during the credit period;
- will 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
- have the lowest levelized cost of generated or stored energy, or of
measured reduction in energy consumption or greenhouse gas emission (based
on costs of the full supply chain); and
- have the shortest project time from certification to completion.
The Department of Energy will implement a “technical review” and evaluate
whether a project merits a DOE recommendation based on the following four
technical review criteria, as described further in Appendix B:
- commercial viability;
- greenhouse gas emissions impact;
- strengthening U.S. supply chains and domestic manufacturing for a
net-zero-13- economy; and
- workforce and community engagement.
Any project awarded a Section 48C tax credit for advanced energy projects
will have a two-year window to complete construction of the facility and
place it in service. Failure to meet this two-year construction deadline
will result in a forfeiture of the tax credit allocation under Section 48C.