With the enactment of sections 45Y and 48E, the IRA has brought a welcome stability to the tax code for clean electricity production and can be expected to provide a much more flexible and predictable economic environment for deploying clean generation for years to come. Given the tight timing for the transition to these tax credits in 2025 and the need for advance planning by developers, the Treasury will need to publish guidance in the very near term to make good on the promise of a stable investment environment.
In this issue brief “On Deck for Treasury: The Inflation Reduction Act’s New Approach to Clean Electricity Tax Credits” prepared by Resources for the Future, an overview of the tax credits and some potential challenges for their implementation in the hopes of stimulating timely discussion on issues Treasury will likely need to address in its forthcoming guidance.
The need for expediency, along with the complexity of some of the issues identified in this issue brief, suggest that issuing guidance on 45Y and 48E may be no small task for Treasury, especially in light of other required IRA-related guidance on its plate. One option for Treasury could be to offer near-term initial guidance on less complicated aspects, such as the eligibility of wind and solar technologies, while seeking public comment on some of the more complicated aspects.
Access the complete brief here
