WASHINGTON (Reuters) – The Biden administration released guidance on Tuesday intended to assist companies in accessing clean energy tax credits under the 2022 Inflation Reduction Act, finalizing a program aimed at extending subsidies that have long been available for wind and solar to other low-carbon sources. This initiative is a component of outgoing President Joe Biden’s efforts to bolster his administration’s broader strategies in combating climate change, actions that may face challenges once President-elect Donald Trump assumes office later this month with a focus on reducing spending and maximizing fossil fuel production.
Trump has indicated his intention to dismantle the IRA, Biden’s landmark climate legislation, in order to generate hundreds of billions of dollars in budgetary savings, although such a move would necessitate approval from Congress.
Officials in the United States who announced the guidance on Tuesday highlighted that the IRA’s technology-neutral clean energy program provides tax credits of up to 30% for the production and investment in environmentally friendly power – an incentive traditionally available to solar and wind projects over the years. The program has expanded its scope to include additional technologies that may qualify for eligibility, such as marine and hydrokinetic energy, nuclear fission and fusion, hydropower, geothermal energy, and certain forms of waste energy recovery.
The administration underscored the program’s significance in the decarbonization of the power sector, responsible for approximately a quarter of U.S. greenhouse gas emissions, and in enhancing electricity capacity amidst rising demand from data centers, industrial consumers, and electric vehicle users. Deputy Treasury Secretary Wally Adeyemo conveyed during a press briefing that revoking the subsidies could result in increased electricity prices for consumers by impeding the development of new power projects and escalating costs for developers.
A Department of Energy analysis revealed that the tax credits, combined with other provisions within the IRA and the Bipartisan Infrastructure Law, are projected to save American households up to $38 billion on electricity bills through 2030. In recent days, the Biden administration has introduced additional measures to solidify its climate agenda, including the prohibition of offshore oil and gas drilling in new regions of the Atlantic, Pacific, and beyond, as well as the finalization of guidelines on how companies can access credits for green hydrogen, a product derived from renewable energy crucial for decarbonizing heavy industry and transportation.
(Writing by Richard Valdmanis; editing by Barbara Lewis)
