U.S. Treasury announces guidelines on additional clean energy tax incentives

The U.S. Treasury has announced plans to provide guidance on additional clean energy tax incentives, including measures aimed at deterring companies from relying on Chinese supply chains, before the end of 2023.

Lily Batchelder, the Treasury’s assistant secretary for tax policy, mentioned that this guidance will include rules for the “foreign entity of concern,” which are set to go into effect in 2024 for completed batteries and 2025 for critical minerals used in their production. These rules will impact investments in batteries for electric vehicles, including Ford Motor Co’s deal with Chinese battery manufacturer CATL.

Additionally, the guidance will cover the “45X” manufacturing production tax for clean energy products like solar, wind, batteries, and critical minerals components.

The U.S. auto industry is closely watching these rules, as they play a significant role in investment decisions related to electric vehicle battery production. The industry is looking for clarity on whether deals like Ford’s licensing of CATL’s technology will qualify for tax credits.

The Treasury also plans to release guidance on tax credits for energy-efficient home improvements and sustainable aviation fuel in the near term. Other guidance expected by the end of 2023 includes Section 48 clean power investment tax credits and clean hydrogen tax credits.

These tax incentives are part of the Inflation Reduction Act (IRA), passed in August 2022, which is estimated to cost around $369 billion over 10 years. However, strong demand for these credits has led some analysts to project that the fiscal costs of the IRA could reach $1 trillion.

Elevate your business with QU4TRO PRO!

Gain access to comprehensive analysis, in-depth reports and market trends.

Interested in learning more?

Sign up for Top Insights Today

Top Insights Today delivers the latest insights straight to your inbox.

You will get daily industry insights on

Oil & Gas, Rare Earths & Commodities, Mining & Metals, EVs & Battery Technology, ESG & Renewable Energy, AI & Semiconductors, Aerospace & Defense, Sanctions & Regulation, Business & Politics.

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

EU agrees on a reform for power market subsidies

European Union (EU) energy ministers have come to an agreement regarding the reform of power market subsidies, effectively resolving a standoff between France and Germany concerning the future competitiveness of their respective industrial sectors. This reform was proposed…

Promising outlook for US offshore wind sector in 2024 after setbacks

The U.S. offshore wind industry is gearing up for a more promising year in 2024, anticipating progress on several projects after facing setbacks and significant write-offs in the previous year. The offshore wind sector is expected to play a pivotal role in helping several states and President…

Copper braces for a 2026 concentrate crunch

The latest industry tallies show 2026 shaping up as the year when tightness in copper concentrate feedstock acts as a literal brake on refined output, transforming what had looked like a comfortable balance into a shortfall.

The pivot from expected surplus to looming deficit has been abrupt. As recently as the spring, projections penciled in a manageable cushion for 2025. Since then, a run of high impact disruptions at marquee assets, seismic damage and flooding at Kakula in the DRC, a fatal collapse at Codelco’s El Teniente in Chile, and a major mud inflow at Freeport’s Grasberg in Indonesia, has knocked out units that are not easily replaced.

Stay informed

error: Content is protected !!