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

TotalEnergies plans March restart for Tyra gas field in Denmark

TotalEnergies has unveiled plans to recommence production at Denmark’s Tyra natural gas field in March 2024. This follows the temporary closure of Denmark’s largest gas field for redevelopment in 2019. The project, also known as Tyra II, is set to restart on schedule by March 31, with a…

Japan, Denmark partnering to develop floating offshore wind technology

Japan and Denmark are collaborating on the research and development of floating offshore wind power technologies to address climate change. The partnership is set to promote the growth of the floating offshore wind industry, which is expected to see significant…

Germany will not provide promotional loans to China from 2026

Germany’s decision to halt promotional loans to China, effective from 2026, signifies a significant shift in their economic relationship and strategic approach. This move underscores Germany’s desire to recalibrate its standing vis-à-vis China and decrease its reliance on the Asian economic giant.

Stay informed

error: Content is protected !!