The Inflation Reduction Act (IRA) passed last December [2022] by Democrats gave green investors hope in sustaining and extending their renewable energy efforts. This act is set to give a 30% tax credit to those investing and practicing in solar, wind, and other green energy projects, and an additional 10% tax credit to those investing in “green communities.” These US communities are economically stuck tied to the usage of fossil fuels, such as oil and coal. This Tuesday, the Biden Administration released final guidance and an outlined plan on how clean energy companies and other agencies can secure that additional tax credit.
“Communities like coal communities have the knowledge, infrastructure, resources and know-how to play a leading role in the move to a clean energy economy,” stated U.S. Deputy Treasury Secretary, Wally Adeyemo.
This tax credit is a momentous saving grace for these communities, and is central to the administration's goal of ensuring that these communities dependent on fossil fuels start to benefit from clean energy sources. To bring more specificity, this tax credit will likely cover projects in heavy coal dependent areas economically collapsed by mining and plant closures, such as the Appalachia region.
The US Treasury Department is to design and release an interactive mapping tool that helps identify eligible areas and communities. Previously, the IRA and the bipartisan infrastructure bill favored red states, since these areas are higher coal producers and dependent on fossil fuels. This will give dependent areas a greater chance and opportunity to start the transition over to clean energy, gearing towards the global climate pledges. The carbon credit market can also be used as an efficacious component when it comes to the transition. Many investors may already be integrated within, but we may also see an increase in market revenue.
Moving in tandem with the Biden Administration, the Department of Energy has announced they will be designating $16 million from the IRA to the University of North Dakota and West Virginia University. These two universities have been in the designing stage of completing studies on refineries that will extract and separate rare earth elements and other critical minerals from coal ash, acid mine drainage, and other mine waste. The extracted minerals are crucial in producing clean energy technologies, such as batteries and solar panels.
