Overview of Section 48C Advanced Energy Project Credit

Initiated by the American Recovery and Reinvestment Act of 2009 and recently bolstered by the Inflation Reduction Act of 2022 with an additional $10 billion funding, the Qualifying Advanced Energy Project Credit (48C) program aims to incentivize advanced energy projects. These projects, as specified under 26 USC § 48C(c)(1), are eligible for a tax credit, supporting investments that advance clean energy production and environmental sustainability.

The Department of the Treasury, in collaboration with the Internal Revenue Service and the Department of Energy, has released the first round of tax credits, totaling up to $4 billion. These credits target initiatives focused on expanding clean energy manufacturing and the recycling of critical materials. Furthermore, projects aimed at refining, processing, and recycling these materials, as well as those reducing greenhouse gas emissions in industrial settings, are also eligible.

Of this funding, around $1.6 billion is reserved specifically for projects located in designated energy communities. The program offers a substantial investment tax credit, covering up to 30% of the qualified investments for projects that comply with prevailing wage and apprenticeship requirements.