While no one knows what 2023 holds for the energy industry, the seemingly widespread support for green technology and clean energy is set to continue this year. In our industry outlook, “Trends and pitfalls that will shape 2023,” we highlight some of the key green energy tax credit trends.
- The Inflation Reduction Act (IRA) proposed significant changes and expansions to existing federal tax benefits for renewable energy, fuel generation and other green technologies. About $370 billion of the law’s spending is on energy and climate spending, much of it on significant changes to the Internal Revenue Code that would extend and widen tax benefits for “green” energy and other technologies.
- Before the IRA, there was a tax credit of up to $7,500 for eligible electric vehicle (EV) buyers. The IRA has been redesigned to remove this cap, allowing some of the most prolific EV manufacturers to get back into the game for EV credits. However, there are new requirements in the IRA for consumers to access these tax credits.
- Hydrogen is expected to play a key role in solving the global climate crisis by supporting a reduction in the amount of greenhouse gas (GHG) emissions and could benefit from new funding opportunities made available by the US Department (DOE) and tax benefits for the production of “qualified clean hydrogen” under the IRA.
- The U.S. Environmental Protection Agency has released its proposed rule for the Renewable Fuel Standard (RFS) program, setting the volume and percentage standards for renewable fuels from 2023 to 2025. The proposed rule also includes several changes regulations to the RFS program.
- To achieve a clean energy transition and increase Europe’s energy independence, the European Union has pledged to spend most of its current budget on building a greener and more resilient Europe. . EU state aid rules offer investors a variety of tools to support industrial investments in the green transition and the resilience of the EU economy.
For more information on the energy trends of 2023 and a high-level look at what lies ahead in various global industry sectors, please see The Trends and Pitfalls That Will Shape 2023.