🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

US Treasury to issue more clean energy tax credit guidance by year-end

Published 09/08/2023, 05:03 AM
Updated 09/08/2023, 05:06 AM
© Reuters. FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the U.S. Treasury building in Washington, U.S., January 20, 2023.  REUTERS/Kevin Lamarque/File Photo

By David Lawder

WASHINGTON (Reuters) - The U.S. Treasury said on Friday it will provide guidance on additional clean energy tax incentives before the end of 2023, including a provision aimed at deterring companies from relying on Chinese supply chains.

Lily Batchelder, the Treasury's assistant secretary for tax policy, declined to provide reporters with specific timing for the guidance on "foreign entity of concern" rules.

But she said the guidance would be released before year-end, along with guidance for the "45X" manufacturing production tax for clean energy products such as solar, wind, batteries and critical minerals components.

The auto industry is watching the rules for both credits as they make investment decisions on producing batteries for their transition to electric vehicles. The foreign entity of concern rules come into effect in 2024 for completed batteries and 2025 for critical minerals used to produce them.

A key decision in the guidance is whether Ford Motor (NYSE:F) Co's deal to license the technology of Chinese battery manufacturer CATL for use in Ford-owned U.S. battery plants will meet the Treasury's standards to access the tax credits. The arrangement has raised concerns among U.S. lawmakers.

Batchelder said that in the near term, Treasury would release guidance on tax credits for investments in energy efficient home improvements and sustainable aviation fuel.

© Reuters. FILE PHOTO: A bronze seal for the Department of the Treasury is shown at the U.S. Treasury building in Washington, U.S., January 20, 2023.  REUTERS/Kevin Lamarque/File Photo

Other guidance expected before the end of 2023 includes Section 48 clean power investment tax credit and clean hydrogen tax credits.

According to initial estimates made when the Inflation Reduction Act (IRA) was passed in August 2022, the cost of its clean energy tax credits was estimated at around $369 billion over 10 years. Since then, strong demand for the credits from investment projects have prompted some analysts to estimate that the IRA's fiscal costs could reach $1 trillion.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.