The U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced $6 billion in tax credit allocations for the second round of the § 48C Qualifying Advanced Energy Project Tax Credit Program. This marks the final tranche of the Inflation Reduction Act’s (IRA) $10 billion investment to support clean energy, critical materials processing, and industrial decarbonization projects.

Key Highlights:

• 140+ projects funded in Round 2, bringing the total to approximately 250 projects across both rounds.
• The program targets clean energy manufacturing and recycling, critical materials processing, and industrial decarbonization across more than 30 states.
• Around $2.5 billion of the Round 2 allocations support projects in designated § 48C energy communities, such as areas impacted by the closure of coal plants and mines.

Clean Energy Transition and Job Creation

The § 48C Program, originally established in 2009 and expanded under the IRA, incentivizes high-impact infrastructure projects through competitive tax credit allocations. In the second round:

• $3.8 billion was allocated to clean energy manufacturing and recycling projects, encompassing technologies like hydrogen production, electric vehicles, batteries, and wind energy components.
• $1.5 billion went to critical materials recycling and refining, including lithium-ion battery recycling and rare earth element processing.
• $700 million supported industrial decarbonization projects, such as heat pumps and thermal storage technologies, which are expected to reduce emissions by 2.8 million tons of CO2.

Selected projects are projected to create 30,000 construction jobs over four years, with 10,000 of these jobs situated in energy communities. Many projects include labor agreements to ensure trained workers and community benefits.

Related Article: U.S. Treasury and IRS Release Clean Fuels Production Credit Guidance, Effective 2025

Oversubscribed Demand Reflects Industry Interest

The second round saw significant interest, with over 800 concept papers submitted requesting $40 billion in credits—six times the funding available. Following further review, 350 applications from over 40 states were submitted, including over 75 from energy communities.

Path Forward

To claim their allocated tax credits, awardees must meet specific certification and operational milestones under the § 48C Program. Successful projects will bolster the nation’s clean energy infrastructure, reduce greenhouse gas emissions, and enhance economic resilience.

The program’s cumulative impact includes $10 billion in tax credits across both rounds, leveraging over $44 billion in total project investments nationwide. These efforts advance the Biden administration’s goal of a secure, sustainable, and equitable energy future.

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