Over 140 projects selected in Round 2; approximately 250 selected in total across both rounds
WASHINGTON – Today, the Internal Revenue Service (IRS) announced $6 billion in tax credits for the second round of the Inflation Reduction Act’s (IRA) § 48C Qualifying Advanced Energy Project Tax Credit (§ 48C Program).
The § 48C Program, managed by the IRS with assistance from Department of Energy’s (DOE) Office of Manufacturing & Energy Supply Chains (MESC), was originally established by the American Recovery and Reinvestment Act of 2009, and subsequently expanded with a $10 billion investment under the IRA. Of this $10 billion, 40% is reserved for projects in designated § 48C energy communities—communities with closed coal mines or coal plants. The § 48C Program is a competitive funding program, meaning that companies have the opportunity to apply for infrastructure project funding which is awarded to the most meritorious projects in the form of an investment tax credit. The objective of this program is to fund critical projects that:
- Expand US clean energy manufacturing and recycling capacity;
- Expand US critical materials processing and refining capacity; and
- Drive process efficiency and reduce greenhouse gas (GHG) emissions at US industrial facilities.
In the second round of the § 48C Program, IRS allocated the remaining $6 billion in tax credits to projects in more than 30 states. This is in addition to the $4 billion in tax credits allocated to Round 1 projects across more than 30 states in March 2024. All projects selected in Round 1 and Round 2 must meet the prevailing wage and apprenticeship requirements to receive a 30% investment tax credit. In Round 2, the IRS allocated roughly $2.5 billion to approximately 50 projects located in § 48C energy communities, totaling $4 billion allocated to projects in these communities across both rounds. Round 2 supported a wide scope and scale of projects, with tax credit allocations ranging from under $10 million to over $100 million.
48C Program Impact
Similar to the first round, the second round of the § 48C Program experienced outsized demand from industry. Interested applicants first submitted a project proposal, known as a concept paper, for consideration. In summer of 2024, DOE received over 800 concept papers requesting over $40 billion in tax credits (reflecting over $140 billion in total US infrastructure project investment)—more than six times the $6 billion in funding available. After the concept paper stage, DOE received more than 350 applications by the October 2024 deadline—including more than 75 applications for projects in energy communities—from more than 40 states requesting more than $16 billion in tax credits.
The allocations made in the second round of the §48C program represent a key milestone in meeting the economic and energy security goals of the IRA. Projects selected in Round 2 are estimated to generate 30,000 construction jobs over four years, and 10,000 of these jobs will be located in energy communities. Further, roughly a third of all selected projects have committed to using a project labor agreement that will ensure there are trained workers for construction of the project and one fifth of projects have committed or plan to sign a collective bargaining agreement to use union labor, while additional projects have signed Good Neighbor or Community Benefits Agreements to deliver on local communities’ priorities.
The §48C program will help to catalyze the nation’s equitable transition to a secure, affordable, and resilient energy system, reduce industrial GHG emissions, and create high-quality jobs across the country. Both rounds combined, the 48C program allocated $10 billion in tax credits, including $4 billion in allocations to projects located in designated § 48C energy communities, to approximately 250 projects across more than 40 states, with project investments over $44 billion dollars.
Round 2 Award Details
§ 48C Round 2 awards, also known as allocations, include:
- Clean energy manufacturing and recycling: $3.8 billion in tax credits (63% of Round 2 tax credits), which includes projects in the Low Carbon Intensity materials category to support new manufacturing facilities that will produce energy-intensive materials at carbon intensity levels at least 30% below the baseline.
- Selected projects will support the buildout of U.S. manufacturing capabilities critical for clean energy deployment and low-emissions materials. Selected projects, for example, span clean hydrogen (e.g., electrolyzers, fuel cells, and subcomponents), grid (e.g., cables, conductors, circuit breakers, transformers, and subcomponents), electric vehicles (e.g., power electronics, powertrain and drivetrain components, and final assembly), batteries, nuclear power, solar PV, and wind energy (including offshore wind components), among other industries and components critical to supporting secure and resilient domestic energy supply chains.
- Critical materials recycling, processing, and refining: $1.5 billion in tax credits (25% of Round 2 tax credits)
- Selected projects are, for example, investments in facilities that refine and process lithium, copper, and rare earth elements, and recycling of lithium-ion batteries, copper and aluminum, and rare earth elements.
- Industrial decarbonization: $700 million in tax credits (12% of round 2 tax credits)
- Selected Projects represent a diverse set of sectors, including, for example, chemicals, food and beverage, district energy systems, pet products, aluminum, ceramics, and building materials. The selected projects reflect adoption of heat pumps, electric boilers, and thermal storage technologies, amongst other solutions to decarbonize industry and once implemented will eliminate roughly 2.8 million tons of CO2
Looking Ahead
To claim a § 48C tax credit, the allocated projects must meet the certification and placed in service requirements of the § 48C Program. Within two years of receiving an Allocation Letter, awardees must submit information through the 48C portal notifying DOE that the certification requirements have been met. DOE will notify the taxpayer and the IRS that it has received the taxpayer’s notification. The IRS then certifies the § 48C Facility by sending a letter (Certification Letter). Within an additional two years of receiving the Certification Letter, the taxpayer must notify DOE that the § 48C Facility has been placed in service via the 48C Portal. Failure to meet any of these milestones will result in allocated § 48C credits being forfeited.
As required by statute, the §48C(e) program will publish the names of all organizations with certified projects and the amount of that allocation after projects are certified. Prior to certification, law prohibits the §48C(e) program from providing identifying information about allocation recipients or their projects without the applicant’s consent. Allocation recipients are not required to publicly share information about their allocation at this time, but some may choose to do so voluntarily. Allocation recipients who are interested in doing so may contact DOE about the potential to voluntarily participate in upcoming DOE announcements. Participation in upcoming announcements will not affect the recipient’s allocation in any way.
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