Anyone considering buying an electric vehicle, for personal or commercial use, should take note of new and expanded tax credits for clean vehicles under the Inflation Reduction Act of 2022. This Legal Update authored by my partner Dan Kiely and me provides details on the tax credits, including their requirements and limitations.
My Mayer Brown colleagues and I have authored this Legal Update on the key provisions regarding carbon capture use and sequestration in the Inflation Reduction Act of 2022.
The Inflation Reduction Act of 2022 (the “IRA”), which was signed into law on Tuesday, August 16, 2022, includes an investment of over $369 billion in energy security and climate change. There has been a lot of discussion about the extension of the investment tax credit (“ITC”) for solar and the provision that allows the transfer of the ITC. However, there has not been a lot of discussion about a subtle change that could benefit a real estate investment trust (“REIT”) interested in owning a distributed solar facility. Read about it in this Mayer Brown Legal Update.
More on offshore wind, this time in California:
Here is Mayer Brown’s Legal Update regarding some of the noteworthy proposals in the Inflation Reduction Act of 2022 that related to green energy.
Last night, after weeks of negotiations, Senators Manchin and Schumer reached a deal on an energy and healthcare bill titled the Inflation Reduction Act of 2022 (the “Act”). The Act includes extensive provisions relating to a range of green energy tax incentives. While these provisions largely track the corresponding provisions in the previously released Build Back Better Act, a preliminary review of the Act suggests that there are a number of material differences.
A more detailed analysis of the Act will follow, but key provisions include:
- Extension of the solar investment tax credit (“ITC”) and renewable electricity production tax credit (“PTC”) for projects that begin construction before January 1, 2025.
- Reduced ITC and PTC for projects that fail to satisfy prevailing wage and apprenticeship requirements; but deemed satisfaction of such requirements for projects that begin construction prior to the date that is 60 days before Treasury issues guidance related to these provisions.
- Bonus ITC and PTC for projects that satisfy certain domestic content requirements.
- ITC expanded to standalone storage and certain interconnection property.
- Direct pay option for certain tax-exempt entities.
- Option for taxable entities to transfer the ITC and PTC to unrelated parties.
- 3-year carryback period for the PTC (but only for projects that are placed in service after December 31, 2022) and the ITC.
- A 15% minimum tax on corporate taxpayers with adjusted financial statement income in excess of $1 billion; however, the ITC and PTC may be applied to reduce the minimum tax but not below 25% of the taxpayer’s net income tax in excess of $25,000.
A number of my Mayer Brown colleagues drafted this Legal Update that provides an overview of the Class VI permit application, the status of current and pending Class VI applications, and the status of state primacy for UIC programs.
On April 14, 2022, the US Internal Revenue Service (IRS) published a notice that provides the inflation-adjustment factor and reference price for the calculation of renewable electricity production tax credits (PTCs) under Internal Revenue Code (IRC) section 45 for calendar year 2022, as well as the amount of the PTC for 2022 as adjusted for inflation.
On May 5, 2022, the IRS issued corrections to this notice, revising the inflation-adjustment factor from the initially released 1.8012 to 1.7593 and reducing the PTC amounts accordingly.
With the federal government being the largest energy consumer in the United States, late last year President Biden issued the Executive Order on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability to set aggressive decarbonization goals for federal agencies. This Legal Update summarizes the executive order, the three primary contracting mechanisms that federal agencies have historically used to purchase competitively priced renewable energy and the regulatory nuances they entail.