On May 24, 2021, the US Internal Revenue Service (IRS) released Notice 2021-32, which provides the inflation-adjustment factors and reference prices for the calculation of renewable electricity production tax credits (PTCs) under Internal Revenue Code (IRC) section 45 for calendar year 2021.

The notice provides that the PTC for electricity produced from wind, as well as closed-loop biomass and geothermal energy, remained unchanged from 2020 at 2.5 cents per kWh for 2021. The notice also includes the PTC amounts for electricity produced from other qualified energy resources. Specifically, the PTC for electricity produced from open-loop biomass, landfill gas, trash, qualified hydropower, and marine and hydrokinetic resources also remained unchanged at 1.3 cents per kWh for 2021. However, the PTC for refined coal increased from $7.301 per ton for 2020 to $7.384 for 2021.

IRC section 45 provides the PTC for any taxable year in the amount of 1.5 cents per kWh of electricity produced by a taxpayer from a qualified facility using wind or closed-loop biomass and sold to an unrelated person during the 10-year period beginning on the date on which the facility is originally placed in service. The credit amount is reduced by one-half for electricity produced from a qualified facility using open-loop biomass, landfill gas, trash, qualified hydropower, and marine and hydrokinetic resources.

IRC section 45 also provides the PTC in the amount of $4.375 per ton of qualified refined coal produced by a taxpayer from a qualified facility and sold to an unrelated person during the 10-year period beginning on the date in which the facility is originally placed in service.

IRC section 45 provides that the 1.5 cent amount and $4.375 amount are to be adjusted annually for inflation.

On March 31, the Biden Administration released its much-anticipated American Jobs Plan (the “AJP”), which outlines $2.3 trillion of proposed spending on not only traditional infrastructure programs, but also climate change, housing, drinking water, workforce development, manufacturing, telecommunications, and elderly care measures.  Read more about the AJP in this Mayer Brown Legal Update.