On Wednesday, the USA’s Biden administration proposed increasing tax credits, used to boost the nation’s solar and wind energy projects, to include a broader range of clean energy technologies such as nuclear fission and fusion.
The Treasury Department announced its Clean Electricity Production Credits and Clean Electricity Investment Credits guidance, available in 2025 as the current wind and solar tax credits phase out.
In the announcement, John Podesta, Senior Advisor to the President for International Climate Policy, said:
“The Inflation Reduction Act’s new technology-neutral Clean Electricity credits, which will come into effect in 2025, are one of the law’s most significant contributions to tackling the climate crisis,”
The proposal outlines several technologies that could qualify for these tax credits, including marine and hydrokinetic energy, nuclear fission and fusion, hydropower, geothermal, and certain forms of waste energy recovery. The tax credits previously offered for wind and solar projects were up to 30% if all conditions were met.
Treasury Secretary Janet Yellen noted that the Inflation Reduction Act has already spurred over USD $850bn in private-sector investment in clean energy and manufacturing, leading to record growth in renewable energy capacity.
She described the new program as “the next key step,” emphasising the long-term commitment to the clean energy sector to ensure the USA remains a significant market for new clean power generation over the coming decade and beyond.
The research firm Rhodium Group theorised that the credits could reduce greenhouse gas emissions by 300-400m tonnes by 2035, a reduction of 29%-46% compared to having no tax credits.
However, some environmental groups have raised concerns that these tax credits for zero greenhouse gas emissions technology might inadvertently support controversial sources, such as burning waste or methane biogas from landfills.
Sarah Lutz, a campaigner for Friends of the Earth, stated that the Biden Administration must ensure that dirty energy sources do not exploit billions in taxpayer dollars.
