The U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued a Notice of Proposed Rulemaking (NPRM) for the Clean Electricity Low-Income Communities Bonus Credit Program, known as 48E(h), created by the Inflation Reduction Act. The program aims to promote cost-saving clean energy investments in low-income communities, Indian lands, affordable housing, or directly benefiting low-income households.
The proposed rules are part of the Biden-Harris Administration’s Investing in America agenda, which seeks to lower costs for underserved communities and ensure they benefit from the growth of the clean energy economy.
The 48E(h) program builds on the Low-Income Communities Bonus Credit Program, also known as 48(e). This transition opens the program to additional clean energy technologies beyond wind and solar, such as hydropower and geothermal. It aligns with Treasury’s efforts to make benefits available to clean energy facilities with zero or negative greenhouse gas emissions rates.
“Incentives to develop clean power in communities that have been overlooked and left out for too long will drive investment and create opportunity, helping ensure that the growth of the clean energy economy benefits all Americans,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “The Biden-Harris Administration is continuing to prioritize lowering energy costs and strengthening our energy security, and today’s announcement represents a major step forward.”
John Podesta, Senior Advisor to the President for International Climate Policy, added: “President Biden and Vice President Harris entered office three and a half years ago with a vision to make clean energy affordable and accessible to every American. The Low-Income Communities Bonus Credit is bringing that vision to life by incentivizing new investment in communities that have been left out and left behind. Today’s proposed rules from Treasury will expand the reach of this already impactful program.”
U.S. Deputy Energy Secretary David M. Turk stated: “The Low-Income Communities Bonus Credit Program is the most significant tax incentive in U.S. history to promote clean energy investments in low-income communities, on Tribal land, and within affordable housing. By expanding the current program to include additional types of clean technologies, this game-changing policy is yet another example of how the Biden-Harris Administration is delivering a more equitable energy transition.”
The NPRM aims to allow various taxpayers and geographies access to the 48E(h) program while prioritizing financial benefits for low-income households. Starting in 2025, 1.8 gigawatts of Capacity Limitation will be available annually under this program until certain greenhouse gas emissions reductions are met or until 2032.
Additionally, qualified non-combustion and gasification facilities under five megawatts can receive a boost on top of their existing tax credits if prevailing wage and apprenticeship requirements are met.
The NPRM incorporates best practices from previous implementations of similar programs in 2023-2024, maintaining an innovative Applicant Portal infrastructure designed for ease of use.
Updated definitions aim to expand financial benefits delivery mechanisms for future technologies while ensuring additional benefits flow to low-income subscribers. The NPRM also proposes sub-reservations for residential facilities like rooftop solar installations and set-asides for projects owned by tax-exempt entities or located in high-poverty areas.
The Department of Energy's Office of Energy Justice and Equity will continue partnering with IRS to manage applications through this portal.
Treasury invites public comments during a 30-day comment period before hosting a public hearing on October 17, 2024, followed by a Tribal consultation on September 27, 2024.
