U.S. Department of the Treasury Releases Final Rules to Onshore Clean Energy Technologies, Strengthen Critical Minerals Supply Chains, and Expand U.S. Manufacturing Base as Part of Investing in America Agenda

WASHINGTON – Today, the U.S. Department of the Treasury and the IRS released final rules for the Advanced Manufacturing Production Credit (Section 45X of the Internal Revenue Code), to spur continued growth of U.S. clean energy manufacturing as part of President Biden and Vice President Harris’ Investing in America Agenda.

The Advanced Manufacturing Production Credit helps to level the playing field for U.S. companies to onshore production of critical clean energy technologies like solar and wind components, batteries and energy storage, and critical minerals. The final rules announced today will expand America’s clean energy manufacturing base, create good-paying jobs, strengthen the nation’s energy security, and build the reliable and responsible supply chains needed to meet U.S. climate goals. In particular, the final rules will accelerate the buildout of domestic critical mineral supply chains by allowing taxpayers to include materials costs and extraction costs in production costs for applicable critical minerals and electrode active materials, provided certain conditions are met. This change, based on feedback from stakeholders, will enable further investment in responsible U.S. critical minerals extraction and processing and strengthen U.S. energy security and clean energy supply chains.

“The Biden-Harris Administration’s economic agenda is driving a manufacturing boom across the country that I’ve seen first-hand in North Carolina, Kentucky, and Georgia. These investments are creating good-paying jobs, strengthening U.S. supply chains, and lowering costs for American consumers and businesses,” said U.S. Secretary of the Treasury Janet L. Yellen. “The final rules announced today will help companies continue to invest and innovate in the United States as we buildout our clean energy economy.”

“The Biden-Harris’s Investing in America agenda is creating game-changing opportunities that will transform our energy economy, promote energy security and ensure America is globally competitive in the 21st century,” said U.S. Secretary of Energy Jennifer Granholm. “These final rules will help strengthen energy dominance while reducing emissions and leveling the playing field for U.S. companies to onshore production of critical clean energy technologies – mitigating our competitors’ market manipulation.”

 “The Inflation Reduction Act takes a government-enabled, but private sector-led approach to building America’s clean energy economy,” said John Podesta, Senior Advisor to the President for International Climate Policy. “Today’s final rules will keep fueling America’s clean energy boom, which has already seen nearly $450 billion in new announced investments from the private sector since President Biden and Vice President Harris took office.”

“As part of the resurgence in American manufacturing supported by the Biden-Harris Administration, today’s advanced manufacturing tax credit final rule will catalyze business investment in the clean energy technologies of the future, help secure domestic critical minerals supply chains, and put American workers and businesses in a position to outcompete China,” said National Economic Advisor, Lael Brainard.

“For too long, technologies invented in America were manufactured somewhere else. Not anymore. President Biden and Vice President Harris are finally bringing that manufacturing home,” said White House National Climate Advisor Ali Zaidi. “We are flexing America’s industrial muscle. On factory floors across the country, American workers are now making the technologies of the future. These Biden-Harris tax credits are knocking down barriers to economic opportunity and lifting up union workers. We are revitalizing American manufacturing and rebuilding America’s middle class. This is how we tackle the climate crisis, bolster energy and mineral security, and win the future.”

Since President Biden signed the Inflation Reduction Act more than two years ago, the Advanced Manufacturing Production Credit has been a major driver of the boom in clean energy manufacturing with more than $126 billion in private sector announcements made since the law passed – including around $77 billion for batteries, $6 billion for critical minerals, $19 billion for solar, and $8 billion for wind – according to recent data from the Rhodium Group/MIT’s Clean Investment Monitor (CIM).

Today’s final rules will give taxpayers additional clarity and certainty to drive even more investment in clean energy and critical minerals. Because the Advanced Manufacturing Production Credit is eligible for the Inflation Reduction Act’s novel monetization provisions to help ensure businesses receive the full value of the incentives – elective pay and transferability – the tax credit is particularly powerful for start-up companies that have low tax liability.

The final rules announced today are largely in line with proposed regulations released in December 2023. The final rules clarify definitions and confirm credit amounts for eligible components, including solar energy components, wind energy components, inverters, qualifying battery components, and applicable critical minerals; define key terms to incentivize production in the United States and clarify the circumstances under which taxpayers can claim the credit; and finalize important safeguards to prevent potential fraud, waste, or abuse – including safeguards against duplicative crediting of the same component, crediting of activities that are not value-added, or extraordinary circumstances in which components are produced but not put to productive use.

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