While no one has a crystal ball for what 2023 will hold for the energy industry, the seemingly widespread support for green technology and clean energy is expected to carry through this year. In our industry outlook, “The Trends—and Traps—That Will Shape 2023,” we highlight some of the major green energy tax credit trends.
- The Inflation Reduction Act (IRA) proposed significant changes and expansions to the existing federal income tax benefits for renewable energy, fuel production, and other green technologies. Approximately $370 billion of the act’s expenditures are devoted to energy and climate spending, much of which pertains to significant changes to the Internal Revenue Code, that would extend and expand tax benefits for “green” energy and other technologies.
- Prior to the IRA, there was a tax credit of up to $7,500 for purchasers of qualified electric vehicles (EVs). The IRA has been redesigned to remove that cap, allowing some of the most prolific EV manufacturers back into the game for EV credits. However, there are new requirements in the IRA for consumers to be able to access those tax credits.
- Hydrogen is expected to play a key role in addressing the global climate crisis by supporting a reduction in the amount of greenhouse gas (GHG) emissions and could qualify for new funding opportunities made available by the US Department of Energy (DOE) and tax benefits for the production of “qualified clean hydrogen” under the IRA.
- The US Environmental Protection Agency published its proposed rule for the Renewable Fuel Standard (RFS) program, setting the volume and percentage standards for renewable fuels for 2023 through 2025. The proposed rule also includes several regulatory changes to the RFS program.
- To achieve clean energy transition and increase Europe’s energy independence, the European Union has pledged the largest share of its current budget to helping build a greener and more resilient Europe. The EU state aid rules provide investors with a variety of tools to support industry investments in the green transition and the resilience of the EU economy.
For more information on 2023 energy trends, and a high-level overview of what’s in store for various global industry sectors, please see The Trends—and Traps—That Will Shape 2023.