Advanced Energy Manufacturing Tax Credit (48C)

Advanced Energy Manufacturing Tax Credit (48C)

The American Reinvestment and Recovery Act of 2009 (ARRA) authorizes the Department of Treasury to award $2.3 billion in tax credits for qualified investments in advanced energy projects, to support new, expanded, or re-equipped domestic manufacturing facilities.   The Advanced Energy Manufacturing Tax Credit (MTC) was authorized in Section 1302 of ARRA and requires the Secretary of Treasury to work in consultation with the Secretary of Energy.  The MTC is also referred to as Section 48C of the Internal Revenue Code.  The goal of the MTC is to grow the domestic manufacturing industry for clean energy, thereby supporting the larger goals of ARRA to stimulate economic growth, create jobs, and reduce greenhouse gas emissions.  In short, the MTC will help secure American leadership in the clean energy sector.

The MTC provides a 30% credit for investments in new, expanded, or re-equipped advanced energy manufacturing projects.  Up to $2.3 billion in MTCs will be allocated for advanced energy projects, which will support total capital investments of almost $7.7 billion in new renewable and advanced energy manufacturing projects.

The Department of Energy (DOE) and the Internal Revenue Service (IRS) will review and make determinations on the eligibility and merit of MTC applications.  Applicants will receive tax credits based on the expected commercial viability of their project and the ranking of their project relative to other projects.  Rankings based on: expected job creation, reduction of air pollutants and greenhouse gas emissions, technological innovation, and ability to have the project up and running quickly.  Technology, geographic & project size diversity, and regional economic development will also be considered when rating projects.

The application period opens August 14, 2009.  Preliminary applications are due to DOE September 16, 2009, followed by final applications being due to DOE and IRS on October 16, 2009.  By January 15, 2010, IRS will certify or reject applications, and notify the certified projects with the approved amount of their tax credit.  Awardees will receive acceptance agreements from the IRS by April 16, 2010.  Credits will be allocated until the program funding ($2.3 billion) is exhausted.  Subsequent allocation periods will depend on remaining funds.

Projects must be completed within 4 years of their tax credit acceptance.  Eligible investment credits cover future expenditures and do not award past investment.  All other applicable sections of the Internal Revenue Code are in force.

Section 1302 of the ARRA describes the following advanced energy facilities, for which manufacturing projects would be eligible:

    * Technologies that create energy from renewable resources (sun, wind, geothermal and other renewable resources)

    * Energy storage technologies (fuel cells, microturbines or other energy storage systems used in electric vehicles)

    * Advanced transmission technologies that support renewable generation (including storage)

    * Renewable fuel refining or blending technologies

    * Energy conservation technologies (advanced lighting, smart grid)

    * Plug-in electric vehicles & vehicle components  (motors, generators)

    * Property to capture and sequester carbon dioxide

    * Other property designed to reduce greenhouse gas emissions 

It should be noted this tax credit does not support energy generation projects, but rather the manufacturing facilities that support generation and conservation.

Source: Department of Treasury