Novogradac’s Renewable Energy Working Group Seeks to Answer Questions
With the passage of the Inflation Reduction Act (IRA) of 2022 in August, the budget reconciliation bill that provides for a significant investment in clean and renewable energy, and measures to address climate change, Novogradac has reactivated the Renewable Energy Working Group (RE Working Group). The group’s first order of business will be responding to the six notices released by the U.S. Department of the Treasury on Oct. 5 seeking public input on climate and clean energy incentives. Detailed below, the notices seek comment on renewable energy tax credits (RETCs) such as the investment tax credit (ITC) and production tax credit (PTC) related to the IRA. As Comments are due Nov. 4, the group will be hard at work in the coming weeks.
RE Working Group
The RE Working Group was created for the express purpose of identifying and addressing technical and administrative issues that arise under the federal renewable energy ITC and PTC. The RE Working Group’s scope includes renewable, clean energy and energy-efficiency tax incentives, all areas enhanced by provisions in the IRA, and aims to address the needs of a wide range of practitioners.
The knowledge and experience of Novogradac’s renewable energy professionals, who lead the RE Working Group, allows them to advise and guide various types of clients, including project developers, tax equity investors, private equity interests and lenders through complex energy transactions. The working group had been meeting internally since August; membership has now been opened to the public to coincide with the issuance of the Treasury notices.
In addition to the RE Working Group, numerous Novogradac resources have been developed to provide some clarity around the IRA including Notes from Novogradac blog posts on the IRA’s clean and renewable energy provisions and questions that remain around the legislation’s provisions, as well as Tax Credit Tuesday podcast episodes on what the IRA means for renewable energy as well as its impact on affordable housing.
Treasury’s Energy Notices Spur RE Working Group to Action
Of the IRA’s $369 billion investment in addressing climate change, $270 billion will be delivered through tax incentives, putting Treasury and the Internal Revenue Service (IRS) at the forefront of IRA implementation. The notices, which cover energy generation incentives, credit enhancements, incentives for homes/buildings, consumer vehicle credits, manufacturing credits and credit monetization, request input on specific questions on implementing key provisions as well as solicit general comments. The Treasury will use comments received in response to these notices to aid the department in developing guidance implementing the revised or newly created credits, incentives and programs listed below.
The specific questions asked in each of the notices cover a range of input requested from commenters. In general, some of the information respondents are asked to provide include, but is not limited to:
- what, if any, industry standards the Treasury and IRS should consider when establishing guidelines;
- input on defining terms and whether clarification is needed;
- helpful guidance Treasury and IRS could provide when taxpayers are required to conduct calculations; and,
- comments on any other topics relating to the credits, incentives and programs not specifically asked in the notices.
According to the fact sheet released along with the notices, this comment request is an early opportunity for stakeholders to provide input as the Treasury and IRS make plans to implement the IRA’s energy provisions. The RE Working Group will focus first on the specific questions and request for general comments put forth in these notices. Further opportunities for public input will come later when the Treasury and IRS release additional types of guidance. Based on the provision of the law being assessed and its context, guidance may take the form of: proposed regulations; notices, revenue procedures, revenue rulings, and announcements; IRS forms, instructions, and publications; and, FAQs, news releases, facts sheets, etc. The RE Working Group will be ready to respond to requests for input as they arise.
The IRA includes several statutory deadlines for action by the Treasury that will mean guidance on these areas will be needed in the near future. For instance, the Secretary of the Treasury is required to establish a program to allocate 1.8 gigawatts for the bonus ITC within 180 days of the passage of the IRA. Additionally, there are statutory requirements to provide labor provisions within 180 days after the enactment of the legislation. These and other requirements will necessitate the provision of guidance by Treasury on some issues sooner than others.
RE Working Group Will Address a Variety of Energy Issues
After reviewing the IRA energy provisions, the working group leadership has initially identified six areas that will require special attention—adders, transferability, new eligible costs/technologies, direct pay, PTCs, and the global minimum tax. In addition to main working group meetings, there will be subcommittee meetings that drill down on each of these areas, providing members the ability to address each in a more focused way by concentrating shared attention.
How Can You Help to Shape Renewable Energy Policies?
Though the IRS will accept comments beyond Nov. 4, and consider them as practicable, meeting the Nov. 4 deadline is the priority. As practitioners and taxpayers will want clarity and certainty regarding the IRA’s provisions work for RE Working Group will continue into 2023.
As with other Novogradac working groups, the RE Working Group will provide a platform for renewable energy industry participants who wish to be in the forefront of this industry. The RE Working Group members will include law firms, investors, syndicators, lenders, for-profit and nonprofit developers, sponsors, consultants and other renewable energy professionals who will work together to coalesce around solutions to technical renewable energy issues and make the RETC programs more efficient in providing benefits. Novogradac’s renewable energy professionals, who focus on the renewable energy industry and have a thorough understanding of how tax-credit-financed transactions work, will lead the RE Working Group as they work together to build a consensus around the emerging issues that arise around the IRA’s provisions to arrive at an agreed upon course of action to navigate the effects of the new legislation. This expertise will be on display in the RE Working Group.
To join the working group, add your voice and ensure that issues important to you are on the RE Working Group’s agenda, please complete and submit this form.
To hear the experts speak on the IRA, the IRS notices and what they mean for the energy industry, register today for the upcoming Novogradac 2022 Fall Renewable Energy and Environmental Tax Credits Conference, taking place Nov. 3-4, in Washington, D.C., and online. Don’t forget to supplement your conference experience with the Project Finance Primer pre-conference workshop, held onsite the day before the conference. The RE Working Group will be hosting an in-person meeting during the conference–to receive an invite, make sure to complete the online form.