On February 5, 2021, House Democrats reintroduced the GREEN Act, seeking to both extend federal tax credits for renewable energy projects and expand those incentives to include new energy storage technology. The goal: climate change mitigation. The GREEN Act, which stands for Growing Renewable Energy and Efficiency Now, would achieve this by:
- extending the Investment Tax Credit (ITC) for solar energy at 30% through 2025 before phasing down to 26% in 2026, 22% in 2027 and then 10% from there;
- extending the 30% investment tax credit for offshore wind property through 2026;
- preserving the wind production tax credit’s 60% phaseout level through 2026; and
- extending the production tax credit for marine and hydrokinetic renewable energy facilities through 2026.
Additionally, one of the Act’s new incentives includes a broad 30% investment tax credit for energy storage technology, defined as “equipment (other than equipment primarily used in the transportation of goods or individuals and not for the production of electricity) which—
(i) uses batteries, compressed air, pumped hydropower, hydrogen storage (including hydrolysis and electrolysis), thermal energy storage, regenerative fuel cells, flywheels, capacitors, superconducting magnets, or other technologies identified by the Secretary, after consultation with the Secretary of Energy, to store energy for conversion to electricity and has a capacity of not less than 5 kilowatt hours, or
(ii) stores thermal energy to heat or cool (or provide hot water for use in) a structure (other than for use in a swimming pool).
For carbon capture and sequestration project developers, the Act includes a one-year extension for the 45Q tax credit for facilities that begin construction by the end of 2026. Another particular tax credit is extended to manufacturers selling zero-emission heavy vehicles and buses with a credit equal to 10% of the vehicle purchase price so long as the purchase price is not over $1 million. For many of these credits, the Act provides a direct-payment option for developers.
In addition to the manufacturer-focused credits, the Act contains individual incentives to encourage residential green energy and energy efficiency, as well as a push to foster university programs studying environmental justice.
This legislation is touted not only for the new green jobs it would create, but also for how it would dovetail into the August 2020 Moving Forward Act, which addresses climate change, in part, by regulating the surface transportation system through the U.S. Department of Transportation. Renewable energy developers – and the parties that finance their projects –are eagerly awaiting the outcome of this critical bill.