Biden administration boosts renewables production tax credit

Oct 24, 2024

by Rachel Frazin 10/24/24 08:45 AM ET

Wind turbines turn behind a solar farm in Rapshagen, Germany, Oct. 28, 2021.

The Biden administration is expanding a federal tax credit that seeks to incentivize domestic production of components for solar and wind energy, as well as batteries.

The Treasury Department issued final guidance Thursday that details how a renewables manufacturing credit from the Democrats’ climate tax and health care law will be implemented.

Compared to a proposed guidance issued late last year, the final guidance makes the credit more lucrative for industry — which officials said could help expand both domestic manufacturing and domestic mining.

The tax credit applies to the production of a wide range of components including the making of solar grade polysilicon, battery cells and the refining of key minerals.

Deputy Treasury Secretary Wally Adeyemo told reporters Wednesday that under the expanded guidance, companies will be able to get credit for the costs of the materials they use to make the components. They will also be able to get credit for mining costs.

“The Biden Harris administration understands how important onshoring the production of critical minerals is to developing secure, clean energy supply chains, and today’s rules represent a major step forward in that effort,” Adeyemo said.

Under the previously proposed guidance companies could not get credit for “merely purchasing raw materials.”

As a result of the change, an administration official told reporters, they expect lower costs for manufacturers and a greater incentive for domestic mining.

The announcement comes days after the administration publicized the detection of large amounts of lithium found in Arkansas.