Biden Administration Finalizes Rule for Clean Electricity, But Threats Remain
Clean Energy Tax Credits Remain Vulnerable After Watered-Down Hydrogen RuleToday, the Department of the Treasury and Internal Revenue Service released their final rule for the Clean Electricity Tax Credits (45Y and 48E), which is an important step towards the Biden Administration’s commitments to address power sector emissions. The final rule dropped a dangerous offsets proposal from the 2024 draft rule. As highlighted in the Clean Electricity Gimmicks report released by Friends of the Earth in October, offsets were lobbied for by fossil fuel and factory farm interests as a backdoor that would allow fossil power plants to gain access to this lucrative tax credit. However, the rule left crucial questions about the eligibility of harmful combustion based energy, like burning woody biomass or trash. For decades, these toxic industries have benefited from special handouts despite their cost to communities and the climate.
This announcement follows Treasury’s announcement last week finalizing the Clean Hydrogen tax credit (45V). Unfortunately, the Biden Administration watered down important guardrails that are needed to ensure that the credit doesn’t subsidize highly polluting hydrogen production. This includes a major giveaway to the dangerous nuclear industry by partially lifting a requirement needed to ensure that hydrogen production doesn’t spike grid emissions.
“We are glad to see the Administration reject bogus offsets, but this was a missed opportunity to set a strong standard that rightfully excludes burning wood biomass and trash from being declared clean electricity,” said Sarah Lutz, Senior Climate Campaigner at Friends of the Earth. “On the heels of Biden’s shameless surrender to the nuclear industry on hydrogen, it’s disappointing that the Administration declined to definitively exclude polluters from qualifying for the clean electricity subsidy. Nevertheless, if the Trump Administration tries to chip away at these clean energy credits, they will have a fight on their hands.”
These final rules are crucial in the last few days of President Biden’s tenure. Trump has made it clear that the next four years will be open season for corporate and special interest looting of existing government programs. The Clean Electricity Tax Credit and the Clean Hydrogen Tax credit are potentially vulnerable targets because they are technology neutral. This means that the types of energy that qualify for the subsidy can vary dramatically depending on the Administration’s implementation decisions. If implemented well, these credits could lower emissions and consumer prices. Unfortunately, the Biden Administration did not go far enough to create guardrails that would ensure a rigorous implementation. There is significant risk that the Trump Administration could turn these clean energy credits into backdoor subsidies for fossil fuels and other polluting energy.
Communications Contact: Erika Seiber, [email protected]