Friends of the Earth warns US President Joe Biden against increasing clean energy tax credits

Joe Biden’s administration has announced a proposal to expand tax credits that have long supported U.S. solar and wind projects, extending those incentives to a broader range of clean energy technologies, including nuclear fission and nuclear fusion.

The Treasury Department released its guidance for new Clean Electricity Production Credits and Clean Electricity Investment Credits to begin in 2025. These credits were established under the Inflation Reduction Act (IRA) through 2022 and will replace the expiring tax from wind and solar energy production and investment tax loans.

“The Inflation Reduction Act’s new clean electricity entitlements, which take effect in 2025, are one of the bill’s most important contributions to the fight against the climate crisis,” said John Podesta, Senior Advisor to the President on International Climate Policy.

The proposal outlines several technologies that could qualify for these lucrative tax credits, such as marine and hydrokinetic energy, nuclear fission and fusion, hydropower, geothermal energy and some forms of waste energy recovery. Credits can be up to 30 percent for qualifying projects, similar to the highest levels previously available for wind and solar initiatives.

Treasury Secretary Janet Yellen said the IRA has already spurred more than $850 billion in private sector investment in clean energy and manufacturing, leading to record growth in renewable capacity. She described the new tax credit program as “another key step” in ensuring the U.S. remains a major market for the next generation of clean energy in the coming decade.

“These loans … represent an unprecedented long-term commitment to the clean energy sector to ensure that the United States becomes a major market for the next generation of clean energy over the next decade and beyond,” Yellen said.

American families are expected to save $38 billion on electricity bills and American businesses will spend 15 percent less on electricity by 2030, the U.S. Treasury said.

According to Rhodium Group, these credits could result in a 300-400 million tonne reduction in greenhouse gas emissions by 2035, a 29-46% reduction compared to a scenario without such tax incentives, the Reuters report said.

The Rhodium Group study found that by 2035, the credits would reduce energy sector carbon emissions by 43 to 73 percent compared to 2022 levels, save U.S. consumers up to $34 billion in annual electricity costs, and add almost 650 gigawatts of clean electricity.

However, some environmental groups have raised concerns that these tax breaks could support controversial energy sources such as waste incineration or methane biogas from landfills. “The Joe Biden administration must prevent dirty energy from taking billions of taxpayer dollars,” warned Sarah Lutz, an activist with Friends of the Earth.

Baburajan Kizhakedath