The Biden administration wants to boost clean energy wages through tax credits

• The Biden administration unveiled a rule linking clean energy tax credits to workers’ wages.
• Projects must employ interns and pay prevailing wages to qualify for increased tax credits.
• The credits could raise wages for clean energy jobs, helping close the wage gap for fossil fuel jobs.

The Biden administration wants to make sure companies pay their clean energy workers well and is using a new tax break to make that happen.

The Treasury Department, along with the Internal Revenue Service, announced a final regulation Tuesday outlining how clean energy projects can receive the Inflation Reduction Act tax credit multiplied by five for higher employee wages.

“No developer is going to leave this money on the table,” John Podesta, the president’s senior adviser on international climate policy, told reporters.

To qualify, projects must employ registered apprentices who are paid and credentialed for their work, and pay their workers the prevailing wage, which is the minimum wage level typically set for workers on government contracts. According to Treasury Secretary Janet Yellen, while prevailing wages have “long been used” in federal projects, this is the first time they have been used in clean energy tax incentives.

“This is an important step toward putting American workers at the center of the clean energy economy. “This will help attract and strengthen a skilled workforce, working with our nation’s unions and private sector companies, and help ensure that this workforce is well-paid,” Yellen told reporters.

This rule touches on one of the main problems facing the clean energy economy: it doesn’t pay as well as jobs in the energy sector that relies on higher-carbon fossil fuels. For example, a 2021 paper published by the University of Massachusetts Amherst Institute for the Study of Political Economy found that while clean energy jobs in California pay $86,000 – more than the national average wage of $65,000 – related to fossil fuels pay an average of $130,000.

Of course, as the industry evolves, more job opportunities are now opening up in the clean energy industry, and some positions are well-paid – but many positions require a bachelor’s degree or work experience experience, underscoring the importance of hiring apprentices.

Sean McGarvey, president of the North American Building Trades Union, told reporters that in the past, the average solar worker earned less than a quarter of NABTU members’ total wage and benefits package.

“That’s why we’ve been so reluctant to see the lack of these policies put in place to cover the clean energy transition; we have always talked about a just transition,” McGarvey said. “In the fossil fuel industry, our experience over the last hundred years has been that they pay the highest wages and benefits, while in the renewable industries that have boomed over the last few decades, this has not been the case.”

The new rule could make available the type of federal tax support for clean energy that fossil fuel companies have benefited from for decades.

“With these new rules in place, there will be a huge increase in the number of people currently working in this industry, and hundreds of thousands of people will have opportunities to join this industry with middle-class family-sustaining wages and good working conditions.” health care and post-retirement benefits,” McGarvey said.

Would you consider switching to clean energy for higher wages? Contact this reporter at [email protected].