Treasury outlines wage, apprenticeship requirements for clean energy tax credits

US Treasury Secretary Janet Yellen tours the Ford Motor Company’s Rouge Electric Vehicle Center that builds the all-electric Ford F-150 Lightning with Linda Zhang,(R), chief engineer for the vehicle, before delivering an economic speech in Dearborn, Michigan, on September 8, 2022.

Jeff Kowalsky | AFP | Getty Images

The Treasury Department released guidelines Tuesday detailing new wage and apprenticeship standards firms must meet to qualify for tax incentives under the Inflation Reduction Act.

“I want to send a message to investors, developers, contractors looking at clean energy projects,” said Labor Secretary Marty Walsh. “I encourage them to take advantage of all these opportunities. They are more than tax incentives, they’re powerful tools for building a skilled workforce.”

The standards go into effect on Jan. 29, 60 days from the announcement.

“We felt it was critical to work quickly to provide initial high level clarity around these important labor standards,” said Treasury Secretary Janet Yellen. “You now have concrete guidance on how to find those wage rates so as to comply to the Inflation Reduction Act’s requirements.”

The Inflation Reduction Act, which became law in August, allocated $369 billion toward addressing climate change through clean energy initiatives. The majority of the investment, around $270 billion, is through direct tax incentives.

The administration on Tuesday further detailed steps needed for companies to qualify for the tax incentives. Firms have to pay workers the prevailing wage for their area and abide by rules for the use of apprenticeship programs. The prevailing wage is determined by the Department of Labor and posted on its website.

“The central component of this law is the strong labor standards put in place to ensure that the jobs we’re creating is part of our transition to a clean energy economy of good paying, high-quality jobs, and that those job opportunities are broadly accessible,” Yellen said. “Workers should benefit from the clean energy economy they’re helping to build.”

The prevailing wage and apprenticeship requirements are needed for companies to receive the Advanced Energy Project Credit, the Alternative Fuel Refueling Property Credit, the Credit for Carbon Oxide Sequestration, the Clean Fuel Production Credit, the Credit for Production of Clean Hydrogen, the Energy Efficient Commercial Buildings Deduction, the Renewable Energy Production Tax Credit and the Renewable Energy Property Investment Tax Credit.

The prevailing wage stipulation is also required for the New Energy Efficient Home Credit and the Zero-Emission Nuclear Power Production Credit.

As part of its guidance for receiving the credits, Treasury also outlined record-keeping requirements and the definition of when a project officially begins.

Source: CNBC