Developments in law and policy of energy, commodities and environment
The Energy Strategy Coalition is a group of companies that operates in nearly every state and includes some of the nation’s largest investor-owned electric and gas utilities, public power authorities and generators of electricity from renewable, nuclear and gas-fired sources.[1]
The EPA’s proposal of carbon pollution standards for existing coal-fired power plants and new…
Today, the Department of the Treasury and IRS made available for public inspection proposed regulations on the new clean vehicle credit under the Inflation Reduction Act of 2022, as codified in section 30D of the Internal Revenue Code. These proposed regulations will be published in the Federal Register on April 17, 2023, and the due date for comments will be 60 days after the publication (or Friday, June 16, 2023).…
Background
Later this week the Department of the Treasury is expected to release guidance on the Inflation Reduction Act (IRA)’s EV tax credit under section 30D of the Internal Revenue Code. Highly consequential for the guidance and practical availability of the credit will be how Treasury interprets the term “foreign entity of concern.” This is because Section 30D(d)(7) excludes from credit eligibility vehicles that are:
Meanwhile, last week, Treasury and the Commerce Department released proposed regulations (here and here, respectively) that interpret “foreign entity of concern” for purposes of various incentive programs under the CHIPS & Science Act (CHIPS Act). Because the IRA’s definition of “foreign entity of concern” mirrors the CHIPS Act’s definition of “foreign entity of concern” interpreted by Commerce, and because Treasury cross-referenced Commerce’s interpretation of “foreign entity of concern” in Treasury’s CHIPS Act guidance, it is reasonable to wonder whether Treasury will adopt the same interpretation of “foreign entity of concern” for purposes of the EV credit exclusion in section 30D(d)(7).
If it does, there could be a dramatic diminution of vehicles eligible for the EV credits. Under Treasury’s proposed CHIPS Act regulations, a foreign entity of concern would include, inter alia, (i) any entity organized under the laws of China or having its principal place of business in China, and (ii) any entity organized outside of China 25% or more of whose voting interests are owned by the Chinese government (as in the case of foreign subsidiaries of Chinese state-owned entities (SOEs)). If that interpretation is used for purposes of section 30D, absent a nearly impossibly fast elimination of Chinese critical minerals and battery components from the EV supply chain, the number of vehicles eligible for the 30D EV credit will sharply decrease in 2024 and will be practically eliminated in 2025.
EV manufacturers and suppliers may wish to flag this concern to Treasury.…
On February 21, 2023, the Federal Highway Administration (“FHWA”) published a Notice of Waiver for Buy America requirements related to Electric Vehicle (“EV”) Chargers, 88 Fed. Reg. 10619. This waiver notice follows the Notice of Proposed Waiver published by FHWA on August 31, 2022. See 87 Fed. Reg. 53539. In response to a robust response from industry, the final waiver is narrower and more streamlined than the proposed waiver, bringing the number of phases from four to two, and simplifying the definition of an EV charger. The waiver applies starting March 23, 2023.…
Continue Reading FHWA Buy America Waiver for Electric Vehicle Chargers
The EU’s Green Deal Industrial Plan for the Net-Zero Age
The US Inflation Reduction Act (the IRA) has raised concerns in the EU about the potential impact on international investment – particularly the possibility that such investment will be pulled into the US, rather than directed to the EU and may encourage ‘green industries’ to relocate production to the US. The EU has been working on an appropriate response that would increase the attractiveness of the EU as a green investment destination without breaching either WTO rules or its own State Aid rules.…
Continue Reading The EU’s Green Deal Industrial Plan for the Net-Zero Age
Four federal agencies—the Environmental Protection Agency, the Department of Transportation, the Department of Energy, and the Department of Housing and Urban Development—have released a Blueprint for Transportation Decarbonization, an ambitious plan that outlines the principles the federal government will continue to use to pursue its stated goal of economy-wide net zero emissions by 2050. This “whole of government” mobilization will profoundly affect many investment decisions, collaborations, regulatory actions and policy disputes with material impacts across many business sectors.…
Continue Reading Biden Administration Releases Comprehensive Transportation Decarbonization Plan
On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law, directing a record $370 billion toward clean energy investments.
Yesterday, the White House released a 182-page guidebook to the IRA entitled Building a Clean Economy. John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, explains in…
Today, the IRS released Revenue Procedure 2022-42 to address the reporting requirements for vehicle manufacturers and sellers. These reporting requirements are prerequisites for purchasers’ eligibility for clean vehicle tax credits under Sections 25E, 30D, and 45W. Section 30D(d)(3) requires that a manufacturer enter into a written agreement to become a qualified manufacturer, which requires periodic written reports to the IRS. Similarly, Section 30D(1)(H) requires that the person who sells a vehicle furnish a report to purchasers and the IRS.…
As noted in our COP27 recap, this year’s climate summit in Sharm el-Sheik involved both the historic creation of a fund to compensate countries most impacted by climate change, as well as lost opportunities to adopt more ambitious and accelerated climate mitigation commitments. Perhaps hidden between these headlines, President Biden announced an initiative with significant implications for federal contractors. Under this proposal, the United States would become the first country to require major government suppliers and contractors to set science-based emissions reduction targets aligned with the Paris Agreement. It would also require contractors to disclose their greenhouse gas (GHG) emissions and climate risks.
This initiative—the proposed Federal Supplier Climate Risks and Resilience Rule—would have wide-reaching impacts if ultimately finalized. Collectively, the proposed rule would cover about 86 percent of the federal government’s supply chain GHG impacts and 86 percent of federal annual spending. To put this in perspective, in the last fiscal year alone the United States purchased $630 billion in goods and services.
The comment period for the proposed Federal Supplier Climate Risks and Resilience Rule closes on January 13, 2023. The proposed compliance requirements for major contractors would start two years after publication of a final rule. If promulgated, this rule may be challenged in court along the lines of the Biden Administration’s COVID-19 vaccine mandate for federal contractors. …
On October 5, 2022, the Treasury Department and the IRS issued notices requesting comments on different aspects of the energy tax benefits in the Inflation Reduction Act (“IRA”). All comments are due by Friday, November 4, either electronically on www.regulations.gov or alternatively by mail to the IRS. Written comments submitted after that date will be considered as long as such consideration will not delay the issuance of guidance.…
Continue Reading IRS issues notices requesting comments on IRA clean energy tax credits
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