BlueGreen Alliance | Treasury Guidance on Inflation Reduction Act Domestic Content Bonuses Offers Clarity to Developers

Treasury Guidance on Inflation Reduction Act Domestic Content Bonuses Offers Clarity to Developers

May 12, 2023

The U.S. Department of the Treasury today released guidance on the domestic content bonus credit for the clean energy tax credits included in the Inflation Reduction Act. For the first time ever, this additional credit will be available for developers using components and materials sourced directly from U.S. manufacturers. These credits are combined with historic supply-side investments in clean technology manufacturing.

In order to receive the 10% domestic content bonus credit, 100% of the iron and steel and a certain share of the manufactured products used in the construction of a qualifying clean energy project must be produced in the United States. The guidance released today offers additional details for developers to determine how to structure their sourcing decisions to take advantage of the credit.

In response to the guidance, the BlueGreen Alliance released the following statement from Executive Director Jason Walsh:

“The widespread outsourcing of manufacturing–commonplace in the last several decades–has devastated U.S. workers and industrial communities across the country, while hitching clean energy to overseas supply chains that are marred by labor abuses, higher levels of pollution, and shipping bottlenecks. With the Inflation Reduction Act, the Biden administration seized an opportunity to reverse years of harmful deindustrialization and build our clean energy future on a foundation of good jobs, clean manufacturing, a reliable industrial base, and greater equity. 

“The guidance released today offers clarity to clean energy developers as they begin to take advantage of the investments and incentives in the Inflation Reduction Act to expand access to clean energy and support more reliable domestic clean technology supply chains. It is our hope that clean energy developers make use of this bonus credit when it becomes available, and we welcome the opportunity to work with developers and manufacturers to ensure it supports the twin goals of clean energy deployment and manufacturing.”