BlueGreen Alliance | Clean Technology & Industrial Transformation

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Clean Technology Manufacturing 

The law makes the largest ever investment in U.S. manufacturing of clean energy technologies, including wind, solar, batteries, EVs, and more. These investments are essential to link climate action with good union jobs, counter the racial and income inequality fed by manufacturing job losses, and build secure domestic supply chains instead of relying on overseas production that is marred by forced labor, higher levels of pollution, and shipping bottlenecks. See here for our fact sheet outlining six reasons we need to spur increased U.S. clean technology manufacturing.

The Inflation Reduction Act includes more than $40 billion in tax credits to expand clean technology manufacturing. It also offers significant funding for the Biden administration to use executive action to spur clean manufacturing growth. The law will: 

  • Support new clean technology manufacturing facilities with an expanded investment tax credit: The law includes $10 billion for the 48C tax credit, which will support the establishment, re-tooling, or expansion of manufacturing facilities to produce solar, wind, battery, EV, energy efficiency, and other clean energy technologies. Of this amount, $4 billion is reserved for manufacturing investments to boost job growth and economic opportunities in communities facing coal facility closures due to the energy transition. The 48C expansion will create more than 110,000 jobs over the next 10 years. 
  • Promote solar, wind, and battery manufacturing with a new production tax credit: The law establishes a new manufacturing production tax credit worth more than $30 billion to support the expansion of solar, wind, and battery manufacturing and critical minerals processing. While the 48C credit has been effective in encouraging small- and medium-sized investments in many clean technology sectors, these four sectors warrant larger, sustained investments due to a significant lack of domestic manufacturing capacity, stiff global competition, and recent disruptions. Critically, manufacturers in these four sectors have a “direct pay” option that will allow them to take advantage of the new tax credit for five years without relying on Wall Street financing that is typically unavailable for manufacturing investments. This new tax credit to fill clean technology supply chain gaps will create more than 560,000 jobs over the next decade. 
  • Enable bold executive action to grow clean manufacturing: The Inflation Reduction Act includes $500 million for the Defense Production Act—a versatile policy toolbox that the Biden administration has started using to support manufacturing growth for critical clean energy goods—such as  solar panels, heat pumps, and grid efficiency components. The new funding will enable the administration to purchase goods, extend loans, install new technology, or otherwise support manufacturing in clean energy sectors. 
Category Program Name and Description Funding Level Administering Agency or Office Funding Mechanism Timeline Labor, Equity, and Domestic Content Standards in Text Eligible Entities New or Existing Program
Clean Tech Manufacturing Extension of the Advanced Energy Project Credit (48C) (Sec. 13501) – Investment tax credit for establishing or retooling a factory to produce a wide range of clean technologies (including renewable energy and EV components).

The tax credit also is expanded to cover installation of equipment that achieves an at least 20% reduction in climate pollution.

$10 Billion
Base Credit: 6%
Bonus Credit: 30%
Treasury (IRS)/DOE Investment Tax Credit (Direct pay only for tax-exempt and government entities) Changes begin in 2023

The IRS is expected to allocate the full $10 billion in available tax credits in 2023.

Prevailing Wage, Apprenticeship Utilization required for bonus credit of 30% instead of base credit of 6% Manufacturing companies

$4 billion set aside for former coal communities (census tracts with mines closed post-1999 and/or power plants closed post-2009)

Existing Program
Clean Tech Manufacturing Advanced Manufacturing Production Credit (45X) (Sec. 13502) – New production tax credit for manufacturing solar, wind, and battery components and processing critical minerals including aluminum, cobalt, lithium, nickel, and more to incentivize building new U.S. facilities to support clean energy supply chains at a globally competitive scale. $30.622 Billion

(This is the Joint Committee on Taxation’s estimate for the credit’s total value.)

Treasury (IRS) Production Tax Credit (Direct pay for all entities for five years) Starts in 2023. The phase-out for solar, wind, and battery components begins in 2030, ends after 2032. The tax credit for critical minerals is permanent. N/A Manufacturing and mining companies New Program
Clean Tech Manufacturing Defense Production Act (DPA) (Sec. 30001) – Funding for DPA, which the Biden administration is using to spur growth in clean technology manufacturing. $500 Million DOD/DOE Purchase agreements, loans and loan guarantees, or technology procurement FY22-FY24 N/A N/A Existing Program

Industrial Transformation

The industrial sector produces nearly a third of U.S. climate pollution, when accounting for electricity use. It is the only source of U.S. greenhouse gas emissions that is projected to rise in the coming decades. Industry is also responsible for toxic air pollution that exposes a quarter of a million people to elevated cancer risks each year, primarily in Black communities. 

To help address industrial pollution, the law establishes and expands investment programs to reduce emissions in energy-intensive industries—such as steel, aluminum, and cement. The law launches a first-of-its-kind program to propel commercial-scale deployment of emissions-reducing technology at U.S. manufacturing facilities, expands a tax credit for industrial transformation projects, and lays the groundwork for public purchasing of clean construction materials. 

While the BIL makes important investments in research, development, and demonstration projects in certain industrial technologies, the Inflation Reduction Act makes essential investments to broadly deploy emissions-reducing technologies across industrial sectors. Together, these investments could eliminate millions of metric tons of harmful emissions while boosting competitiveness and job creation at U.S. industrial facilities. The law will:

  • Directly invest in emissions-reducing technology at manufacturing facilities: The law launches a new, nearly $6 billion program to help manufacturers carry out emissions-reducing upgrades at steel, aluminum, cement, and other energy-intensive industrial facilities. This program will create nearly 120,000 jobs over five years and cut nearly 70 million metric tons of annual climate pollution—the equivalent of running over 18,000 wind turbines for a year.
  • Cut industrial emissions through a tax credit: In addition to providing $10 billion for the 48C tax credit to spur clean technology manufacturing, as described above, the law makes the tax credit available—for the first time—for manufacturers to install equipment that achieves an at least 20% reduction in climate pollution.  According to BlueGreen Alliance internal analysis, the program expansion will cut an estimated 7 million metric tons of annual greenhouse gas emissions—equivalent to the yearly climate pollution emitted by about 1.5 million gasoline-powered vehicles. 
  • Support government purchases of low-emissions materials: The law includes new investments to support the Biden administration’s Buy Clean initiative, which will use the U.S. government’s vast purchasing power to drive demand for low-emissions manufacturing of construction materials. To lay the groundwork for Buy Clean, the law includes $250 million for grants and technical assistance that will help manufacturers report their emissions in environmental product declarations—a tool to accurately compare the emissions that go into manufactured goods. The law also invests more than $5 billion for DOT and the General Services Administration (GSA) to support the use of low-carbon materials for public buildings and highways.
Category Program Name and Description Funding Level Administering Agency or Office Funding Mechanism Timeline Labor, Equity, and Domestic Content Standards in Text Eligible Entities New or Existing Program
Industrial Advanced Industrial Facilities Deployment Program (Sec. 50161) – Financial assistance for commercial-scale deployment of industrial emissions reduction technology. $5.812 Billion DOE Competitive Financial Assistance (Grants, Rebates, Loans, or Cooperative Agreements) FY 22-26 Criteria for competitive applications include measuring the benefits to the local community A domestic, non-Federal, nonpower industrial or manufacturing facility engaged in energy-intensive industrial processes New Program
Industrial Environmental Product Declaration (EPD) Assistance Program (Sec. 60112) – Provide grants and technical assistance to businesses and states/Tribes/nonprofits that support such businesses to develop EPDs and support “other activities that assist in measuring, reporting, and steadily reducing the quantity of embodied carbon of construction materials and products.” $250 Million EPA Competitive Grant – Project Grant and Technical Assistance FY 22-31 N/A Businesses and states, Tribes, and nonprofits that support such businesses New Program
Industrial Low-Carbon Labeling Program (Sec. 60116) – Identify and label low-embodied carbon materials and products used for buildings and transportation projects. $100 Million EPA Not specified FY 22-26 N/A N/A New Program
Direct Procurement Low-Carbon Federal Buildings (Sec. 60503) – To the Federal Buildings Fund to acquire and install low-embodied carbon materials and products for use in the construction or alteration of buildings under the jurisdiction, custody, and control of the GSA. $2.15 Billion GSA Competitive Contracts FY 22-26 N/A N/A Existing Program
Direct Procurement Low-Carbon Transportation Materials (Sec. 60506) – For the DOT Federal Highway Administration (FHWA) to reimburse eligible recipients for the incremental costs of using low-embodied carbon construction materials and products in projects. $2 Billion DOT Competitive Grants FY 22-26 N/A States, local governments, political subdivision of a state, territory, Tribes, any recipient of funds under the Federal Lands Transportation Program, metropolitan planning organizations, special purpose district or public authority with transportation function New Program
Direct Procurement Low-Carbon Disaster Relief (Sec. 70006) – Authority to provide financial assistance for costs associated with low-carbon materials and incentives that encourage low-carbon and net-zero energy projects (with increased federal cost share). N/A FEMA Competitive Grants and Technical Assistance FY 22-26 N/A States, local governments, Tribes Existing Program
Direct Procurement Low-Carbon Affordable Housing (Sec. 30002) – The U.S. Department of Housing and Urban Development (HUD) to fund projects that implement low-emission technologies, materials, or processes or address climate resilience of multifamily properties. $837.5 Million HUD Project Grants and Direct Loans FY 22-28 N/A Any owner or sponsor of an eligible property – defined as a property receiving project-based assistance pursuant to the Housing Act of 1959, the Cranston-Gonzalez National Affordable Housing Act, and the U.S. Housing Act of 1937 New Program