Friends of the Earth warns US President Joe Biden for expanding clean energy tax credits

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The Joe Biden administration has announced a proposal to expand tax credits that have long supported U.S. solar and wind energy projects, extending these incentives to a broader array of clean energy technologies, including nuclear fission and fusion.

The Treasury Department revealed its guidelines for the new Clean Electricity Production Credits and Clean Electricity Investment Credits, set to commence in 2025. These credits were established under the 2022 Inflation Reduction Act (IRA) and will replace the expiring wind and solar production and investment tax credits.

“The Inflation Reduction Act’s new Clean Electricity credits, which will come into effect in 2025, are one of the law’s most significant contributions to tackling the climate crisis,” John Podesta, Senior Advisor to the President for International Climate Policy, said.

The proposal outlines several technologies that could qualify for these lucrative tax credits, such as marine and hydrokinetic energy, nuclear fission and fusion, hydropower, geothermal energy, and certain forms of waste energy recovery. The credits could reach up to 30 percent for qualifying projects, similar to the highest levels previously available for wind and solar initiatives.

Treasury Secretary Janet Yellen reported that the IRA has already spurred over $850 billion in private sector investment in clean energy and manufacturing, leading to record increases in renewable energy capacity. She described the new tax credit program as a “next key step” in ensuring the U.S. remains a major market for new clean power generation over the coming decade.

“These credits … make an unprecedented long-term commitment to the clean energy sector to ensure the U.S. is a major market for new clean power generation over the next decade and beyond,” Yellen said.

American families are expected to save $38 billion on their electricity bills and American businesses are projected to spend 15 percent less on electricity by 2030, US Treasury Department said.

According to the Rhodium Group, these credits could result in a reduction of 300-400 million tonnes of greenhouse gas emissions by 2035, representing a 29 percent-46 percent cut compared to a scenario without such tax incentives, Reuters news report said.

The Rhodium Group study found that by 2035, the credits will reduce power sector carbon emissions by 43-73 percent below 2022 levels, save American consumers up to $34 billion in annual electricity costs, and add nearly 650 gigawatts of clean electricity to the grid.

However, some environmental groups have raised concerns that these tax credits might support controversial energy sources, such as waste burning or methane biogas from landfills. “The Joe Biden Administration must prevent dirty energy from co-opting billions in taxpayer dollars,” warned Sarah Lutz, a campaigner for Friends of the Earth.

Baburajan Kizhakedath

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