Kaine Discusses Clean Energy Tax Credits in Inflation Reduction Act During Event in Big Stone Gap

PHOTOS FROM KAINE’S SWVA TOUR AVAILABLE HERE

WASHINGTON, D.C. – Today, U.S. Senator Tim Kaine hosted an event at Mountain Empire Community College in Big Stone Gap to discuss clean energy tax credits, economic development, and job creation in the Inflation Reduction Act (IRA), which Kaine helped pass last year. The event came from an idea Kaine had to bring local leaders, state and federal government officials, and businesses together to strategize on how to take advantage of the IRA provisions and help create jobs and boost economic development in Virginia. Kaine was joined by U.S. Department of Energy (DOE) Director of the National Energy Technology Laboratory and Executive Director of the Biden Administration’s Interagency Working Group (Energy Communities IWG) on Coal and Power Plant Communities and Economic Revitalization Brian Anderson, Virginia Department of Energy Economic Development Program Manager Dan Kestner, officials from the Virginia Economic Development Partnership, and business leaders. During the roundtable, Kaine also heard about the need to address workforce demands and help fill jobs of the future, and he discussed his bipartisan JOBS Act, which would help more Americans get good-paying jobs by allowing students to use federal Pell Grants to afford high-quality, short-term job training programs.

“We need to get together to capitalize on some job creation opportunities that are part of the Inflation Reduction Act that we passed last year,” said Kaine. “The idea is to really share and collaborate about how we can use some new tools and incentives that are on the table to help look at innovative economic development strategies all around Southwest Virginia.”

“Part of the IRA that was probably less promoted was the existence of incentives for development of clean energy projects, particularly in parts of the country that have been long connected to our energy economy and particularly the fossil fuel energy economy,” Kaine continued. “So if there’s ways to come into regions that have really been the backbone of powering America and help those regions advance into new chapters in the energy economy, that would be great.”

The IRA takes historic action to tackle climate change and reduce carbon emissions by roughly 40 percent by 2030. The law includes a number of provisions and tax credits to incentivize investments in clean energy, and the clean energy provisions are estimated to create nearly one million jobs per year. Communities in Virginia—especially Southwest Virginia—are well-positioned to benefit from many of these tax credits and funding opportunities because there are additional benefits for “energy communities,” or communities that meet one of the following criteria:

• Had a coal mine that closed after 1999 or a coal mine that retired after 2009.
• Have a significant portion of local employment or local tax revenues derived from a traditional energy industry and an unemployment rate above the national average.
• Is deemed a brownfield site by the Environmental Protection Agency, meaning it has the presence or potential presence of a hazardous substance, pollutant, or contaminant.

A preliminary map recently released by the Department of Energy shows where the energy communities are across the United States.

Clean Electricity Tax Credits

The IRA extends the existing Clean Electricity Production Tax Credit and the Clean Electricity Investment Tax Credit, and the Administration has released additional guidance on how energy communities can benefit. The Clean Electricity Production Tax Credit is for a facility in service that produces electricity generated from renewable energy sources, and the tax credit is based on the amount of energy produced over a period of time. The Clean Electricity Investment Tax Credit is for investments in facilities that generate or store clean electricity, and the tax credit is based on dollars spent.

The base tax credit for each is 30% of the property cost for a clean energy facility—for example, a wind farm. If the project is located in an energy community, there is an additional 10% added to the base credit. If the project uses domestic content, including domestic steel, there is another 10% added to credit, and there are additional bonuses if the community is low-income. This means that this credit could help offset investments in advanced energy technologies like solar, wind, geothermal, hydropower, biomass, municipal solid waste, or other investments in advanced energy capacity. More information is available here.

Advanced Energy Project Credit

The IRA expanded the Advanced Energy Project Credit, known as the 48C investment tax credit, for businesses that re-equip, expand, or establish an industrial or manufacturing facility related to clean energy equipment. This is for facilities that manufacture clean energy technology like solar panels or electric vehicle (EV) batteries. The program is aimed at helping ensure the U.S. is leading the way on manufacturing energy technology of the future. The IRA set aside $4 billion in credits for businesses that make these investments in energy communities that have seen closures of coal mines or retirements of coal-fired power plants in recent years. Applications for the first round of funding are expected to open on May 31, 2023 and close on July 31, 2023. More information is available here.

Clean Energy Projects on Former Mine Lands

Thanks to the Bipartisan Infrastructure Law, there is $450 million to advance clean energy technologies on abandoned mine lands. The program is managed by DOE’s Office of Clean Energy Demonstrations (OCED) and will provide up to 50% of the cost, ranging from $10 million to $150 million, for each project. Projects must create high-quality and long-term jobs, spur economic development, and provide direct benefits to the local community.

Eligible clean energy technologies include solar, microgrids, geothermal, direct air capture, energy storage, advanced nuclear technologies, and fossil-fueled electricity generation with carbon capture, utilization, and sequestration. Applicants must submit a Community Benefits Plan to outline their proposed project by May 11, 2023 and submit a full application by August 31, 2023. Applicants may register here for DOE’s April 19 webinar on eligibility, application processes, and funding requirements.

In addition to the event today, Kaine toured Volvo Truck’s New River Valley Plant in Dublin on Thursday to meet with employees, test drive their new electric truck, and discuss how the IRA will expand electric vehicle (EV) charging stations and provide tax credits to accelerate domestic production of EVs.

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