Comment to the Internal Revenue Service: Clean Electricity Production Credit and Clean Electricity Investment Credit Proposed Rulemaking

Summary The proposed rule does not exclude greenhouse gas emissions from backup units used to avoid service interruptions — as distinct from such emissions “in case of a power system outage” or “after an outage” — in the definition of “greenhouse gases emitted … in the production of electricity.” Such service interruptions can result from the inherent intermittency of wind and solar generating technologies and/or from the inability of wind and solar generating technologies to regulate the frequencies observed in the power grid, which must be synchronized at 60 Hertz. As the absolute and proportional capacities of wind and solar power increase, the likelihood of such service interruptions increases as well, and with it the need for backup capacity and generation designed to avoid such service interruptions. Applying the Environmental Protection Agency projections of the U.S. power capacity and generation mix through 2045, and conservative assumptions about the amount of needed natural gas backup capacity and the attendant backup capacity factors, greenhouse gas emissions from backup generation approach the phaseout limit of 394.5 million metric tons by 2035, and exceed it by over 62 percent by 2045. Therefore, notwithstanding the notional “applicable year” limitation for the Section 45Y Clean Electricity Production Credit and the Section 48E Clean Electricity Investment Credit, defined as the later of 2032 or the year in which greenhouse gas emissions from the production of electricity fall to or below 394.5 million metric tons, the reality is that the definitions in the proposed rule, if finalized, would make the credits permanent. Accordingly, those definitions cannot be consistent with Congressional intent. Read the full comment below. Zycher-comment-DoTr-IRS-clean-energy-tax-credits-RIN-1545-BR17-August-2024 Download