The Sun Also Rises: Congress Votes to Stimulate the Renewabl

The Sun Also Rises: Congress Votes to Stimulate the Renewable Energy, Efficiency, Carbon Capture, and Storage Industries | K&L Gates LLP


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On 21 December 2020, the shortest day of the year in North America, the U.S. Congress passed a historic stimulus package. Among its more than 5000 pages, the bill includes important, if not quite historic, clean energy-related provisions ranging from new and extended tax incentives to government programs for research and development. Assuming the legislation becomes law, a new day for U.S. carbon capture, offshore wind, and many more renewable energy technologies may dawn.
Renewable energy tax provisions
Many of the headline tax-related provisions are unsurprising (but still a nice holiday gift). The production tax credit would be extended by one year for electricity produced by wind, new open and closed biomass, hydropower, marine, and hydrokinetic energy electricity production facilities. In addition, the solar investment tax credit (ITC) will be extended at the 26% rate for two more years, reducing pressure for last-minute ITC safe-harbor deals that have not yet closed. The legislation also includes a much-needed tax incentive in the form of a 5-year 30% ITC for offshore wind facilities placed in service in inland navigable waters (think the Great Lakes) and U.S. coastal waters (which the Internal Revenue Service (IRS) will hopefully define more precisely in guidance). Notably, the offshore wind ITC is not subject to a sunset period, perhaps indicating that Congress may see fit to extend it when the time comes.

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