Certification procedures
Under the Notice, each applicant for certification has two years from the date of acceptance by Treasury of the Section 48C(e) application during which to provide Treasury with evidence that the requirements of the certification have been met. An applicant that receives a certification has two years from the date of issuance of the certification to place the project in service and to notify Treasury that the project has been placed in service.
If the project is not placed in service within the two-year period, the certification no longer will be valid. If any certification is revoked, the total amount of the credits that may be allocated under Section 48C(e)(2) is increased by the amount of Section 48C credits with respect to such revoked certification. Further, if Treasury determines that a project for which a certification was granted has been placed in service at a location that is materially different than the location specified in the application for the project, the certification no longer will be valid.
Key definitions
The Notice includes several definitions that apply solely for purposes of the Section 48C(e) program, including the following. (Appendix A of the Notice includes additional detail regarding these definitions.)
A “qualifying advanced energy project” means a project that:
- re-equips, expands, or establishes an industrial or manufacturing facility for the production or recycling of “specified advanced energy property”:
- re-equips any industrial or manufacturing facility with equipment designed to reduce greenhouse gas emissions by at least 20% through the installation of low- or zero-carbon process heat systems; carbon capture, transport, utilization and storage systems; energy efficiency and reduction in waste from industrial processes; or any other industrial technology designed to reduce greenhouse gas emissions, as determined by Treasury); or
- re-equips, expands, or establishes an industrial facility for the processing, refining, or recycling of critical materials (as defined in Section 7002(a) of the Energy Act of 2020).
Treasury must certify that part or all of the qualified investment in the qualifying advanced energy project is eligible for a Section 48C credit. Finally, the project may not include any portion of a project for the production of any property that is used in the refining or blending of any transportation fuels (other than renewable fuels).
“Specified advanced energy property” means any of the following:
- property designed for use in the production of energy from the sun, water, wind, geothermal deposits (within the meaning of Section 613(e)(2)), or other renewable resources;
- fuel cells, microturbines, or energy storage systems and components;
- electric grid modernization equipment or components;
- property designed to capture, remove, use, or sequester carbon oxide emissions;
- equipment designed to refine, electrolyze, or blend any fuel, chemical, or product that is renewable, or low-carbon and low-emission;
- property designed to produce energy conservation technologies (including residential, commercial, and industrial applications);
- light-, medium-, or heavy-duty electric or fuel cell vehicles, as well as technologies, components, or materials for such vehicles, and associated charging or refueling infrastructure;
- hybrid vehicles with a gross vehicle weight rating of not less than 14,000 pounds as well as technologies, components, or materials for such vehicles; or
- other advanced energy property designed to reduce greenhouse gas emissions as determined by Treasury.
“Eligible property” is defined as property that (1) is necessary for the production or recycling of specified advanced energy property, re-equipping, expanding, or establishing certain manufacturing or industrial facilities and (2) is tangible personal property or other tangible property (not including a building or its structural components) that is used as an integral part of the qualifying advanced energy project; if (3) depreciation (or amortization in lieu of depreciation) is allowable with respect to the property.
Section 4 of the Notice explains how taxpayers can meet the prevailing wage and apprenticeship requirements for a tax year and thereby be eligible to claim a credit equal to 30% of the taxpayer’s qualified investment for such year with respect to any qualified energy project instead of the base 6% credit. (For guidance on the prevailing wage and apprenticeship requirements, see Notice 2022-61 and PwC Tax Insight, Wage and apprenticeship guidance issued for energy bonus credits, December 9, 2022.)