Section 48C Qualifying Advanced Energy Project Credit Program

Decarbonization efforts in all sectors of the US economy are receiving an unprecedented economic boost from a variety of sources (policy, direct subsidy, compliance and voluntary carbon pricing, and public sentiment).  In particular, state and federal governments are providing capital incentives.

One example funding opportunity currently of interest to many in the industrial and manufacturing sectors is the Section 48C – Qualifying Advanced Energy Project Credit Program.  This is a 30% tax credit that has a competitive application process.  There are three project types under which businesses can seek funding, and these are:  Clean Energy Manufacturing and Recycling; Greenhouse Gas Emission Reduction; and Critical Material.  The details of this program are outlined in updated guidance from the Department of Treasury.

This is a unique opportunity to obtain incentive funding for projects across a very wide swath of industry.  While WES provides grant writing and technical services across the eligible project types, this post specifically focuses on the Greenhouse Gas Emission Reduction Project segment.  WES staff have written or provided technical support for hundreds of successful funding applications for a wide variety of projects in the energy, manufacturing, housing, agricultural, and natural resource sectors. Based on this experience, WES has the following food for thought for those reviewing this funding opportunity. 

  • This program is a unique opportunity to support investment in the hard work required to deeply decarbonize existing manufacturing facilities.  There are a plethora of funding opportunities to support renewable or novel energy generation systems (solar, wind, low carbon fuels, combined heat and power, fuel cells, etc.).  The typical incentives cover what amounts to “fuel switching” for a facility, and can be hugely beneficial for decarbonization of energy.  However, there are almost no funding opportunities that will support the incredibly hard work of re-tooling existing facilities to improve processes, replace energy distribution (particularly thermal), and drive deep energy efficiency.  This 48C opportunity is uniquely designed to support all of the hard work required to deeply decarbonize existing industrial facilities.  
  • Owners that have developed a plan for re-tooling their facilities to drastically reduce emissions intensity are well positioned to be competitive for this opportunity.
    • With solid planning, most US industrial facilities can achieve 20-80% GHG emissions intensity reductions in a way that reduces operating costs, but achieving these reductions requires purposeful, collaborative planning throughout an organization, and realistic goal setting.
    • It is typical that deep decarbonization plans involve taking advantage of a host of projects over a number of years to allow for cost effective deep decarbonization.  It is also typical that these projects, while they can pay for themselves, do not have 1-2 year paybacks.
    • For those who have set up comprehensive plans with realistic goals, Section 48C is a great opportunity to obtain support on a vast array of projects to meet decarbonization goals.
  • The guidance document and the 48C application process are an opportunity for sustainability teams that have GHG reduction mandates, but haven’t yet had the bandwidth to develop plans for deep decarbonization. 
    • This funding opportunity is a great example of the types of incentive opportunities that are becoming more frequent over time, and leveraging them requires having a real plan in place for deep decarbonization. 
      • For example, this is only the first round of the 48C allocation applications, and this round is only for 40% ($4 Billion) of the total 48C allocation ($10 Billion). 
    • Developing the Concept Paper required by this funding opportunity is a great way to identify what components of your organization’s overall planning or facility planning need refinement to be able to target opportunities similar to this one, or the next round of this specific funding opportunity.
  • It is difficult to be successful in seeking funding when developing projects based on chasing the most recent grant funding opportunity.  The best approach is to develop a solid plan that will provide cost savings overtime, and then be ready to take advantage of funding opportunities that fit well with your plan. This has been WES’s key to success in supporting clients in seeking funding.  Our recommendation is that good projects have a fairly easy time attracting funding opportunities in order to make them great projects. 

WES staff are happy to discuss your project if you plan to target 48C, and to partner with you on developing your decarbonization projects. WES is able to tailor support to your needs, whether it be just Concept Paper development, or in developing a deep decarbonization plan.  Check out our team’s grant writing services, and our team’s decarbonization services.

Note that WES does not provide tax, legal or accounting advice. This post has been written for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.