Last night, Congressional leaders announced an agreement on a $900 billion COVID relief bill. While the text of the bill has not been released as of this writing, people familiar with the negotiations have indicated that the deal will extend renewable energy tax credits for wind and solar projects and the Section 45Q carbon capture tax credit, with special provisions addressing offshore wind farms.
According to these sources, the bill would extend the 26% investment tax credit available for solar projects that begin construction in 2020 by two years – to the end of 2022. A 22% credit would then be available for projects that begin construction in 2023, with the credit phased out afterwards. In the case of the production tax credit, eligibility at the 60% level would be extended for one year for projects that begin construction before the end of 2021.
Additionally, according to these sources, the bill would allow offshore wind farms to elect either the production tax credit and the investment tax credit, with the investment tax credit extended by five years, allowing a full 30% investment tax credit for offshore wind farms that begin construction by the end of 2025.
For carbon capture projects, which currently must begin construction by the end of 2023, the bill would allow credits for projects that begin construction by the end of 2025.
The bill would also extend excise tax credits for alternative fuels and income tax credit for biofuels, as well as production tax credits for coal mined on tribal lands. The bill would additionally extend a credit for installation of electric vehicle chargers and other alternative fuel vehicle refueling property through 2021. However, the bill would not extend the $7,500 consumer tax credit for the purchase of electric vehicles, which phases down once a manufacturer sells 200,000 electric vehicles.