The US Treasury released a speech outlining the implementation of phase four, along with a press release announcing a significant milestone for clean vehicles on 1 October 2024.
Phase Four of Implementation of the Inflation Reduction Act’s Clean Energy Provisions
Aviva Aron-Dine, the US Treasury Assistant Secretary for Tax Policy, commented on the fourth phase of implementing the clean energy provisions outlined in the Inflation Reduction Act (IRA).
The Assistant Secretary stated this Administration will continue to provide rules of the road and certainty to help make the IRA tax policies even more effective in reducing greenhouse gas emissions, supporting the development of clean energy industries of the future and the deployment of clean energy solutions across every sector of the economy, creating good-paying jobs, supporting domestic production and manufacturing, and lowering consumer costs.
Phase One: The Treasury and the Internal Revenue Service (IRS) quickly published detailed requests for public input on nearly all of the law’s clean energy tax provisions to identify and prioritise issues. Then, to support immediate investment, the administration focused on issuing guidance on cross-cutting bonus and credit monetisation provisions, as well as credits for electric vehicles.
Phase Two: The administration focused on boosting American manufacturing to create good-paying jobs and strengthen energy security. From fall 2023 through early 2024, the administration proposed regulations on the section 45X Advanced Manufacturing Production Credit, the section 45V Clean Hydrogen Production Credit, the section 48 Investment Tax Credit for electricity generation, and other key provisions.
Phase Three: The administration focused on providing longer-term clarity and certainty. That included issuing final rules on elective pay (also known as “direct pay”) and transferability, provisions that are growing the scope and scale of clean energy projects by expanding their financing options.
Phase Four: The administration stated it is doubling down on our commitment to provide the rules of the road and certainty needed to realise the full benefits of the IRA. By the end of this Administration, we can anticipate finalising regulations on a number of key provisions that are especially central to the IRA’s climate and economic goals.
Credit Transfer Mechanism Surpasses USD 2 Billion
On the same day, the Treasury released a separate statement announcing that the US Department of the Treasury and IRS announced consumers have saved more than USD 2 billion in upfront costs on their purchase of more than 300,000 clean vehicles since 1 January 2024, marking a major milestone in the Biden-Harris Administration’s work to lower transportation costs for Americans.
Since this mechanism went into effect on 1 January 2024, more than USD 2 billion in financial benefits to consumers at the point-of-sale have been realised through the clean vehicle advance payment program for both new clean vehicles and used clean vehicles.
Of the more than 300,000 advance payments that have been issued, more than 250,000 are for tax credits related to new clean vehicles. The option to transfer the tax credit to the dealer is very popular, with 93% of new clean vehicle transactions and more than 85% of used clean vehicle transactions reported through IRS Energy Credits Online involving a transfer of the credit to the dealer.
