The U.S. Department of the Treasury and IRS have unveiled new proposed rules aimed at improving job quality in the clean energy sector. The guidelines, part of the Inflation Reduction Act, offer enhanced tax incentives for companies that meet specific wage and apprenticeship standards.
"These policies will increase apprenticeship in the clean energy economy, and the prevailing wage requirements will ensure that more people doing this work are getting the fair wages they deserve. This will create opportunities for workers to thrive in a critical industry while also meeting the President's climate goals and securing our energy future," said Acting Secretary of Labor Julie Su.
According to a press release dated August 29, 2023, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) have released new proposed rules and FAQs to enhance clean energy job quality. The guidance represents the completion of the first phase of the Treasury Department's Inflation Reduction Act implementation and is aligned with President Biden's Investing in America agenda.
For the first time, the Inflation Reduction Act has extended lasting wage and registered apprenticeship requirements to clean energy tax incentives, the press release states. Companies that meet these standards are eligible to claim an enhanced tax credit or deduction that could be up to five times the standard amount. This novel application is intended for a range of clean energy projects, including utility-scale wind, solar, and battery storage projects.
Developed in consultation with the U.S. Department of Labor, the guidelines offer comprehensive information on how to correct compliance failures and verify adherence to wage and apprenticeship requirements. The Treasury's guidance encourages the adoption of Project Labor Agreements that meet specific criteria, thus widening the tool's application in the clean energy sector.
According to the press release, the new rules also set labor hour benchmarks for apprenticeships in clean energy projects—12.5% of total labor hours for projects commencing in 2023 and 15% for those starting in 2024. These guidelines are augmented by ratio and participation requirements to ensure adequate supervision and more diverse apprentice involvement.
The Treasury and IRS also outlined penalties for non-compliance while offering waivers for companies that correct their mistakes in a timely manner or use Qualifying Project Labor Agreements, as per the press release.
The proposed rules aim to balance economic growth with climate action, Secretary of the Treasury Janet L. Yellen stated in the release. Acting Secretary of Labor Julie Su added that these measures extend the Biden-Harris administration's worker-centric policies into the tax code, aiming to provide fair wages and more opportunities in the evolving clean energy sector.