Skip to content

Casey secured tax credits in Inflation Reduction Act for clean energy investments made in “energy communities,” places with economies dependent on coal, oil, or natural gas

Casey pushes Administration to fix loophole could exclude many former fossil fuel sites from clean energy development bonus tax credit

Washington, D.C. - Today, U.S. Senator Bob Casey (D-PA) urged U.S. Department of the Treasury Secretary Janet Yellen and U.S. Department of Energy Secretary Jennifer Granholm to clarify guidance for clean energy bonus tax credit to ensure that all of Pennsylvania energy communities rightfully benefit from the bonus tax credit. Senator Casey fought to include this bonus credit in the Inflation Reduction Act (IRA), to encourage clean energy deployment and manufacturing in “energy communities,” areas whose economies and jobs are or were dependent on the coal, oil or natural gas energy sectors. At present, unclear guidance from the Department of Treasury about bonus tax credit eligibility effectively excludes certain energy communities. Casey’s letter urged the Departments to issue clarified and more inclusive guidance so that Pennsylvania’s numerous energy communities can stand to benefit from the investment and jobs this credit will bring.

“If Treasury does not issue these clarifications, our economy risks missing out on potential investments and job creation in the communities that need it the most and out climate stands to miss out on clean energy development. Energy communities in my home state of Pennsylvania have powered our Nation for generations. Issuing clarifications will enable them to continue this legacy,” wrote Senator Casey.

Clarifying guidance for bonus tax credit eligibility to not unintentionally exclude former fossil fuel energy plants will allow the bonus tax credit to be allocated according to the bill’s original intent. As fossil fuel sites continue to retire and become optimal sites for clean energy redevelopment, clarifying bonus tax credit guidance will the increase opportunities for energy communities’ economies to be supported by clean energy investments.

Casey has consistently fought for new federal initiatives to support economic revitalization and workforce development for Pennsylvania energy communities and workers. In 2021, Casey worked to pass the Infrastructure Investment and Jobs Act to bring billions of dollars to Pennsylvania to build out clean energy infrastructure, improve roads and bridges, expand high-speed internet access, and more, all while creating good-paying jobs. Passed in 2022, the Inflation Reduction Act also made major investments in new energy manufacturing, including solar panels, wind turbines, and clean battery systems. Casey fought to include strict domestic content standards to ensure projects use 100 percent American-made steel and iron.

Notably, this is not the first time Senator Casey has called on the Treasury Department to put out guidance prioritizing American workers and manufacturing. In March 2023, Casey urged the Treasury Department to swiftly implement guidance for clean energy tax credits in the IRA that incentivize companies to use American steel, iron, and manufactured goods when building new energy projects. Following his advocacy, the Treasury Department issued guidance regarding these tax credits.

In June 2023, Senator Casey delivered a rousing speech to union workers and business leaders in Pittsburgh to outline his vision for the United States to take control of its economic future by investing in American workers and manufacturing, as well as stopping investments in national security sectors from going to countries of concern, including China. In July, the Senate overwhelmingly passed Senator Casey’s legislation to screen American investments in foreign countries of concern, like China, by a vote of 91-6. Building on Casey’s efforts, the Biden Administration issued an executive order addressing the issue weeks later.

In October 2023, Casey announced the launch of the two hydrogen hubs, funded by the Infrastructure Investment and Jobs Act: the Mid-Atlantic Clean Hydrogen Hub (MACH2), based in Southeastern Pennsylvania, and the Appalachian Regional Clean Hydrogen Hub (ARCH2) serving Pennsylvania, West Virginia, Ohio, and Kentucky. These hubs will bring jobs, economic growth, and energy innovation to the Mid-Atlantic and the Appalachian Basin. Additionally, Casey announced The Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization (Energy Communities IWG) Rapid Response Team. This team will assist Pennsylvania organizations, businesses, and local governments in coordinating federal resources they need to position the Commonwealth as a national leader in next-generation energy and train workers.

2023 report shows that, since the passage of the IRA, energy communities are leading the Nation in new clean energy investment. A full map of areas in Pennsylvania that may be eligible for the Energy Communities Bonus Credit can be found here.

Full text of the letter is below and the signed PDF can be found HERE

Dear Secretary Yellen and Secretary Granholm:

I write to you today regarding the implementation of key tax credits in the Inflation Reduction Act (IRA) to ensure that forthcoming guidance supports the communities and workers that have powered our Nation. Congress intended the energy communities bonus credit for the clean energy Investment Tax Credit (ITC) and Production Tax Credit (PTC) to give private clean energy developers an incentive to locate their new clean energy investments in energy communities and at former fossil fuel energy sites. So called “brownfield sites” that were formerly dedicated to fossil fuel production or power generation and which may require remediation are ideal sites for new renewable energy projects, such as wind, solar, and battery storage, because of their pre-existing connections to the power grid and existing workforce and infrastructure. However, I am concerned that the guidance Treasury is adopting will result in some former natural gas plants sites not qualifying for the energy communities bonus as intended.

As one of the primary authors of the energy communities bonus tax credit, it was my and the Finance Committee’s intention to allow former fossil fuel power generation sites to be redeveloped using the energy communities bonus credit as an incentive. However, as currently proposed, the rule would prevent this.

The Inflation Reduction Act relies on the definition of a brownfield under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA; 42 U.S.C. § 9601(39)) to provide categorical eligibility for energy community bonus credits.  However, in its rule interpreting the IRA energy community credits, Treasury provides for some exemptions to this eligibility in order to prevent bad actors and polluters from accessing federal tax dollars, just as the exemptions function under CERCLA. While I agree that it is appropriate to prevent bad actors from accessing federal tax dollars, I believe there may be some situations where clean energy developers not party to site contamination and who are committed to purchasing and remediating a site should be eligible to access energy communities credit. Developers considering site acquisition and development need clarity from Treasury prior to site acquisition that they will be able to access energy communities bonus credits once the required remediation work is approved. Situations such as this provide a double benefit by first undertaking environmental cleanup and subsequently investing in the community and I ask that Treasury provide guidance clarifying their eligibility in this regard and under such circumstances. The Environmental Protection Agency has issued guidance with similar nuances that may help inform IRS guidance.

In addition, the Treasury Department should consider the impacts of the exclusions and how they interact with a site’s brownfield designation. For example, EPA has recognized that the breadth of the exclusory language may result in unintended ineligibility of certain sites that should be eligible for brownfield funding and has interpreted the language to allow for such eligibility, particularly with respect to certain sites permitted under the Solid Waste Disposal Act, Toxic Substances Control Act, and the Clean Water Act. Virtually all operating natural gas power generation facilities have permits under the aforementioned laws to enable their operations. Yet, by cross-referencing CERCLA exemptions, Treasury potentially excludes otherwise eligible sites from the brownfield designation. Where environmental remediation and development are possible, Treasury should ensure eligible brownfields are not excluded based on their permitting needs under the aforementioned laws.

According to the Energy Information Administration, coal and natural gas plants account for 98 percent of the 15.6 gigawatts of U.S. electricity capacity retirements in 2023. This leaves a sizable gap in our energy-generation capacity and a hole in the economies that depended on these plants for jobs and tax revenue. The energy communities bonus credit is the mechanism by which we may fill these gaps with good-paying, clean energy jobs.

To that end, I urge the Department of the Treasury and the Internal Revenue Service (IRS) to issue guidance allowing developers and operators committed to brownfield site remediation and development and those seeking to redevelop retired and retiring natural gas power plants to access IRA energy community bonus credits. If Treasury does not issue these clarifications, our economy risks missing out on potential investments and job creation in the communities that need it the most and our climate stands to miss out on clean energy development. Energy communities in my home state of Pennsylvania have powered our Nation for generations. Issuing clarifications will enable them to continue this legacy.

Thank you for your attention to this important matter. I look forward to working with you to meet our climate goals while protecting and supporting the workers and communities that powered our Nation through industrialization.