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Treasury tops up tax credits where fossil fuel jobs were lost

Credits promote climate-friendly projects

Treasury Secretary Janet L. Yellen emphasized the tax credits' benefits for coal mining towns.
Treasury Secretary Janet L. Yellen emphasized the tax credits' benefits for coal mining towns. (Tom Williams/CQ Roll Call)

The administration plans to deploy federal money in former coal towns and communities losing fossil fuel jobs from two of President Joe Biden’s signature legislative packages.

The Treasury Department released guidance Tuesday detailing how clean energy producers can receive more in federal tax credits if they build climate-friendly projects in areas that were once hubs for coal and oil jobs. The Treasury is offering the credits under an August law that contained $270 billion in tax breaks for clean energy. 

The Energy Department separately rolled out an initiative to spend $450 million from the 2021 bipartisan infrastructure law for clean energy-related experimental projects on land formerly used for mining. Another $16 million under that law will go to West Virginia University and the University of North Dakota to work on getting minerals needed for renewable energy products from mining waste.

The coordinated announcement comes as Biden and administration officials are traveling the country to promote his domestic agenda. That included a stop for Biden on Monday in Minnesota at a plant that makes clean energy equipment.

The announcement also comes as Sen. Joe Manchin III and the administration spar over implementation of the August law he helped enact. The package included benefits for building clean energy equipment or facilities that produce clean power in a so-called energy community. That includes areas where coal mines have closed since 2000 or coal-fired power plants have been shuttered since 2010, a significant portion of local tax revenue or jobs are related to fossil fuels and the unemployment rate is at or above the national average, or the land is a polluted brownfield site.

Manchin, D-W.Va., has said the administration is straying from the intent of the law. The divide has been sharpest over subsidies for buying electric vehicles. Manchin said Friday that rules Treasury produced for the tax credits ignore Congress’ intent and undermine efforts to boost U.S. manufacturing and secure supply chains by moving them out of China.

The release of new, separate guidance and funding for coal and fossil-fuel dependent communities could please Manchin, who represents the second-biggest coal-producing state. 

Developers claiming an investment tax credit for equipment like wind turbines or solar panels can get an extra 10 percentage points, on top of a benefit of up to 30 percent of their investment if they meet other wage and job training standards. A production tax credit for facilities generating clean energy could be 10 percent larger.

Treasury Secretary Janet L. Yellen emphasized the benefits for coal mining towns. “Coal communities have the knowledge and resources to play a leading role in the growth of the clean energy economy, and additional public investment will jumpstart the process,” she said in a statement.

Deputy Treasury Secretary Wally Adeyemo said on a call with reporters that the extra incentives will help communities that depend on energy jobs.

The administration also announced new tools to identify areas that qualify as an energy community for the tax credit boost and to aid redevelopment of closed coal power plants.

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