On May 29, 2024, the Treasury Department and the Internal Revenue Service (IRS) released a notice of proposed rulemaking (Proposed Regulations) with respect to Section 45Y (clean electricity production credit or CEPC) and Section 48E (clean electricity investment credit or CEIC) of the Internal Revenue Code of 1986, as amended (the Code). The CEIC and CEPC are intended to replace the existing production tax credit (PTC) and investment tax credit (ITC) under Sections 45 and 48 of the Code, respectively, which generally are available only for certain clean power projects with a start of construction date prior to January 1, 2025. The CEIC and CEPC are technology-neutral credits available for projects placed in service after December 31, 2024. Clean power projects that are placed in service after December 31, 2024 and have a start of construction date on or before December 31, 2024, however, may be eligible to claim either the ITC or CEIC, or the PTC or CEPC.

The Proposed Regulations specifically recognize certain clean energy technologies, including geothermal, hydropower, solar, wind, and certain types of waste energy recovery property, among others. The Proposed Regulations provide rules with respect to taxpayer eligibility, determining the greenhouse gas emissions rates for qualified facilities, the process for filing a provisional emissions rate petition, and the phaseout rules for the CEIC and CEPC and certain key definitions.

The Treasury Department and IRS seek public comments on the Proposed Regulations and other important questions introduced in the preamble. Public hearings on the Proposed Regulations are scheduled on August 12 and 13, 2024.