The historic US climate bill boosted tax credits for clean energy sources ranging from hydrogen to nuclear power, offering subsidies worth hundreds of billions of dollars. But there’s a catch buried in the law: Projects that don’t meet certain new wage and labor requirements only get a fraction of the credit.
In order to get the full value of a 30% investment tax credit for the construction of solar power, fuel cell and other clean energy projects, developers must pay workers at least a wage level set by the US Department of Labor and use a minimum share of labor from workers who are in registered apprenticeship programs.
Projects that don’t meet those requirements only get a 6% base rate. The rules apply to other Inflation Reduction Act credits as well, including a production tax credit commonly used for wind projects, tax incentives for carbon capture projects and new tax subsidies for hydrogen and nuclear power.
Meeting the pay and hiring thresholds, which go into effect for new projects later this month, isn’t going to be easy, say renewable energy and construction trade associations.
“Those goals are nearly impossible to meet,” said Brian Turmail, a vice president with the Associated General Contractors of America, referring to the apprenticeship requirement.
Companies that fail to fulfill them could potentially lose out on millions. Uncertainty around the fine print risks delaying projects and making it harder for developers to find financing.
Abigail Ross Hopper,...
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