On May 31, 2023 the Internal Revenue Service (IRS) and Department of Energy (DOE) released a notice on implementing the Qualifying Advanced Energy Credit (48C) that was authorized under the Inflation Reduction Act. In my travels around the country, most asphalt contractors are not aware of the 30% tax credit for projects that re-equip an industrial facility with equipment designed to reduce greenhouse gas emissions by 20%.
When I worked at NAPA, I received many calls from asphalt contractors who were very interested in obtaining the 48C tax credit. When we were preparing NAPA’s comments in response to the IRS request for information, it was evident that the age of asphalt plants in the US are very old, although no hard data is available to verify the information.
This is yet another “low carbon asphalt” incentive that arises out of the Inflation Reduction Act where asphalt mix producers can tap into a federal funding stream to take an action that may have been put off in the past due to expense, upgrading the asphalt plant.
Last February, the IRS issued Notice 2023-18 to establish the section 48C(e) program to allocate $10 billion in credits ꟷ not less than $4 billion of which will be allocated to projects located in certain energy communities census tracts. The guidance is primarily of interest to owners of clean energy manufacturing and recycling projects, greenhouse gas emission reduction projects, and critical material projects. Asphalt plants would be eligible for 48C under this definition.
Notice 2023-44 issued May 31, 2023 updates the earlier version of Appendix A, defining qualifying advance energy projects, with clearer definitions and examples, and updates the earlier version of Appendix B, providing the Department of Energy application process, by adding technical review criteria and application content requirements. This notice also provides the process for submitting concept papers and joint applications for DOE recommendations and for IRS § 48C(e) certifications and clarifies the selection criteria used to evaluate whether a project merits a DOE recommendation.
Here is the most important part of asphalt plant owners to keep in mind regarding the 48C tax credit: Dates!
The newly released guidance provides information on the DOE application process and DOE’s 48C-eXCHANGE web portal. DOE will open the portal for applicants to download application materials on May 31, 2023. For this round of the program, DOE will begin accepting concept papers no later than June 30, 2023, and all concept papers must be submitted by July 31, 2023.
DOE and IRS will host a virtual informational webinar on June 27, 2023, at 2 p.m. ET. This webinar will provide information about how to prepare and submit the concept paper. The registration link to attend this webinar will be provided on June 12, 2023.
I worked on this issue when Congress enacted the Inflation Reduction Act (IRA) last year. I am told this is largest Federal tax credit available to the asphalt industry, ever. If you want to learn more about the IRS tax credit, reach out to Surface Tech. Surface Tech is helping asphalt contractors get ready for the low-carbon asphalt market being implemented by the Federal government’s Buy Clean policies.
