CHP Alliance
Summary
It’s been two years since the Inflation Reduction Act (IRA) became law, unleashing record new investments in the U.S. clean energy transition. Combined heat and power scored a major win thanks to the IRA: an expanded investment tax credit that covers up to 50% of eligible project costs. But with that credit set to expire at the end of 2024, the U.S. Treasury Department is preparing to implement the IRA’s new “technology-neutral” credits, which will take effect in January 2025.
The Treasury Department’s proposed rule for these tax credits is constrictive and needs fundamental redirection. In order to qualify, it requires combustion of fuel to undergo a Lifecycle Analysis (LCA), which is narrowly focused on fuel inputs and not on achieving Congress’ goal for these credits — cutting power sector emissions by 75%. By solely focusing on fuel inputs, the proposed rule would:
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