US applies tax credit to some green energy miners

In a change of position, the US Treasury Department will allow some mining companies to access a tax credit aimed at boosting American production of solar panels, lithium-ion batteries and other energy components.

The reversal comes following industry pressure. The original proposed rules, published in December 2023 for the 45X tax credit, excluded raw materials in favour of processing. Miners cited the unfeasibility of producing products without first extracting the minerals, and the Treasury responded.

Now, ‘material costs and extraction costs’ come under the tax credit under the final 45X rules.

Wally Adeyemo, the deputy Treasury secretary, told reporters that the credit can only be obtained once an ‘eligible component’ is made, thus benefitting mining companies that own processing facilities. Other miners will lose out. The mining would have to take place in the US to qualify.

In addition, the rules for the Advanced Manufacturing Investment Credit (CHIPS ITC) include domestic manufacturing of solar ingots and wafers with a 25% investment tax credit under Section 48D of the Advanced Manufacturing Investment Credit rules.