GREEN Act of 2021

Andre Smith II

Mayer Brown – Tax Equity Times

House Ways and Means Committee Democrats introduced the Growing Renewable Energy and Efficiency Now (GREEN) Act of 2021 on February 5, 2021. The bill is an updated version of a similar bill of the same name introduced in June of 2020.

Many provisions of the GREEN Act either extend or expand the application of existing renewable energy tax credits. The bill extends the production tax credit (PTC) for facilities for landfill gas, trash, qualified hydropower and marine and hydrokinetic renewable energy facilities through 2026. The PTC for geothermal energy is retained under the bill and extended through 2021. The bill similarly extends the PTC for qualified wind facilities through 2026 at the current 60 percent level.

The bill also extends the investment tax credit (ITC) for solar energy property at 30 percent through 2025, which phases down to 26 percent in 2026, 22 percent in 2027, and 10 percent thereafter. The bill uses the same phaseout timeline and percentages for geothermal energy property.

Application of the ITC is also expanded to include energy storage technology and linear generators at the 30 percent rate through 2026 and phases down by 4 percent each year in 2027 and 2028. The bill describes energy storage technology as that which uses batteries and other storage technology to store energy for conversion to electricity and has a minimum capacity of 5 kWh, or to store energy to heat or cool a structure. It further describes linear generators as that which converts fuel into electricity through electromechanical means using a linear generator assembly without the use of rotating parts with a nameplate capacity of at least 1 kW.

The bill also extends existing tax incentives available for the sale of electric vehicles. The bill increases the electric vehicle credit cap for manufacturers to 600,000 vehicles, but reduces the credit by $500 after the first 200,000 vehicles sold. This would replace the current phaseout period that begins with 200,000 vehicles sold, with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached. At the start of the new phaseout period created under the bill, the credit is reduced by 50 percent for one calendar quarter and subsequently ends. For manufacturers that already passed the 200,000 threshold before the enactment of the bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded in determining when the 600,000 threshold is reached.

In addition to building on existing credits, the bill creates a new credit for manufacturers for the sale of zero-emission heavy vehicles and buses, which would equal 10 percent of the sales price of such vehicle to the extent the sales price does not exceed $1 million. To qualify for this new credit, the vehicle: (i) must be for domestic use, (ii) must not weigh less than 7 tons, (iii) must not include an internal combustion engine, and (iv) must be propelled solely by an electric motor which draws electricity from a battery or fuel cell. The bill also expands the definition of qualified income for publicly traded partnerships to include income from various renewable energy activities such as those qualifying for the PTC, ITC, and relating to carbon sequestration.

View source: https://www.taxequitytimes.com/2021/02/green-act-2021/

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