The Green Book And Green Energy – Energy and Natural Resources


  • With tax policy long an important tool for incentivizing
    renewable energy, it comes as no surprise that in the U.S.
    Department of the Treasury’s General Explanations of the
    Administration’s Fiscal Year 2022 Revenue Proposals (the
    so-called Green Book), the Biden Administration proposes the
    expansion, extension and creation of a number of green energy tax
  • Congressional Democrats also have proposed legislation to
    expand credits related to renewable energy with similar priorities
    and objectives to the Green Book proposals.
  • This Holland & Knight alert outlines a number of Green Book
    provisions that would offer incentives on a fully refundable,
    “direct pay” basis. Considered a priority of the
    industry, this direct payment option significantly increases the
    benefit of the credits, a move expected to help drive increased
    business investment.

Since the beginning of his presidential campaign, President Joe
Biden has made clear his vision to drive the United States toward
world leadership in green energy. With tax policy long an important
tool in the toolbox for incentivizing renewable energy and energy
efficiency, it comes as no surprise that in the U.S. Department of
the Treasury’s General Explanations of the Administration’s
Fiscal Year 2022 Revenue Proposals (the so-called Green
Book), the Biden Administration proposes the expansion, extension
and creation of a number of green energy tax credits described in
detail below. (See Holland & Knight’s previous alert,
“Biden Administration’s FY 2022 Budget and Its
Tax Increases for Corporations, Wealthy,” June 3, 2021,
for a more general overview of the Green Book.)

These proposals will all require legislative change. Since the
start of the 117th Congress and before, congressional Democrats
have similarly been developing proposed legislation to expand
credits related to renewable energy and energy efficiency with
similar priorities and objectives to the Green Book proposals. Most
notable among these proposals are H.R. 848, the Growing Renewable Energy and
Efficiency Now Act (GREEN Act), sponsored by House Ways and Means
Committee senior member Rep. Mike Thompson (D-Calif.), and S. 1298, the Clean Energy for America Act,
championed by Senate Finance Committee Chairman Ron Wyden (D-Ore.).
While the bills tackle the tax code’s incentives for green
energy with philosophically different approaches, they both target
many of the same tax credits discussed in the Green Book. These
legislative proposals will be detailed in a subsequent Holland
& Knight alert.

Of particular interest for businesses, many of the provisions
outlined below propose offering incentives on a fully refundable,
“direct pay” basis, allowing individuals and businesses
to elect to recoup the full value of the credits as a cash payment
from the federal government. Considered a priority of the industry,
this direct payment option significantly increases the benefit of
the credits, a move expected to help drive increased business

Also of note, the proposals contained in the Green Book
generally include statements that the Biden Administration plans to
work with Congress on measures to “pair these credits with
strong labor standards, benefitting employers that provide
good-paying and good-quality jobs.” Although there is broad
support from congressional democrats to support green energy
through the tax code, more progressive members have sought to
further pair these incentives with specific conditions to advance
broader policy objectives, such as labor standards. Aligning with
progressive concepts from the Green New Deal to advance labor
priorities alongside green energy objectives, there has been
discussion around tying increased tax incentives to requirements
that businesses pay construction and operations workers – in some
cases, including contractors and subcontractors – local prevailing
wages. Also part of the conversation are provisions to require
construction of new facilities, equipment and resources to utilize
a certain percentage of domestic content, another priority of U.S.
labor in an effort to boost the domestic supply chain.

Critics have expressed concern that adoption of these
restrictions will limit the usefulness of the credits and
ultimately slow deployment of renewable energy and energy-efficient
resources at a time when rapid scale-up is needed to combat climate
change. Support for these labor provisions is more fraught than
support for the credits themselves, and will continue to be looked
at as the House Ways and Means Committee and the Senate Finance
Committees evaluate their respective legislative proposals.

Although it is unclear whether the proposals in the Green Book
will garner significant support, or whether those in the GREEN Act
or Clean Energy for America Act will prevail, change is certainly
needed to meet President Biden’s ambitious goal to reach 100
percent clean energy and net-zero economy-wide carbon emissions no
later than 2050.

Below are some specific green energy proposals as set forth in
the Green Book.

Specific Green Book Proposals

Electric Vehicles and Charging Infrastructure

A significant thrust of the Biden Administration’s green
energy plan is a push to transition vehicles toward an increasingly
electric fleet and to build out the charging infrastructure to
support these electric vehicles (EVs). The administration has
proposed a variety of measures, only some of which leverage the tax
code. Specifically, the tax proposals included in the Green Book

  • extension of the current $1,000 Section 30C credit for EV
    charging stations installed at residential property for five
  • expansion and extension of the current 30C credit for EV
    charging stations for commercial use by increasing the business
    credit cap to $200,000 per device, allowing businesses to claim the
    credit on a per-device basis, extending the credit for five years
    with a direct pay option
  • expansion of the Safe, Accountable, Flexible Efficient
    Transportation Equity Act: A Legacy for Users (SAFETEA-LU) private
    activity bonds to state and local governments to issue private
    activity bonds for infrastructure to support zero emissions
  • creation of a new tax credit for medium- and heavy-duty zero
    emissions vehicles based on the Section 30D tax credit, offering
    credits that range from $25,000 for a Class 3 vehicle to $120,000
    for Class 7-8 vehicles and gradually phasing down through 2027
    (proposal also includes a direct pay option)

Sustainable Aviation Fuel

Unlike many of the other proposals contained in the Green Book,
which build off existing tax credits, there is currently no tax
incentive for the production of sustainable aviation fuel. The
proposal is to create a new tax credit in the amount of $1.50 per
gallon for fuel that achieves at least a 50 percent reduction in
emissions when compared with conventional jet fuel. The temporary
credit becomes even more valuable if the sustainable fuel produced
is cleaner when compared with conventional fuel.

In recognition that conventional jet fuel is a contributor of
CO2 emissions, the idea of a new tax incentive for sustainable
aviation is gaining traction. Congress recently introduced
legislation, the Sustainable Skies Act, that tracks the Biden
Administration’s proposal.

Expand Availability of Solar and Wind Tax Credits (ITCs and

Under current law, a 60 percent production tax credit (PTC)
(Code Section 45) for qualified renewable production (i.e. wind,
closed-loop biomass, geothermal and other) is available for
facilities that begin construction during 2021. No PTC is available
for projects commencing in future tax years. The proposal would
provide a full 100 percent PTC for wind and certain other qualified
facilities that begin construction after 2021 and before 2027, with
a five-year phased-down (20 percent per year) PTC continuing to be
available for projects commencing through 2030.

Under current law, a 26 percent investment tax credit (ITC)
(Code Section 48) is available for solar energy facilities that
begin construction before the end of 2022. The ITC is reduced to 22
percent for projects that begin construction in 2023 and to 10
percent for facilities that commence construction in subsequent tax
years. The proposal would extend the full 30 percent ITC for solar
and geothermal electric energy property and other qualified
facilities that begin construction after 2021 and before 2027,
followed by a five-year phaseout each year between 2027 and 2030.
The proposal would also expand the ITC to certain stand-alone
energy storage technology starting in 2022.

The proposal provides for a direct pay option for both the PTC
and ITC, which would permit a taxpayer to elect to receive a cash
payment in lieu of the available PTC and ITC.

Expand and Enhance Carbon Oxide Sequestration Credit (Code
Section 45Q)

The 45Q Credit is a per-metric-ton tax credit available to
owners of carbon capture equipment who capture carbon oxide from an
industrial facility or directly from the atmosphere and then
sequester it, or who first use it as a tertiary injectant in
enhanced oil recovery (EOR) and then sequester it as part of that
process. Under current law, to be eligible for the credit,
construction on both the facility and the carbon capture equipment
must begin before Jan. 1, 2026.

The proposal would extend the deadline for construction of
qualified facilities from Jan. 1, 2026 to Jan. 1, 2031. The credit
amount would be increased by an additional $35 per metric ton (to
$85) for “hard-to-abate industrial carbon oxide capture
sectors such as cement production, steelmaking, hydrogen production
and petroleum refining.” Direct air capture projects would be
eligible for an extra $70 per metric ton credit (i.e., a total
credit of $120).

The proposal also includes a direct pay option that allows a
taxpayer to elect to receive a cash payment in lieu of the carbon
sequestration credit.

Qualifying Transmission Property

The proposal would create a new 30 percent investment tax credit
for certain qualifying electric transmission property (e.g.,
overhead, submarine and underground transmission facilities, as
well as any ancillary facilities and equipment necessary for
transmission facility operation) with a minimum voltage of 275
kilovolts (kVs) and a minimum transmission capacity of 500
megawatts (MWs) that is placed in service after 2021 and before
2032. The new credit would also be eligible for the direct pay
option, which would provide a taxpayer the option to elect a cash
payment in lieu of the tax credits.

Electric Generation Tax Credit for Existing Nuclear Power

The proposal would expand the electric generation tax credit
(Code Section 45J) for existing nuclear power plants by providing
up to $1 billion (annually) in credits for energy generated. The
credits would be allocated to plants that would bid for the credit
every two years. The credits would be targeted to economically
at-risk facilities to prevent the early retirement of nuclear
facilities and would continue through 2030.

The credit is also expected to provide for an electable direct
cash payment in lieu of credits.

Qualifying Advanced Energy Manufacturing

The proposal would modify and expand the credits available for
qualifying advanced energy projects (Section 48C) to include:
industrial facilities; recycling in addition to production; and
expanded eligible technologies, including energy storage and
components, electric grid modernization equipment, carbon oxide
sequestration and energy conservation technologies. The proposal
authorizes an additional $10 billion in tax credits (with $5
billion allocated to coal communities), with the three-year
application window opening after Dec. 31, 2021.

Taxpayers again would have the option of electing direct cash
payments in lieu of credits.

Low-Carbon Hydrogen Tax Credit

The proposal would establish a credit for low-carbon hydrogen
produced from a qualified low-carbon hydrogen production facility
during its first six years of service for an end use application in
the energy, industrial, chemicals, or transportation sector.
Low-carbon refers to hydrogen produced using zero-carbon emissions
electricity (renewables or nuclear) and water as feedstock, or
hydrogen produced using natural gas as a feedstock with all carbon
emitted in the production process captured and sequestered. The
credit would be $3/kg of hydrogen between 2022 and 2024, and $2/kg
between 2025 and 2027, subject to an annual inflation adjustment.
This credit will also eligible for a cash payment option in lieu of
the credit.

Repeal of Fossil Fuel Incentives

As a revenue raiser to offset the above energy incentives, the
Green Book proposes ending a number of current incentives
benefiting fossil fuels. Among the numerous provisions, the
proposals would repeal:

  • the ability to expense exploration and mine development
  • the expensing of intangible drilling costs
  • the percentage depletion with respect to oil and gas wells and
    hard mineral fossil fuels
  • the enhanced oil recovery credit for eligible costs
    attributable to a qualified enhanced oil recovery project
  • the capital gains treatment of royalties on the disposition of
    coal or lignite
  • the exemption from the corporate income tax for publicly traded
    partnerships with qualifying income and gains from activities
    relating to fossil fuels


The energy-related provisions contained in the Green Book would
impact many industries if enacted. Holland & Knight is closely
engaged with the Biden Administration and Congress on these
provisions, and will continue to monitor prospects for these
credits closely as they move through the legislative process in the
coming months. For more information on specific proposals or the
potential impact on your organization, please contact the

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

Comments are closed.