Washington, D.C./ Politics & Govt
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Published on June 18, 2024
Biden-Harris Administration Unveils Tax Incentives Tied to Labor Standards for Clean Energy ProjectsSource: Wikipedia/Adam Schultz, Public domain, via Wikimedia Commons

The Biden-Harris Administration has recently rolled out final rules that will be transformative for the clean energy sector, offering up a major boost in tax credits to projects adhering to new labor requirements. As detailed in a statement released by The White House, this leap forwards has been orchestrated under the Inflation Reduction Act, and it attaches for the first time ever solid labor protections and apprenticeship incentives to tax credits for climate and clean energy initiatives.

With an aim to add 1.5 million jobs over the next ten years, these employment opportunities are not just numbers, but represent pathways for workers—especially those without college degrees—to move into well-compensated roles within the industry. The rules put forth by the Department of Treasury and IRS promise a fivefold clean energy tax credit for projects satisfying the registered apprenticeship and prevailing wage prerequisites. Despite one report prompting developers to use Project Labor Agreements for large projects to conform with stipulations, ensuring smooth project flow and strong worker provisions.

The revamped incentive structure is intended to serve as a stimulus for developers, nudging them to pay the prevailing wages for the construction, alteration, and repair of eligible clean energy projects. Workers will also have the opportunity to "earn while they learn" through registered apprenticeships. According to a blog published by Deputy Secretary of the Treasury Wally Adeyemo and Acting Secretary of Labor Julie Su, utilizing Project Labor Agreements is a best practice for fostering fair employment conditions on significant construction endeavors, as per The White House.

To underline the administration's investment in this sector, the Treasury and IRS have also formulated an educational Fact Sheet to be disseminated across job sites, laying out the standards for workers regarding prevailing wage and apprenticeship guidelines for clean energy projects. This Sheet also mentions how to report suspected tax infractions using IRS Form 3949-A, with both IRS and Department of Labor joining forces under an MOU to bolster compliance and address potential nonconformities with these requirements.

Aligning with the thrust for expanding access to good-paying and union jobs, the administration has launched initiatives like the interactive map from the Department of Labor, disclosing over 1,000 planned clean energy projects, and the announcement of the multiple Investing in America Workforce Hubs. These strategies champion the connection between American workers and the burgeoning industries like clean energy, which President Biden touted as playing a key role in America's economic future. Vice President Kamala Harris emphasized this commitment during her visit to Detroit, where she unveiled actions to boost the electric vehicle sector—a notable beneficiary of these recent workforce initiatives.

The Administration's focus on workforce readiness is not just on future jobs but also ensures the present workforce is equipped to transition to these emerging sectors. Investments by the Department of Labor and Department of Energy, including grants and training initiatives have been made to this end. These efforts have been complemented by the Department of Energy's national Energy Workforce Needs Assessment and the Department of Labor's cooperative agreements, aiming to forge robust career pathways and fulfill the demands of a rapidly shifting energy landscape.