Tax Takeaways from Manchin-Schumer Deal: Climate & Energy - McDermott

Key Takeaways | Renewables Tax Takeaways from the Manchin-Schumer Deal on Taxes, Climate and Energy

Overview


Video: Renewables Tax Takeaways from the Manchin-Schumer Deal on Taxes, Climate, and Energy webinar, part of McDermott’s 2022 programming (runtime: 58m)

On August 1, McDermott Partners Philip Tingle and Heather Cooper hosted a webinar to address the climate bill, dubbed the Inflation Reduction Act of 2022, which unexpectedly came back on the table on July 27. Click here for a summary of the bill.

Below are key takeaways from the presentation:

  • Last week’s surprise Congressional bill incorporates many of the same features we saw in last year’s Build Back Better bill, including an extension of the existing PTC and ITC, to be replaced by a technology-neutral PTC and ITC available for any energy producing projects or storage technology with net zero greenhouse gas emissions. Those new credits would remain in place without phase down until at least 2032.
  • If enacted, taxpayers need to consider how the proposal impacts their pipelines. Taxpayers may no longer need to worry about “begin construction” for purposes of locking in the tax credit phase-down under the current law, but will still need to think about “begin construction” rules vis a vis the new wage and apprentice requirements, and also think about placed-in-service dates for purposes of eligibility for the new domestic content bonus and transferability provisions.
  • The bill doesn’t offer the much-desired direct pay feature for most projects, but offers a transfer optionality that could dramatically change how facilities are financed. Developers will need to consider how the transfer mechanism impacts timing of getting paid for the credits, stranded depreciation, tax basis step-up valuations, and the discount rate for selling the credits, and whether it still makes sense in some cases to bring in tax equity.
  • There are lots of different incentives scattered throughout the bill and market players will need to carefully assess how these incentives may refocus how and where they build projects. For instance, new credits for storage and hydrogen, and significant credit boosts for projects in low-income, coal and other traditional energy communities.

REGISTRATION INFORMATION

Monday, August 1, 2022
2:00- 3:00 pm EDT

Dig Deeper

Chicago, IL / McDermott Event / May 20 – 21, 2025

Tax Symposium 2025

New Orleans, LA / Speaking Engagements / April 28 – May 1, 2025

COST’s 2025 Spring Conference and Audit Session

Minneapolis, MN / Speaking Engagements / April 29, 2025

Twin Cities Tax Seminar

Webinar / McDermott Webinar / April 16, 2025

Family Office Tax Webinar: The Family Office Rule Decoded

Webinar / McDermott Webinar / April 9, 2025

Navigating IRS Tax Refunds

Nashville, TN / Speaking Engagements / March 27 – 28, 2025

COST's Southeast Regional State Tax Seminar and Healthcare Tax Seminar

Get In Touch