Leyton is an international consulting firm that helps businesses leverage financial incentives to accelerate their growth and achieve long-lasting performance.
Understanding the Clean Electricity Investment Tax Credit (Section 48E)
The Clean Electricity Investment Tax Credit underSection 48E was established by the Inflation Reduction Act of 2022, and it offers significant tax savings for investments in clean electricity facilities. An important distinction to be made is that this incentive intends to transition many of the previously eligible energy properties under Section 48 to Section 48E. To be eligible for the Section 48E tax credit, taxpayers must have constructed, reconstructed, erected, or acquireda clean electric facility that achieves a Green House Gas (GHG) emissions rate that is compliant with the Annual Table issued by the Internal Revenue Service.
The IRS Annual Table and GHG Emissions Rate Requirements
On January 15, 2025, the Internal Revenue Service issued Revenue Procedure 2025-14, introducing the first-ever Annual Table that specifies GHG emissions rate requirements for various facility types.
The Annual Table will be updated periodically, reflecting advancements in emissions data and technology, and taxpayers should consult the most recent table to ensure their facilities meet the criteria for the Section 48E credit. Facilities listed in this table qualify categorically for the Section 48E tax credit if their GHG emissions rate is not greater than zero. All other facilities not listed, such as combustion or gasification facilities, must determine their GHG emission rate through a lifecycle analysis to confirm compliance with a GHG emissions rate not greater than zero. Systems that previously automatically qualified under Section 48 provision,s such as combined heat and power and other cogeneration system,s would need to undergo this test
Lifecycle Analysis: How It Impacts Eligibility for the Tax Credit
A lifecycle analysis is a systematic method for evaluating the environmental impacts of a product, process, or service throughout its entire life cycle. It is used to assess sustainability and guide decisions toward reducing negative environmental impacts. It can include analysis of key factors such as raw resource extraction, processing, manufacturing, distribution, use during functional lifespan, and even end-of-life disposal.
How Leyton Can Support Your Section 48E Tax Credit Needs
Leyton stands to serve all needs related to the Clean Electricity Investment Tax Credit and has industry experts with the knowledge to accurately and defensibly conduct a study for complex topics such as life cycle analyses and eligible basis calculations. If you would like to learn more about the Clean Electricity Investment Tax Credit and whether your facility could qualify, please fill out the form below to contact one of our experts, who will walk you through the study in further detail.
