IRS Establishes Environmental Justice Credit Allocation And Advanced Energy Project Credit Programs

On Monday, February 13, 2023, the Internal Revenue Service ("IRS") established the programs for allocating Environmental Justice Solar and Wind Capacity Limitations under I.R.C. § 48(e) and Advanced Energy Project Credits under I.R.C. § 48C.These programs were established via Notice 2023-17 and Notice 2023-18, respectively (collectively, the "Notices").

These Notices were issued to meet Inflation Reduction Act ("IRA") requirements that the Secretary of the Treasury establish these programs within 180 days of the enactment of the IRA. See below for a summary of key aspects of the Notices.

§ 48(e) Potentially Increases the ITC for Environmental Justice Projects

Generally, I.R.C. § 48(e) provides for an increase in the Investment Tax Credit ("ITC") under I.R.C. § 48 in the case of qualified solar and wind facilities which are (1) located in low-income communities, (2) located on Indian land, (3) part of a qualified low-income residential building, or (4) part