IRA Clean Electricity Credits Under Threat of Becoming New Fossil Fuel Handout

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IRA Clean Electricity Credits Under Threat of Becoming New Fossil Fuel Handout

October 29, 2024

WASHINGTON - A newanalysisfrom Friends of the Earth shows that Big Oil and Big Ag are lobbying to co-opt key provisions of the Inflation Reduction Act. The Biden Administration is under pressure from polluters to include accounting gimmicks in the implementation of the new 45Y and 48E Clean Electricity Tax Credits - two of the most important provisions in the entire law for decarbonizing the power grid. If polluters get their wish, billions in clean energy tax credits could flow to new fossil gas plants.

The proposed guidancepublished in June would allow obviously clean energy sources like wind and solar to qualify. But the same proposal also sought input on "book and claim" accounting, which would create a dangerous loophole for fossil gas plants to qualify as clean energy. This would allow bogus negative emission offsets from sources like factory farms to greenwash fossil gas plants, aggravating some of the most polluting practices in Big Ag while further entrenching fossil fuels in our power sector. As the Treasury Department prepares to release a final rule in late 2024, polluters are pushing to lock-in this lucrative offset scheme.

The new analysisfinds that an average fossil gas plant would be able to reach "zero emissions" on paper by purchasing offsets to cover only 14% of its fuel supply. The same gas plant would be able to claim over $90 million a year in tax credits, securing an over 100% return on investment based on the cost of biogas offsets.

Sarah Lutz, Senior Climate Campaigner for Friends of the Earth and author of the report, issued the following statement:

"Big Oil and Big Ag are working hard to co-opt the Inflation Reduction Act. The Treasury Department has the responsibility to ensure that the clean electricity tax credit goes only to truly clean electricity. For the sake of our climate and communities, this polluter wishlist of loopholes and accounting gimmicks must be ignored."

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Communications Contact: Erika Seiber, [email protected]

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