Climate Law Matters: Energy & Climate Newsletter – December 2024 | Foley Hoag LLP
By Rebecca Chilton
As with many, we in the Foley Hoag energy and climate practice have felt the results of the 2024 election reverberate through our industry. We’ve gathered and digested the most current information available and debated the repercussions of a second Trump term on everything from tax credits and EPA funding streams to permitting and tariffs. In this issue of Climate Law Matters, my colleagues give their thoughts about how different actors in the green economy, particularly state governments, together with dramatic upward trends in manufacturing, investment and electricity demand, can be stabilizing forces against a rapidly changing federal landscape and can help build on our current industry momentum. First and foremost, however, we’ve been in close touch with our clients, helping them plan and pivot, regroup and recharge. One of the most vital aspects of the renewable energy sector is our ability to agilely adapt to change. Alongside our allies in the fight against climate change, we’re preparing to step up and step forward with cautious optimism into an uncertain future.
Still, in a time of great upheaval, it can be helpful to reorient towards first principles, going back to the original reasons why we do what we do. For some, it is the opportunity to radically transform the way we generate and distribute power in order to create not only a more just energy economy, but also a more robust one. For others, it is the conviction that capitalism’s inherent creativity and disruptive power deliver the innovation, scale and efficiency that are critical to achieving measurable climate solutions. Returning to these fundamental tenets — purpose and profit, mission and market – we discover that they are, in many ways, two sides of the same coin.
The genius of the Inflation Reduction Act was to combine these two imperatives into one watershed legislation, pushing catalytic capital down and into corners not yet served by the energy transition, and in turn opening new pathways to growth and generating even more energy and ClimateTech solutions. In only two years, the IRA has spurred an unprecedented wave of adaptation, expansion, investment, equity and innovation in renewable energy and ClimateTech that cannot now be turned back, no matter what administration or Congress sits in Washington.
Sustaining this momentum depends on a “both/and” mentality that, while it may make for a few strange bedfellows, ultimately forges powerful partnerships for the common good. A robust market of direct tax credit transfers would have seemed almost fanciful in August of 2022: now it’s an established industry with evolving standards and booming demand which opens up capital for smaller and more distributed projects that serve a wide spectrum of consumers. Only a few years ago, it would have been unusual to see nonprofits leading renewable energy development; today, these organizations are using direct pay to structure complex financing for high impact projects. Red districts are welcoming solar module manufacturers. Communities with deep roots in the coal mines are training the next generation of skilled labor for the energy transition. Community development organizations are designing microgrids that make their whole city more resilient. By including environmental justice as an essential part of our analysis, we are pushed to see past perceived risks and outdated assumptions to bring new, creative players into the energy mix and, as a result, the pie grows bigger. With renewed appreciation for our interdependence and confidence in the unstoppable power of good ideas, we can pick up the twin tools of mission and market and, together, maintain our trajectory and continue the IRA’s sweeping changes into 2025 and beyond.
Give the People What They Want (and What They Want Are More and More Clean Electrons)
December 13, 2024 – By Mark Barnett, Rebecca Chilton, and Kevin Chen
As we put this post-election issue of Climate Law Matters together, my colleagues and I noticed an interesting common thread in our reflections: without minimizing the impact a negative turn to federal policy could have on many fronts in the fight against climate change, we share the belief that the data tells us something profound about the future of renewable energy that the results of the election might not indicate. In short, renewable energy is not a trend but a powerful industry that cuts across all sectors of the economy, benefits our citizens without regard to party, and is an irreplaceable component not just of reversing climate change but of creating the next wave of national and global growth and prosperity. Clean energy provided more than half of our energy jobs in 2023 – a rate of job creation more than double any other sector of the economy. In the two-year period since the enactment of the Inflation Reduction Act, total clean energy and technology investment grew by 76% over the two years prior to the IRA. Not only has investment in clean energy generation risen by 26% between 2023 and 2024, manufacturing serving the clean energy and ClimateTech space (which indicates a significantly embedded economic commitment) increased by 86%, led by batteries (which doubled between 1H23 and 1H24) and solar and wind component manufacturing (up 709% and 434%, respectively, from their modest pre-IRA baseline).
But perhaps the most potent force driving the continued momentum in the clean energy economy, and particularly the renewable power sector, is the marked uptick in demand for electricity nationwide. After roughly two decades of flat or declining electricity demand, the United States is projected to enter a sustained period of electric load growth in the coming years.
Read our full post here.
Presidential Shakeup (Once Again) Presents Opportunity for State Climate Action
December 9, 2024 – By Basil Seggos and Sarah Main
President Trump’s reelection sent shockwaves through the renewable energy community. With campaign pledges to dismantle Biden-era climate programs funded by the Inflation Reduction Act and the Bipartisan Infrastructure Law and possible cuts to the federal workforce, Trump appears poised to withdraw from global climate leadership.
We’ve been down this road before. When Trump was first elected in 2016, he pulled the United States out of the Paris Climate Agreement and reversed, repealed, or otherwise rolled back nearly 100 environmental regulations. States quickly emerged to establish a bulwark for the environment, and history is set to repeat itself.
Read our full post here.
Treasury Finalizes New Rules for Advanced Manufacturing Production Tax Credit (Section 45X)
November 14, 2024 – By Aaron Lang and Will Holt
On October 28, 2024, the Department of the Treasury and the Internal Revenue Service (collectively “Treasury”) published new final rules for one of the Inflation Reduction Act’s (“IRA”) key clean energy tax credits, the Advanced Manufacturing Production Credit, otherwise known by its Tax Code designation—Section 45X.
Section 45X is different from other IRA tax credits. It applies to manufacturers of specific clean energy technologies and producers of a laundry list of critical minerals for clean energy components rather than clean energy generation and storage developers.
While the new final rules are substantially similar to the rules Treasury initially proposed in December 2023, they address many issues commenters raised during the rulemaking process. We analyze the Section 45X credit and key issues within this post. We also address the interplay between Section 45X and Section 48C (the separate investment tax credit that similarly applies to clean energy manufacturers and critical minerals producers) and give our initial thoughts on how the incoming Trump administration might affect Section 45X and the new rules.
Read our full post here.
A Boon for Biogas: Treasury’s Final Section 48 ITC Rules Resolve Key Concerns for Biogas and RNG Projects
December 9, 2024 – By Aaron Lang and Kevin Chen
On December 4, 2024, the Department of the Treasury finalized new rules governing the Section 48 Investment Tax Credit (“ITC”). The ITC applies to a broad range of clean energy projects, including biogas projects, which were added to the ITC by the Inflation Reduction Act (“IRA”). This post focuses on the ITC rules for biogas projects; it does not cover any other type of energy project under the ITC. It was unclear from Treasury’s proposed rules, issued in November 2023, whether certain renewable natural gas (“RNG”) projects would qualify. Among the concerns were (1) whether the equipment that upgrades biogas to RNG was eligible and (2) whether proposed ownership requirements would exclude certain RNG projects. The final rules largely resolve those issues, making it clearer for certain RNG projects to qualify for the ITC.
Read our full post here.
Massachusetts Permitting and Siting Reform is On the Way! What Does That Mean For Your Projects?
December 12, 2024 – By Zachary Gerson
On November 20, 2024, Massachusetts Governor Maura Healey signed “An Act Promoting a Clean Energy Grid, Advancing Equity, and Protecting Ratepayers,” into law as Chapter 239 of the Acts of 2024. Among other things, the new law includes major reforms to the siting and permitting processes for clean energy projects in MA, including new consolidated permitting paths for both large and small projects. The Act also includes new procurement authorities for energy storage and clean energy generation.
On November 8, 2024, prior to the bill being signed, Foley Hoag partner Zach Gerson and RENEW Northeast Director Francis Pullaro presented an overview of the bill and how clean energy developers should anticipate upcoming changes.
To read through their presentation, please click here.
December 13, 2024 – By Sarah Main
In this year-end edition of EV Roundup, we look back at developments in the EV space for a birds-eye view of where the U.S. stands 2-years post-Inflation Reduction Act (IRA) enactment. Indeed, we are starting to see IRA dollars translate into tangible, on-the-ground projects that are producing real, economic benefits in both red and blue states. These economic benefits are a direct result of IRA-spurred private investment in domestic clean tech and clean energy industries. Perhaps more meaningfully, these economic benefits signify that more Americans are continuing to enter the clean energy work force.
Looking at 2024 EV sales, the U.S. made meaningful strides towards achieving the Biden Administration’s goal of having 50% of all new vehicle sales be electric by 2030. Since the IRA was enacted, purchases of zero-emission vehicles grew to $157 billion, or nearly double where investments were pre-IRA.
There has been much speculation about how the incoming Trump Administration will shape the future of the domestic clean transportation sector. Among other things, the IRA provides consumer tax credits for up to $7,500 for new EVs, $4,000 for used EVs, and tax credits for home chargers that some worry could be unraveled by the incoming Administration. These and other IRA programs that aim to spur domestic industry and continue tariffs on foreign imports are not likely to go away quickly. It’s too soon to say how the markets will react to any policy changes made by the Trump Administration, but it’s a good time to reflect on where we are now and where we need to go to achieve a clean energy transition.
Read the full update here.
Our Most Recent Posts
November 25, 2024 – Eric Wesoff, Canary Media
Eric Wesoff from Canary Media seeks to calm any jitters his readers may have regarding the future of the U.S. energy transition by charting out the data: renewable energy has grown steadily over the last 20 years. Regardless of administration, the clean energy transition continues. Check this article out for a heartening visualization of the expanding clean energy market in the US.
September 25, 2024 – Robinson Meyer, Jesse D. Jenkins, Heatmap News
In this episode of the “Shift Key” podcast from Heatmap News, hosts Robinson Meyer and Jesse D. Jenkins explore the Greenhouse Gas Reduction Fund (“GGRF”) – otherwise known as the $27 billion that the EPA has used to create a network of Green Banks across the country. The Shift Key hosts speak with Jahi Wise, the former director for the Greenhouse Gas Reduction Fund program at the Environmental Protection Agency and Dawn Lippert, the founder and CEO of Elemental Impact, a climate tech investment and nonprofit organization.
December 3, 2024 – Meta
Meta announced it will release a request for proposals (RFP) to identify nuclear energy developers to help the company meet its AI innovation and sustainability objectives — targeting 1-4 gigawatts (GW) of new nuclear generation capacity in the U.S. Our team at Foley Hoag continues to monitor the intersection between AI, data centers, and the increased power generation they require – particularly as it relates to the development of nuclear energy.
