Clean Energy Applications in America | Green Energy and World
Clean Energy Applications in America and How Green Energy will change the World? The Inflation Reduction Act (IRA), which directs new federal spending to reduce carbon emissions, lower health care costs, fund the Department of Revenue and improve taxpayers’ compliance, was signed into law on August 16, 2022, and was made even more comprehensive with some additions in 2023.
The contribution of these regulations to clean energy is indeed considerable. In fact, a project with the same characteristics can become much more advantageous for investors in the United States compared to other countries despite some high costs such as labor.
The law’s $370 billion investment will lower energy costs for families and small businesses, accelerate private investment in clean energy solutions in every sector of the economy and in every corner of the country, and strengthen supply chains for everything from critical minerals to efficient electrical appliances. It is also thought to create well-paid jobs and new economic opportunities for workers.
Clean Energy Applications in America and Green Energy and World
When I examine the law and the opportunities in America in these aspects, it can be clearly seen that the United States, which is already the most reliable port, has embraced environmental investments more. In addition, the dollar that strengthens against foreign currencies may also contain different opportunities for companies operating on a global scale in terms of purchasing power and cash flow.
The law should be well understood for its positive effects on Internal Rate of Return (IRR), Internal Return on Investment (ROI), Return on Investment, Tax Credit or Deduction. ROI is a simple calculation that shows how much return an investment provides compared to the initial investment amount. The IRR, on the other hand, provides an estimated annual rate of return on investment over time and offers a “barrier rate” to compare other investments with variable cash flows.
The positive impact on IRR when the investor takes advantage of the Tax Credit facilities under the law is really impressive. When we examine the tax reductions under the scope of the law under the title of “Clean Energy”, we come across important topics such as production, investment, fuel and electric vehicles. Of course, we will look at the constructive effects of the law as a whole, not only in terms of tax reduction, but also in terms of incentives under “Carbon Management”.
Clean Energy!
Production Tax Breaks
The tax break for the production of new clean hydrogen is given in four phases to projects whose construction must begin by 2033. In cases where the carbon intensity is 0.45 kg Co2e/kg H2, the Production Tax Credit (PTC) is applied as three dollars H2 per kilogram. When this value is four kg of Co2e/kg H2, the maximum hydrogen production tax reduction is $0.60 H2 per kilogram. Here the density is calculated by The Greenhouse gases, Regulated Emissions, and Energy use in Technologies Model (GREET). Tax breaks; It continues with different supports in the fields of ”New Advanced Manufacturing, Nuclear Energy Production, Expansion of Renewable Electricity Production, New Clean and Green Electricity Production”.
Investment Tax Reliefs
The Investment Tax Credit (ITC) for the extension of these technology-specific energy investments, the investment tax deduction ends in 2024 for most technologies and is replaced by the new technology-independent Clean Electricity ITC, which will start in 2025. Solar power built before January 1, 2025 provides a 30 percent tax credit for geothermal, fiber optic solar power, fuel cell, microturbine, small wind, offshore wind, combined heat and power, waste energy recovery and energy storage. It applies a 10 percent bonus to meeting local production requirements for steel, iron or alloys finished components.
It also applies a 10 percent bonus for projects located in energy communities (undivided fields or fossil fuel communities). Tax Breaks; Support for new clean electricity generation and advanced energy projects continues.
Fuel Tax Reductions
In this application, the new technology neutral two-year tax credit is applied for low-carbon transport fuel. The maximum credit is US$1 per gallon multiplied by an emission factor (or US$1.75 per gallon for sustainable aviation fuel). 1 gallon corresponds to about 3.79 liters. Meanwhile, Sustainable Aviation Fuel (SAF), sustainable aviation fuel, is a biofuel used to power aircraft with similar characteristics to conventional jet fuel but with a smaller carbon footprint.
Depending on the raw material and the technologies used to produce it, SAF can significantly reduce life-cycle greenhouse gas emissions compared to conventional jet fuel. Some emerging SAF pathways even have a net-negative greenhouse gas footprint. Fuel companies in Turkey have already started adding this fuel to their aviation fuel. Tax Breaks; “Expansion of Second Generation Biofuel, Expansion of Biodiesel and Renewable Green Diesel, Expansion of Clean Vehicles, Acquisition of Used Clean Vehicles, Sale of New Commercial Clean Vehicles and Extension of Alternative Fuel Supply Ownership”.
Carbon Management
Carbon Capture and Sequestration
Industrial facilities are supported for Carbon Capture, Utilisation and Storage (CCUS), or $50 to $85 per ton, for carbon capture, utilization and storage. You are given $60 at $35 per ton for producing low- and zero-carbon fuels, chemicals, building materials, and other products, or for the use of CO2 and precursor carbon monoxide retained for improved oil recovery (EOR), improved oil recovery. Once the carbon capture equipment is in service (there is no direct payment option for the last seven years of the loan). Nonprofits and cooperatives can receive direct payment for the full 12 years of the loan.
Low Carbon Material and Building Investments
In addition to the supply of low-carbon materials for federal projects, it supports numerous efforts to standardize the environmental impact description, labeling, and verification of low-carbon concrete and building materials, which is a key component of federal procurement. To support the development of a standardized, high-quality, transparent environmental product declaration for greenhouse gas emissions related to building materials, the Environmental Protection Agency (EPA) has provided $250 million to the Environmental Protection Agency, the Federal Highway Administration (FHA), the Federal Highway Administration and the General Services Administration (GSA), in consultation with the General Services Administration, to identify low-carbon building materials used for federal buildings and federal transportation projects, and $100 million to the EPA for labeling.
In addition, the Federal Emergency Management Agency (FEMA) has been granted new authority to cover the costs associated with low-carbon materials or to promote low-carbon and net-zero energy projects while managing disaster relief. Two billion dollars for FHA to provide or reimburse a two-percent incentive on federal transportation projects for the use of low-carbon building materials that are the same or gradually more expensive than traditional building materials. Budgets of $2.15 billion have been allocated to the Federal Building Fund for GSA to purchase and install low-carbon building materials and products. In addition to these; There is also extensive support for “Biomass, Carbon Removal and Forest Management, Energy Innovation and Residential Energy Efficiency”.
Offshore Wind and Oil and Gas Systems
Offshore Wind projects require an oil and gas lease sale of 60 million acres in the previous year for offshore wind leases over the next 10 years. One acre is about 4,047 m2. The app makes $100 million available for the planning, modeling, analysis and development of inter-regional transmission and optimized integration of energy generated from offshore wind, as well as removes the offshore wind moratorium in the southeastern U.S. and East Gulf and allows leasing on U.S. soil. Coastal states need to use this funding for specific purposes, such as coastal restoration, conservation or financing resilient infrastructure.
It raises offshore oil and gas royalties for Fuel and Gas projects from 12.5 percent to a minimum of 16.66 percent for 10 years after the introduction of this bill. It also increases the minimum bid for onshore oil and gas rentals from two dollars per acre to $10. It is increasing annual rental rates for new onshore oil and gas leases.
In its Emission Reduction projects, Methan supports EPA’s facilities, well operators and communities to enable methane emission reduction activities such as monitoring, reporting, resource laundering, receive technical and financial assistance, establish innovative solutions, reduce negative health impacts and realize environmental restoration. It sets a maximum annual emission rate of 25,000 metric tons of CO2e (ventilated, emitted or ignited) methane waste for a plant and imposes penalty fees for facilities starting at $900 per ton in 2024 and increasing to $500 per ton in 2026.
Financing of clean energy!
There are also very useful practices in the financing of clean energy. The United States Department of Energy (DOE) The Department of Energy is an executive department of the U.S. federal government that oversees U.S. national energy policy and directs the research and development of nuclear energy and nuclear weapons in the United States. The Loan Programs Office (LPO) under this department has received more than $40 billion in loan authorization. The Greenhouse Gas Reduction Fund, Domestic Manufacturing Transformation Grants, the Advanced Defense Production Use Act and the Biofuel Infrastructure also offer numerous opportunities for clean energy financing.
When the advantages of this law are evaluated in terms of hydrogen production, storage and use, it is seen that there are many opportunities. As is known, the energy content of hydrogen by volume is low. This makes it difficult to store hydrogen as it requires high pressures, low temperatures or chemical processes to store it compactly. In addition, the United States is rapidly implementing applications that will be an example to the world in order to increase the hydrogen fuel and the vehicles and industries using this fuel, which are still not widespread enough due to reasons such as electrolysis and / or renewable energy-based electricity generation expenses, but which should be widespread as soon as possible due to their environmental effects.
Such incentives include $30 billion in financing and are expected to encourage domestic production of solar panels, wind turbines, inverters and other important equipment. In summary, Solar, Wind, Carbon Capture, Energy Storage and Hydrogen production support on dozens of issues such as very important steps have been taken to achieve America’s decarbonization goals.
