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If you’re like me, you hoped new federal guidance released last week would make it clear if your dream electric vehicle is eligible for money-saving tax credits. That’s not exactly what happened.
The passage of the Inflation Reduction Act — Congress’ big climate package — last year came with a catch for electric vehicle incentives: they’d only apply to U.S.-made and -sourced cars. That promise is how the Biden administration got Sen. Joe Manchin’s critical vote for the climate package.
But the U.S. Treasury Department’s proposed guide to the incentives released last Friday includes a few notable but vague exceptions to the domestic-only promise. For starters, at least 40% of a vehicle’s critical minerals have to be from the U.S. or a country that has a free trade agreement with the U.S. At least half of the EV’s battery components also have to be made or assembled in North America. And both of those percentages will increase every year.
Those rules aren’t what Manchin had in mind, and he has threatened to sue to keep the incentives tightly tied to U.S.-made cars.
Yet even with the Treasury’s exceptions to the domestic requirements, few currently available EVs will be eligible for a $7,500 tax credit. But exactly what EVs are on that short list remain unclear; the Treasury will publish that information here by April 18.
Also limiting the incentives are price caps, household income limits, and other rules that CNBC summed up here.
More clean energy news
🥇 A win for renewables: U.S. renewable electricity generation narrowly surpassed coal for the first time last year, driven largely by new wind and solar power, though experts say quicker progress is needed to meet climate goals. (Grist)
⏩ And a look at the future: Nearly half of the U.S.’s coal capacity operating in 2011 will shut down by the end of 2026, an energy think tank estimates, pointing toward a quicker and more permanent transition than earlier expectations. (Grist)
🌎 How climate failure became a win: After the defeat of a major climate bill in 2009 and a subsequent Republican congressional takeover, environmentalists dove deeper into politics to push for the eventual success of the Inflation Reduction Act. (Politico)
🌊 What’s next for offshore wind: The U.S. Energy Department rolled out a roadmap to achieve its goal of building 30 GW of wind energy by 2030 — enough to power 10 million homes. (Associated Press)
⚡ Electrification educators: A Massachusetts organization trains volunteer “heat pump coaches” who’ve electrified their homes and help answer neighbors’ questions about switching to clean heat. (Canary Media)
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