Internal Revenue Bulletin 2024-32 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2024–32
August 5, 2024
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
TD 10003, page 342.
This document contains final regulations relating to the
excise tax imposed on certain sales by manufacturers, pro-
ducers, or importers of designated drugs. Specifically, the
final regulations set forth procedural provisions relating to
how taxpayers must report liability for such tax. The final
regulations also except such tax from semimonthly deposit
requirements. The final regulations affect manufacturers,
producers, or importers of designated drugs dispensed,
furnished, or administered to individuals under the terms of
Medicare during certain statutory periods.
EMPLOYEE PLANS
Notice 2024-59, page 348.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment rates
for June 2024 used under § 417(e)(3)(D), the 24-month
average segment rates applicable for July 2024, and the
30-year Treasury rates, as reflected by the application of
§ 430(h)(2)(C)(iv).
INCOME TAX
REG-119283-23, page 351.
This document contains proposed regulations relating
to the clean electricity production credit and the clean
electricity investment credit established by the Inflation
Reduction Act of 2022. The proposed regulations would
provide rules for: determining greenhouse gas emissions
rates resulting from the production of electricity; peti-
tioning for provisional emissions rates; and determining
eligibility for these credits in various circumstances. The
proposed regulations would affect all taxpayers who
produce clean electricity and claim the clean electricity
production credit with respect to a facility or the clean
electricity investment credit with respect to a facility or
energy storage technology, as applicable, that is placed
in service after 2024.
Rev. Rul. 2024-15, page 340.
Federal rates; adjusted federal rates; adjusted federal long-
term rate, and the long-term tax exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for August 2024.
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
August 5, 2024 Bulletin No. 2024–32

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7872.)
Rev. Rul. 2024-15
This revenue ruling provides various
prescribed rates for federal income tax
purposes for August 2024 (the current
month). Table 1 contains the short-
term, mid-term, and long-term applica-
ble federal rates (AFR) for the current
month for purposes of section 1274(d)
of the Internal Revenue Code. Table 2
contains the short-term, mid-term, and
long-term adjusted applicable federal
rates (adjusted AFR) for the current
month for purposes of section 1288(b).
Table 3 sets forth the adjusted fed-
eral long-term rate and the long-term
tax-exempt rate described in section
382(f). Table 4 contains the appro-
priate percentages for determining the
low-income housing credit described
in section 42(b)(1) for buildings placed
in service during the current month.
However, under section 42(b)(2), the
applicable percentage for non-federally
subsidized new buildings placed in ser-
vice after July 30, 2008, shall not be
less than 9%. Finally, Table 5 contains
the federal rate for determining the
present value of an annuity, an inter-
est for life or for a term of years, or a
remainder or a reversionary interest for
purposes of section 7520.
REV. RUL. 2024-15 TABLE 1
Applicable Federal Rates (AFR) for August 2024
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
AFR4.95%4.89%4.86%4.84%
110% AFR5.45%5.38%5.34%5.32%
120% AFR5.96%5.87%5.83%5.80%
130% AFR6.46%6.36%6.31%6.28%
Mid-term
AFR4.34%4.29%4.27%4.25%
110% AFR 4.78%4.72%4.69%4.67%
120% AFR5.22%5.15%5.12%5.10%
130% AFR5.66%5.58%5.54%5.52%
150% AFR6.54%6.44%6.39%6.36%
175% AFR7.65%7.51%7.44%7.40%
Long-term
AFR4.52%4.47%4.45%4.43%
110% AFR4.98%4.92%4.89%4.87%
120% AFR5.43%5.36%5.32%5.30%
130% AFR5.89%5.81%5.77%5.74%
REV. RUL. 2024-15 TABLE 2
Adjusted AFR for August 2024
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted AFR3.74%3.71%3.69%3.68%
Mid-term adjusted AFR3.29%3.26%3.25%3.24%
Long-term adjusted AFR3.42%3.39%3.38%3.37%
August 5, 2024 340 Bulletin No. 2024–32

REV. RUL. 2024-15 TABLE 3
Rates Under Section 382 for August 2024
Adjusted federal long-term rate for the current month3.42%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)
3.62%
REV. RUL. 2024-15 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for August 2024
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit8.03%
Appropriate percentage for the 30% present value low-income housing credit 3.44%
REV. RUL. 2024-15 TABLE 5
Rate Under Section 7520 for August 2024
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest
5.2%

Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.
Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of August 2024. See Rev.
Rul. 2024-15, page 340.
Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of August 2024. See Rev. Rul.
2024-15, page 340.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.
Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.
Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.
Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of August 2024. See Rev. Rul.
2024-15, page 340.
Section 7872.—Treatment
of Loans With Below-
Market Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
August 2024. See Rev. Rul. 2024-15, page 340.

Bulletin No. 2024–32 341 August 5, 2024

August 5, 2024 342 Bulletin No. 2024–32
26 CFR 40.0-1;26 CFR 40.6011(a)-1;26 CFR
40.6302(c)-1;26 CFR 47.5000D-0;26 CFR
47.5000D-1;26 CFR 47.5000D-2;26 CFR
47.5000D-3;26 CFR 47.5000D-4
TD 10003
Excise Tax on Designated
Drugs; Procedural
Requirements
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final rule.
SUMMARY: This document contains
final regulations relating to the excise tax
imposed on certain sales by manufactur-
ers, producers, or importers of designated
drugs. Specifically, the final regulations
set forth procedural provisions relating
to how taxpayers must report liability
for such tax. The final regulations also
except such tax from semimonthly deposit
requirements. The final regulations affect
manufacturers, producers, or importers
of designated drugs dispensed, furnished,
or administered to individuals under the
terms of Medicare during certain statutory
periods.
DATES: Effective date: These regulations
are effective on August 5, 2024.
Applicability dates: For dates of appli-
cability, see §§40.0-1(e), 40.6011(a)-1(e),
40.6302(c)-1(f), and 47.5000D-1(b).
FOR FURTHER INFORMATION
CONTACT: Jacob W. Peeples or James
S. Williford at (202) 317-6855 (not a toll-
free number).
SUPPLEMENTARY INFORMATION:
Background
This document amends the Excise Tax
Procedural Regulations (26 CFR part 40)
and adds new part 47 to 26 CFR chapter I
to contain the “Designated Drugs Excise
Tax Regulations” related to the excise tax
imposed by section 5000D of the Internal
Revenue Code (Code) on certain sales by
manufacturers, producers, or importers of
designated drugs (section 5000D tax).
Sections 1191 through 1198 of the
Social Security Act (SSA), added by sec-
tions 11001 and 11002 of Public Law 117-
169, 136 Stat. 1818 (August 16, 2022),
commonly referred to as the Inflation
Reduction Act of 2022 (IRA), require
the Secretary of Health and Human Ser-
vices to establish a Medicare prescription
drug price negotiation program (Medicare
Drug Price Negotiation Program) to nego-
tiate maximum fair prices for certain high
expenditure, single-source drugs covered
under Medicare.
Section 5000D, added to new chap-
ter 50A of the Code by section 11003 of
the IRA, imposes an excise tax on cer-
tain sales by manufacturers, producers, or
importers of designated drugs dispensed,
furnished, or administered to individuals
under the terms of Medicare during a day
that falls within a period described in sec-
tion 5000D(b). The periods described in
section 5000D(b) relate to certain statuto-
rily prescribed milestones in the Medicare
Drug Price Negotiation Program. Because
chapter 50A is a new chapter of the Code,
the existing regulations that prescribe pro-
cedural rules applicable to most Federal
excise taxes do not apply to chapter 50A.
Notice 2023-52 (2023-35 I.R.B. 650;
August 28, 2023) announced that the
Department of the Treasury (Treasury
Department) and the IRS intended to pro-
pose regulations addressing substantive
and procedural issues related to the sec-
tion 5000D tax.
On October 2, 2023, a notice of pro-
posed rulemaking (REG-115559-23) was
published in the Federal Register (88 FR
67690) (proposed regulations). No public
hearing was requested or held. The Trea-
sury Department and the IRS received sev-
eral comments in response to the proposed
regulations. The comments addressing the
proposed regulations are summarized in
the Summary of Comments and Explana-
tion of Revisions section of this preamble.
Summary of Comments and
Explanation of Revisions
I. Overview
As noted in the Background section of
this preamble, the Treasury Department
and the IRS received several public com-
ment submissions in response to the pro-
posed regulations. The public comments
fall into six general categories: timing of
the publication of the proposed regula-
tions; the quarterly filing requirement in
the proposed regulations; the proposed
regulations’ retroactive applicability
dates; the constitutionality of the section
5000D tax; technical issues and questions
relating to the implementation of the sec-
tion 5000D tax itself; and comments on
the Special Analyses provided in the pro-
posed regulations. Each of these catego-
ries of comments is addressed in turn in
parts II through VII of this Summary of
Comments and Explanation of Revisions.
All public comments were considered and
are available at https://www.regulations.gov
or upon request. After full consideration of
the public comments received in response
to the proposed regulations, this Treasury
decision adopts the proposed regulations
with three non-substantive modifications.
Specifically, the final regulations mod-
ify proposed §§40.0-1, 40.6011-1(d), and
40.6302(c)-1 by clarifying that the section
5000D tax is imposed on “the sale of” des-
ignated drugs. The language, as modified,
more closely tracks the language of section
5000D(a).
II. Timing of the Publication of the
Proposed Regulations
A commenter stated that the Treasury
Department and the IRS acted prema-
turely when publishing proposed regu-
lations related to procedural rules prior
to publishing substantive rules for the
section 5000D tax and requested that the
Treasury Department and the IRS with-
draw the proposed regulations until sub-
stantive rules are published.
The section 5000D tax is a self-ex-
ecuting tax – that is, the section 5000D
tax is effective and applicable regardless
of whether implementing regulations are
published by the Treasury Department and
the IRS. See Sundance Helicopters, Inc. v.
United States, 104 Fed. Cl. 1, 11 (2012)
(in determining whether the issuance of
regulations is a precondition to the appli-
cation of a statute, the court followed Tax
Court precedent in Estate of Neumann v.
Comm’r, 106 T.C. 216 (1996) (setting out
the rule that “a tax statute is self-executing
if the regulation referred to in the statute
deals only with how, not whether, the tax

Bulletin No. 2024–32 343 August 5, 2024
is to be applied.”)). Further, under section
5000D(b)(1), the first date that a manu-
facturer, producer, or importer could be
liable for the section 5000D tax is Octo-
ber 2, 2023. As a result, publication of the
proposed regulations was not premature
because liability can arise under section
5000D in the absence of substantive regu-
latory guidance, and taxpayers needed this
procedural guidance on how to meet their
tax reporting and payment obligations for
section 5000D tax liability incurred on
and after October 2, 2023. Accordingly,
the Treasury Department and the IRS are
finalizing the proposed regulations with-
out adopting this comment.
III. Quarterly Filing Requirement
A commenter expressed concern
regarding the proposed regulations’ quar-
terly filing and payment requirement. Spe-
cifically, the commenter stated that – in
the absence of substantive guidance such
as clarification of what sales are subject to
the section 5000D tax – it is “impossible”
for the IRS to determine that a “quarterly
cadence” for filing returns and paying the
section 5000D tax is rational. Further, the
commenter stated that the quarterly filing
requirement will be overly burdensome on
taxpayers.
Generally, §40.6011(a)-1(a)(2)(i) re-
quires that taxpayers subject to Federal
excise tax must file a Form 720, Quar-
terly Federal Excise Tax Return, begin-
ning with the first calendar quarter during
which their Federal excise tax liability
arises. Once the first Form 720 is filed,
a taxpayer is generally required to con-
tinue filing Forms 720 for every calendar
quarter thereafter – regardless of wheth-
er additional Federal excise tax liabilities
are incurred during a particular subse-
quent calendar quarter – until the taxpay-
er permanently ceases all operations with
respect to which the Federal excise tax
liability was incurred. See §§40.6011(a)-
1(a)(2)(i) and 40.6011(a)-2(a)(1). Failure
to file subsequent quarterly returns after
filing the first Form 720 may result in
the assessment of penalties under section
6651(a) of the Code.
In developing the proposed regula-
tions, the Treasury Department and the
IRS recognized that in the context of the
section 5000D tax (under which a tax-
payer may incur liability in a particular
calendar quarter and then never incur lia-
bility again in subsequent calendar quar-
ters), to require a taxpayer to continue to
file Form 720 for every calendar quarter
following the filing of its first Form 720
even if no tax liability is incurred in sub-
sequent calendar quarters would be both
unnecessary for tax administration and
unduly burdensome on the taxpayer. As a
result, the proposed regulations exempted
taxpayers that incur a section 5000D tax
liability (section 5000D taxpayers) and
report that tax liability on a timely filed
Form 720 from the general requirement
to file subsequent Forms 720 if no section
5000D tax liability is incurred during a
subsequent calendar quarter. Specifically,
proposed §40.6011(a)-1(d) required a tax-
payer to file a subsequent Form 720 only
if a new section 5000D tax liability arises
during a particular calendar quarter.
Regarding the requirement to pay
a section 5000D tax liability quarterly
with the taxpayer’s Form 720, gener-
ally, §§40.6071(a)-1(a) and 40.6151(a)-1
require that Form 720 filers must pay the
tax shown on the return at the same time
the return is filed. Providing a different
rule for section 5000D taxpayers would
introduce unnecessary complexity into
the excise tax filing and payment regime.
An increase in complexity could lead to
taxpayer confusion and likely result in
a greater burden on both taxpayers and
the IRS with little to no benefit accruing
to stakeholders. The Treasury Depart-
ment and the IRS also note that proposed
§40.6302(c)-1 exempted the section
5000D tax from the semimonthly deposit
requirements that apply to most other
Federal excise taxpayers. By finalizing
this proposed rule without this modifica-
tion to the requirement to pay with the
quarterly filing, the compliance burden
on section 5000D taxpayers will be fur-
ther reduced.
For these reasons, as well as for rea-
sons similar to those discussed in part II
of this Summary of Comments and Expla-
nation of Revisions (related to the neces-
sity to timely provide section 5000D tax-
payers with procedural guidance on how
to meet their tax reporting and payment
obligations), the Treasury Department and
the IRS are finalizing the proposed regula-
tions without adopting this comment.
IV. Applicability Dates
The proposed regulations provided that
the Treasury decision finalizing the pro-
posed regulations will apply to calendar
quarters beginning on or after October 1,
2023; in other words, the proposed regu-
lations provided that this Treasury deci-
sion will not apply beginning on the date
that it is published in the Federal Regis-
ter, but rather it will retroactively apply
as of the first day of the fourth calendar
quarter of 2023. A commenter requested
that the Treasury Department and the IRS
reconsider the retroactive applicability
dates provided in the proposed regulations
because the section 5000D tax is new.
As discussed in part II of this Summary
of Comments and Explanation of Revi-
sions, the Treasury Department and the
IRS prioritized providing section 5000D
taxpayers with procedural guidance on
how to meet their tax reporting and pay-
ment obligations by October 2, 2023, the
first date when a taxpayer could incur a
section 5000D tax liability. Because the
first date when a taxpayer could incur lia-
bility for the section 5000D tax is Octo-
ber 2, 2023, which falls within the fourth
calendar quarter of 2023, it is appropriate
for the final regulations that provide rules
relating to filing and payment of the sec-
tion 5000D tax to relate back to the begin-
ning of the fourth calendar quarter of 2023
(that is, October 1, 2023), which in accor-
dance with section 7805(b)(1)(B), would
be the first taxable period ending after
October 2, 2023 (that is, the date the pro-
posed regulations were published in the
Federal Register). As a result, the Trea-
sury Department and IRS are finalizing
the proposed applicability dates without
adopting this comment.
V. Constitutionality
Some commenters stated that the
Medicare Drug Price Negotiation Pro-
gram generally, and the section 5000D
tax specifically, may be unconstitutional.
These comments are outside the scope of
the proposed regulations, which set forth
proposed rules for administering a duly
enacted tax law. Therefore, it is not appro-
priate for the Treasury Department and the
IRS to address these comments in the con-
text of this rulemaking.

August 5, 2024 344 Bulletin No. 2024–32
VI. Technical Comments
A commenter requested that the Trea-
sury Department and the IRS consider pro-
viding sales-reporting and calculation “safe
harbors” in these final regulations. Another
commenter stated their belief that Notice
2023-52 requested clarification on how the
Treasury Department and the IRS should
define “sales” for purposes of the section
5000D tax. These comments are outside the
scope of the proposed regulations, which
related only to the procedures for reporting
and paying the section 5000D tax.
VII. Comments on the Special Analyses
A. Paperwork Reduction Act
A commenter requested that the Trea-
sury Department and the IRS reconsider
the paperwork burden estimate in the
Paperwork Reduction Act (44 U.S.C.
3507(d)) (PRA) section of the proposed
regulations because the commenter
believes that the number of estimated
hours is too low. In this request, the
commenter suggested that it is possible
that no taxpayers will ever incur a sec-
tion 5000D tax liability. The commenter
accepted that the Treasury Department
and the IRS do not have historical data on
the number of compliance hours affected
taxpayers may experience if a section
5000D tax liability is incurred and did
not offer a specific estimated number of
hours it views as more accurate than the
estimate provided in the proposed regu-
lations. Similarly, the commenter did not
offer an alternative calculation methodol-
ogy that the Treasury Department and the
IRS could use to provide a better burden
estimate.
The Treasury Department and the IRS
calculated the estimated number of paper-
work burden hours using the long-standing
and established methodology outlined in
Publication 5743, Taxpayer Compliance
Burden, to arrive at the estimated total
annual reporting burden of 1,380 hours
stated in the proposed regulations. For
these reasons, the Treasury Department and
the IRS estimate that this Treasury decision
will impose a total annual reporting burden
of 1,380 hours, as discussed in part II of the
Special Analyses section of this preamble.
However, the Treasury Department and the
IRS will regularly examine and, as nec-
essary, update the estimated total annual
reporting burden of this Treasury decision
as required by the PRA.
B. Regulatory Flexibility Act
A commenter requested that the Treasury
Department and the IRS conduct a Regu-
latory Flexibility Act (5 U.S.C. chapter 6)
(RFA) analysis because the commenter is
concerned that this Treasury decision may
have an indirect effect on small entities. An
agency may properly certify that no RFA
analysis is needed when it determines that
a rule will not have a significant economic
impact on a substantial number of small
entities that are subject to the requirements
of the proposed rule. See Mid-Tex Elec.
Co-op., Inc. v. FERC, 773 F.2d 327, 342
(D.C. Cir. 1985) (holding that Congress did
not intend to require consideration of every
indirect effect that any regulation might
have on small businesses). Accordingly, as
discussed in part III of the Special Analy-
ses section of this preamble, the Treasury
Department and the IRS continue to certify
that this Treasury decision will not create
additional obligations for, or impose a sig-
nificant economic impact on, small entities,
and as a result, a regulatory flexibility anal-
ysis under the RFA is not required.
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Pursuant to the Memorandum of
Agreement, Review of Treasury Regula-
tions under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.
II. Paperwork Reduction Act
The collection of information con-
tained in these final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the PRA under control number 1545-
0023.
The collections of information in
these regulations relate to reporting and
recordkeeping requirements that will
allow taxpayers to meet their tax report-
ing obligations. The collections of infor-
mation would generally be used by the
IRS for tax compliance purposes and by
taxpayers to facilitate proper tax report-
ing and compliance. The reporting and
recordkeeping requirements are covered
within the form and instructions for Form
720.
Because the section 5000D tax is a
new tax that has never been reported to
the IRS, the Treasury Department and
the IRS do not have historical data on the
number of affected taxpayers. The Cen-
ters for Medicare and Medicaid Services
(CMS) has selected 10 drugs for price
negotiation for initial price applicability
year 2026. CMS will select for negotia-
tion a limited number of drugs for each
initial price applicability year after that,
as outlined in the IRA. Further, manufac-
turers, producers, or importers of such
drugs may or may not become subject
to a section 5000D tax liability. Based
on the foregoing, the IRS estimates that
there will be between 0 and 50 taxpayers
during the next 3 years.
If a taxpayer has a section 5000D tax
liability, it would be required to file Form
720 to report such liability. Form 720 is
a quarterly return. A taxpayer would only
be required to file Form 720 during cal-
endar quarters in which the taxpayer has
a section 5000D tax liability. Therefore,
a taxpayer that has a section 5000D tax
liability in one calendar quarter but not in
subsequent calendar quarters would only
be required to file one Form 720.
The respondents with regard to the
section 5000D tax are manufacturers,
producers, or importers of certain drugs.
The Treasury Department and the IRS
estimate the annual burden of the collec-
tions of information as follows (these esti-
mates, which are for PRA purposes only,
are based on the high end of the range of
possible taxpayers and the high end of the
range of the frequency of responses, in
which a taxpayer would have tax liability
in all four calendar quarters):
Estimated frequency of responses:
Quarterly.
Estimated number of responses: 50.

Bulletin No. 2024–32 345 August 5, 2024
Estimated burden time per respondent:
6.9 hours.
Estimated total annual reporting bur-
den: 1,380 hours.
A Federal agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information dis-
plays a valid control number assigned
by OMB. Books or records relating to a
collection of information must be retained
if their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by section 6103.
The Treasury Department and the IRS
received a comment suggesting that the
paperwork burden estimate provided in
the proposed regulations was too low.
However, for the reasons discussed in
detail in the Summary of Comments and
Explanation of Revisions section of this
preamble and in this Special Analyses sec-
tion, the Treasury Department and the IRS
have not changed the estimates provided
herein.
III. Regulatory Flexibility Act
For the reasons discussed in detail in
the Summary of Comments and Explana-
tion of Revisions section of this pream-
ble and in this Special Analyses section,
pursuant to the RFA, it is hereby certi-
fied that these final regulations will not
have a significant economic impact on
a substantial number of small entities.
This certification is based on the fact
that the section 5000D tax is imposed
only on certain sales by manufacturers,
producers, or importers of designated
drugs during periods described in sec-
tion 5000D(b). The periods described in
section 5000D(b) relate to milestones in
the Medicare Drug Price Negotiation Pro-
gram, which involve only certain drugs
with high Medicare expenditures. Drugs
with high Medicare expenditures that are
not already excluded from the Medicare
Drug Price Negotiation Program under an
exception such as the SSA’s small biotech
exception (sections 1192(b) and (d)(2) of
the SSA) are likely to be manufactured,
produced, or imported by large entities, so
if any section 5000D tax liability arises,
an insubstantial number of taxpayers will
be small entities. As noted earlier, data is
not available about the number of taxpay-
ers affected, but the number is likely to be
limited, in part due to the limited number
of drugs selected for the Medicare Drug
Price Negotiation Program in any partic-
ular year. In addition, these final regula-
tions will assist taxpayers in meeting their
tax reporting obligations by providing
clarity on how to report section 5000D
tax liability, which will make it easier for
taxpayers to comply with section 5000D.
Therefore, these final regulations will
not create additional obligations for, or
impose a significant economic impact on,
small entities, and a regulatory flexibility
analysis under the RFA is not required.
IV. Section 7805(f)
Pursuant to section 7805(f) of the
Code, the notice of proposed rulemak-
ing preceding these final regulations was
submitted to the Chief Counsel for the
Office of Advocacy of the Small Business
Administration for comment on its impact
on small business. No comments were
received from the Chief Counsel for the
Office of Advocacy of the Small Business
Administration.
V. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 requires that agencies
assess anticipated costs and benefits and
take certain other actions before issuing a
final rule that includes any Federal man-
date that may result in expenditures in
any one year by a State, local, or Tribal
government, in the aggregate, or by the
private sector, of $100 million in 1995
dollars, updated annually for inflation.
These final regulations do not include any
Federal mandate that may result in expen-
ditures by State, local, or Tribal govern-
ments, or by the private sector, in excess
of that threshold.
VI. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive
order. These final regulations do not have
federalism implications, do not impose
substantial direct compliance costs on
State and local governments, and do not
preempt State law within the meaning of
the Executive order.
Statement of Availability of IRS
Documents
The IRS Notice cited in this pream-
ble is published in the Internal Revenue
Bulletin and is available from the Super-
intendent of Documents, U.S. Govern-
ment Publishing Office, Washington, DC
20402, or by visiting the IRS website at
https://www.irs.gov.
Drafting Information
The principal author of these regula-
tions is Jacob W. Peeples of the Office of
the Associate Chief Counsel (Passthroughs
& Special Industries). However, other per-
sonnel from the Treasury Department and
the IRS participated in their development.
List of Subjects
26 CFR Part 40
Excise taxes, Reporting and record-
keeping requirements.
26 CFR Part 47
Excise taxes.
Adoption of Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS amend 26 CFR chapter I, sub-
chapter D, as follows:
PART 40—EXCISE TAX
PROCEDURAL REGULATIONS
Paragraph 1. The authority citation
for part 40 continues to read in part as fol-
lows:

August 5, 2024 346 Bulletin No. 2024–32
Authority: 26 U.S.C. 7805.
* * * * *
Par. 2. Section 40.0-1 is amended by
revising paragraphs (a) and (e) to read as
follows:
§40.0-1 Introduction.
(a) In general. The regulations in this
part are designated the Excise Tax Proce-
dural Regulations. The regulations in this
part set forth administrative provisions
relating to the excise taxes imposed by
chapters 31 through 34, 36, 38, 39, 49, and
50A of the Internal Revenue Code (Code)
(except for the chapter 32 tax imposed by
section 4181 (firearms tax) and the chap-
ter 36 taxes imposed by sections 4461
(harbor maintenance tax) and 4481 (heavy
vehicle use tax)), and to floor stocks taxes
imposed on articles subject to any of these
taxes. Chapter 31 relates to retail excise
taxes; chapter 32 to manufacturers’ excise
taxes; chapter 33 to taxes imposed on com-
munications services and air transporta-
tion services; chapter 34 to taxes imposed
on certain insurance policies; chapter 36
to taxes imposed on transportation by
water; chapter 38 to environmental taxes;
chapter 39 to taxes imposed on registra-
tion-required obligations; chapter 49 to
taxes imposed on indoor tanning services;
and chapter 50A to taxes imposed on the
sale of designated drugs. References in
this part to taxes also include references
to the fees imposed by sections 4375 and
4376 of the Code. See parts 43, 46 through
49, and 52 of this chapter for regulations
related to the imposition of tax.
* * * * *
(e) Applicability dates—(1) Paragraph
(a). Paragraph (a) of this section applies
to returns required to be filed under
§40.6011(a)-1 for calendar quarters begin-
ning on or after October 1, 2023. For rules
that apply before October 1, 2023, see 26
CFR part 40, revised as of April 1, 2024.
(2) Paragraphs (b) and (c). Para-
graphs (b) and (c) of this section apply
to returns for calendar quarters beginning
after March 31, 2013. For rules that apply
before March 31, 2013, see 26 CFR part
40, revised as of April 1, 2012.
(3) Paragraph (d). Paragraph (d) of
this section applies to returns for calendar
quarters beginning on or after January 19,
2021. For rules that apply before January
19, 2021, see 26 CFR part 40, revised as
of April 1, 2020.
Par. 3. Section 40.6011(a)-1 is
amended by:
1. Revising the first sentence of para-
graph (a)(2)(i).
2. Adding paragraphs (d) and (e).
The revision and additions read as fol-
lows:
§40.6011(a)-1 Returns.
(a) * * *
(2) * * *
(i) * * * Except as provided in para-
graphs (b) through (d) of this section, the
return must be made for a period of one
calendar quarter. * * *
* * * * *
(d) Tax on the sale of designated drugs.
A return that reports liability imposed by
section 5000D of the Internal Revenue
Code must be made for a period of one
calendar quarter. A return must be filed
for each calendar quarter in which liabil-
ity for the tax imposed by section 5000D
is incurred. There is no requirement that
a return be filed for a calendar quarter in
which there is no liability imposed by sec-
tion 5000D.
(e) Applicability dates—(1) Paragraph
(a)(2)(i). Paragraph (a)(2)(i) of this sec-
tion applies to returns filed for calendar
quarters beginning on or after October 1,
2023. For rules that apply before October
1, 2023, see 26 CFR part 40, revised as of
April 1, 2024.
(2) Paragraph (c). See paragraph (c)(2)
of this section.
(3) Paragraph (d). Paragraph (d) of
this section applies to returns filed for
calendar quarters beginning on and after
October 1, 2023.
Par. 4. Section 40.6302(c)-1 is
amended by:
1. Revising paragraphs (e)(1)(iv) and
(v).
2. Adding paragraph (e)(1)(vi).
3. Revising paragraph (f).
The revisions and addition read as fol-
lows:
§40.6302(c)-1 Deposits.
* * * * *
(e) * * *
(1) * * *
(iv) Sections 4375 and 4376 (relating
to fees on health insurance policies and
self-insured insurance plans);
(v) Section 5000B (relating to indoor
tanning services); and
(vi) Section 5000D (relating to the sale
of designated drugs).
* * * * *
(f) Applicability dates—(1) Para-
graphs (a) through (d). Paragraphs (a)
through (d) of this section apply to depos-
its and payments made after March 31,
2013. For rules that apply before March
31, 2013, see 26 CFR part 40, revised as
of April 1, 2013.
(2) Paragraph (e). Paragraph (e) of
this section applies to calendar quarters
beginning on or after October 1, 2023.
For rules that apply before October 1,
2023, see 26 CFR part 40, revised as of
April 1, 2024.
Par. 5. Add part 47 to read as follows:
PART 47—DESIGNATED DRUGS
EXCISE TAX REGULATIONS
Sec.
47.5000D-0 Table of contents.
47.5000D-1 Introduction.
47.5000D-2 - 47.5000D-4 [Reserved]
Authority: 26 U.S.C. 7805.
Section 47.5000D-1 also issued under
26 U.S.C. 5000D.
§47.5000D-0 Table of contents.
This section lists the table of contents
for §§47.5000D-1 through 47.5000D-4.
§47.5000D-1 Introduction.
(a) In general.
(b) Applicability date.
§§47.5000D-2 - 47.5000D-4 [Reserved]
§47.5000D-1 Introduction.
(a) In general. The regulations in this
part are designated the Designated Drugs
Excise Tax Regulations. The regulations
in this part relate to the tax imposed by
section 5000D of the Internal Revenue
Code. See part 40 of this chapter for reg-

Bulletin No. 2024–32 347 August 5, 2024
ulations relating to returns, payments,
and other procedural rules applicable to
this part.
(b) Applicability date. This section
applies to returns filed for calendar quar-
ters beginning on or after October 1, 2023.
§§47.5000D-2 - 47.5000D-4 [Reserved]
Douglas W. O’Donnell,
Deputy Commissioner.
Approved: June 24, 2024.
Aviva R. Aron-Dine,
Acting Assistant Secretary of
the Treasury (Tax Policy).
(Filed by the Office of the Federal Register July 3,
2024, 8:45 a.m., and published in the issue of the
Federal Register for July 5, 2024, 89 FR 55507)

August 5, 2024 348 Bulletin No. 2024–32
Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2024-59
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the inter-
est rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
1
However, an elec-
tion may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Section 1.430(h)(2)-1(d) provides
rules for determining the monthly cor-
porate bond yield curve,
2
and § 1.430(h)
(2)-1(c) provides rules for determining
the 24-month average corporate bond
segment rates used to compute the target
normal cost and the funding target. Con-
sistent with the methodology specified in
§ 1.430(h)(2)-1(d), the monthly corporate
bond yield curve derived from June 2024
data is in Table 2024-6 at the end of this
notice. The spot first, second, and third
segment rates for the month of June 2024
are, respectively, 5.09, 5.28, and 5.52.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to §
430(h)(2)(C)(iv) to be within the applica-
ble minimum and maximum percentages
of the corresponding 25-year average seg-
ment rates. For this purpose, any 25-year
average segment rate that is less than 5%
is deemed to be 5%. The 25-year average
segment rates for plan years beginning in
2023 and 2024 were published in Notice
2022-40, 2022-40 I.R.B. 266 and Notice
2023-66, 2023-40 I.R.B. 992, respec-
tively. The applicable minimum and max-
imum percentages are 95% and 105% for
plan years beginning in 2023 and 2024.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate
bond segment rates applicable for July
2024 without adjustment for the 25-year
average segment rate limits are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
July 2024 4.99 5.29 5.29
The adjusted 24-month average seg-
ment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code. The
24-month averages applicable for July
2024, adjusted to be within the applicable
minimum and maximum percentages of
the corresponding 25-year average seg-
ment rates in accordance with § 430(h)(2)
(C)(iv) of the Code, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable MonthFirst SegmentSecond SegmentThird Segment
2023July 20244.995.295.74
2024July 20244.995.295.59
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to multi-
employer plans pursuant to § 412. Section
431(c)(6)(B) specifies a minimum amount
for the full-funding limitation described in
§ 431(c)(6)(A), based on the plan’s current
liability. Section 431(c)(6)(E)(ii)(I) pro-
vides that the interest rate used to calcu-
late current liability for this purpose must
be no more than 5 percent above and no
more than 10 percent below the weighted
average of the rates of interest on 30-year
1
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).
2
For months before February 2024, the monthly corporate bond yield curve was determined in accordance with Notice 2007-81, 2007-44 I.R.B. 899. Section 1.430(h)(2)-1(d) generally adopts
the methodology for determining the monthly corporate bond yield curve under Notice 2007-81 but includes two enhancements to take into account subsequent changes in the bond market.
Those enhancements are described in the preamble to TD 9986 (89 FR 2127).

Bulletin No. 2024–32 349 August 5, 2024
Treasury securities during the four-year
period ending on the last day before the
beginning of the plan year. Notice 88-73,
1988-2 C.B. 383, provides guidelines for
determining the weighted average interest
rate. The rate of interest on 30-year Trea-
sury securities for June 2024 is 4.45 per-
cent. The Service determined this rate as
the average of the daily determinations of
yield on the 30-year Treasury bond matur-
ing in May 2054. For plan years beginning
in July 2024, the weighted average of the
rates of interest on 30-year Treasury securi-
ties and the permissible range of rates used
to calculate current liability are as follows:
Treasury Weighted Average Rates
For Plan Years Beginning In30-Year Treasury Weighted AveragePermissible Range 90% to 105%
July 20243.523.17 to 3.69
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Section 1.417(e)-1(d)(3) and
Notice 2007-81 provide guidelines for
determining the minimum present value
segment rates. Pursuant to those guidelines,
the minimum present value segment rates
determined for June 2024 are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
June 2024 5.09 5.28 5.52
DRAFTING INFORMATION
The principal author of this notice
is Tom Morgan of the Office of Associ-
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free number).

August 5, 2024 350 Bulletin No. 2024–32
Table 2024-6
Monthly Yield Curve for June 2024
Derived from June 2024 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.55.5320.55.4940.55.5360.55.5680.55.57
1.05.3821.05.4941.05.5361.05.5681.05.57
1.55.2521.55.4941.55.5361.55.5681.55.57
2.05.1422.05.4942.05.5362.05.5682.05.57
2.55.0522.55.4942.55.5362.55.5682.55.57
3.04.9823.05.4943.05.5363.05.5683.05.57
3.54.9323.55.4943.55.5363.55.5683.55.57
4.04.9024.05.4944.05.5464.05.5684.05.57
4.54.8824.55.4944.55.5464.55.5684.55.57
5.04.8825.05.4945.05.5465.05.5685.05.57
5.54.8925.55.4945.55.5465.55.5685.55.57
6.04.9126.05.4946.05.5466.05.5686.05.57
6.54.9426.55.4946.55.5466.55.5686.55.57
7.04.9727.05.4947.05.5467.05.5687.05.57
7.55.0127.55.5047.55.5467.55.5687.55.57
8.05.0528.05.5048.05.5468.05.5688.05.57
8.55.0828.55.5048.55.5468.55.5688.55.57
9.05.1229.05.5049.05.5469.05.5689.05.57
9.55.1629.55.5049.55.5469.55.5689.55.57
10.05.1930.05.5050.05.5470.05.5690.05.57
10.55.2330.55.5050.55.5570.55.5690.55.57
11.05.2631.05.5051.05.5571.05.5691.05.57
11.55.2831.55.5151.55.5571.55.5691.55.57
12.05.3132.05.5152.05.5572.05.5692.05.57
12.55.3332.55.5152.55.5572.55.5792.55.58
13.05.3533.05.5153.05.5573.05.5793.05.58
13.55.3733.55.5153.55.5573.55.5793.55.58
14.05.3934.05.5154.05.5574.05.5794.05.58
14.55.4134.55.5154.55.5574.55.5794.55.58
15.05.4235.05.5255.05.5575.05.5795.05.58
15.55.4335.55.5255.55.5575.55.5795.55.58
16.05.4436.05.5256.05.5576.05.5796.05.58
16.55.4536.55.5256.55.5576.55.5796.55.58
17.05.4637.05.5257.05.5577.05.5797.05.58
17.55.4637.55.5257.55.5577.55.5797.55.58
18.05.4738.05.5258.05.5578.05.5798.05.58
18.55.4838.55.5258.55.5578.55.5798.55.58
19.05.4839.05.5359.05.5579.05.5799.05.58
19.55.4839.55.5359.55.5679.55.5799.55.58
20.05.4940.05.5360.05.5680.05.57100.05.58

Bulletin No. 2024–32 351 August 5, 2024
Part IV
Notice of Proposed
Rulemaking
REG-119283-23
Section 45Y Clean
Electricity Production
Credit and Section
48E Clean Electricity
Investment Credit
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations relating to the clean
electricity production credit and the clean
electricity investment credit established by
the Inflation Reduction Act of 2022. The
proposed regulations would provide rules
for: determining greenhouse gas emis-
sions rates resulting from the production
of electricity; petitioning for provisional
emissions rates; and determining eligi-
bility for these credits in various circum-
stances. The proposed regulations would
affect all taxpayers who produce clean
electricity and claim the clean electricity
production credit with respect to a facility
or the clean electricity investment credit
with respect to a facility or energy storage
technology, as applicable, that is placed
in service after 2024. This document also
provides notice of a public hearing on the
proposed regulations.
DATES: Written or electronic comments
must be received by August 2, 2024. The
public hearing on these proposed regula-
tions is scheduled to be held on August 12,
2024, at 10 a.m. (ET) and August 13, 2024,
at 10 a.m. (ET). On August 13, 2024, the
public hearing will be held by telephone
only. Requests to speak and outlines of
topics to be discussed at the public hearing
must be received by August 2, 2024. If no
outlines are received by August 2, 2024,
the public hearing will be cancelled.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically via the Federal eRulemak-
ing Portal at https://www.regulations.
gov (indicate IRS and REG-119283-23)
by following the online instructions for
submitting comments. Once submitted
to the Federal eRulemaking Portal, com-
ments cannot be edited or withdrawn. The
Department of the Treasury (Treasury
Department) and the IRS will publish for
public availability any comments submit-
ted to the IRS’s public docket. Send paper
submissions to: CC:PA:01:PR (REG-
119283-23), Room 5203, Internal Reve-
nue Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning these proposed
regulations, the Office of Chief Counsel
(Passthroughs and Special Industries) at
(202) 317-6853 (not a toll-free number);
concerning submissions of comments or
the public hearing, Vivian Hayes at (202)
317-6901 (not a toll-free number) or by
email to publichearings@irs.gov (pre-
ferred).
SUPPLEMENTARY INFORMATION:
Background
This notice of proposed rulemaking
contains proposed amendments to the
Income Tax Regulations (26 CFR part
1) to implement sections 45Y and 48E of
the Internal Revenue Code (Code), which
generally replace sections 45 and 48 of
the Code with respect to qualified facili-
ties, and for section 48E, with respect to
energy storage technology, that is placed
in service after December 31, 2024.
The renewable electricity production
credit determined under section 45 of
the Code (section 45 credit) is generally
available for qualified facilities described
in section 45(d), which provides that the
construction of the qualified facilities
must begin before January 1, 2025. Simi-
larly, other than for geothermal heat pump
equipment (described in section 48(a)(3)
(vii)
1
), the energy credit determined under
section 48 of the Code (section 48 credit),
which is an investment credit under sec-
tion 46 of the Code, is generally avail-
able for energy property the construction
of which begins before January 1, 2025.
Therefore, as long as construction begins
on the relevant qualified facility or energy
property before January 1, 2025, a tax-
payer may be able to claim a section 45
credit or section 48 credit, respectively,
even if the taxpayer places the qualified
facility or energy property in service after
December 31, 2024.
Sections 45Y and 48E were added to the
Code, respectively, by sections 13701(a)
and 13702(a) of Public Law 117-169, 136
Stat. 1818, 1982 (August 16, 2022), com-
monly referred to as the Inflation Reduc-
tion Act of 2022 (IRA). Section 13701(c)
of the IRA provides that the clean elec-
tricity production credit determined under
section 45Y (section 45Y credit) applies to
facilities placed in service after December
31, 2024. Similarly, section 13702(c) of
the IRA provides that the clean electricity
investment credit determined under sec-
tion 48E (section 48E credit) applies to
property placed in service after December
31, 2024.
Thus, in some cases, if a taxpayer
places in service a qualified facility or
energy property after 2024, the construc-
tion of which begins before 2025, the
qualified facility or energy property may
be eligible for more than one of the cred-
its determined under section 45, 45Y,
48, or 48E, although a taxpayer can only
claim one of these credits with respect
to such qualified facility or energy prop-
erty. Accordingly, a taxpayer must choose
which one of these credits to claim with
respect to such qualified facility or energy
property. Once the taxpayer has claimed
one of these credits with respect to a qual-
ified facility or an energy property, the
taxpayer cannot claim any other of these
credits with respect to the same qualified
facility or energy property.
1
Section 48(a)(3)(vii) includes as energy property equipment that uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure
(geothermal heat pump property), but only with respect to property the construction of which begins before January 1, 2035.

August 5, 2024 352 Bulletin No. 2024–32
I. Overview of Section 45Y
Section 45Y(a)(1) provides that for pur-
poses of the general business credit under
section 38 of the Code, the section 45Y
credit for any taxable year is an amount
equal to the product of the kilowatt hours
(kWh) of eligible electricity produced by
the taxpayer at a qualified facility, mul-
tiplied by the applicable amount with
respect to such qualified facility. For this
purpose, eligible electricity is electricity
that is either (1) sold by the taxpayer to an
unrelated person during the taxable year
or (2) in the case of a qualified facility that
is equipped with a metering device that is
owned and operated by an unrelated per-
son, sold, consumed, or stored by the tax-
payer during the taxable year.
A. Amount of credit
For purposes of the applicable amount
used in calculating the section 45Y credit,
section 45Y(a)(2) provides a base amount
and a higher alternative amount. Section
45Y(a)(2)(A) provides that the applica-
ble amount will be the base amount of
0.3 cents in the case of a qualified facil-
ity that does not satisfy the requirements
for the higher alternative amount. Section
45Y(a)(2)(B) provides that the alternative
amount of 1.5 cents applies in the case
of any qualified facility (1) with a maxi-
mum net output of less than 1 megawatt
(as measured in alternating current), (2)
the construction of which begins prior to
the date that is 60 days after the Secretary
of the Treasury or her delegate (Secretary)
publishes guidance on the requirements
of section 45Y(g)(9) (wage requirements)
and section 45Y(g)(10) (apprenticeship
requirements),
2
or (3) that satisfies section
45Y(g)(9) and, with respect to the con-
struction of such facility, satisfies section
45Y(g)(10).
Section 45Y(c)(1) provides for an
inflation adjustment for both the base and
alternative amounts. Section 45Y(c)(1)
provides that in the case of a calendar year
beginning after 2024, the 0.3 cent amount
in section 45Y(a)(2)(A) and the 1.5 cent
amount in section 45Y(a)(2)(B) will each
be adjusted by multiplying such amount
by the inflation adjustment factor for the
calendar year in which the sale, consump-
tion, or storage of the electricity occurs.
Section 45Y(c)(1) also addresses the
rounding rules to be applied to this com-
putation. Section 45Y(c)(2) provides that
the Secretary will, not later than April 1
of each calendar year, determine and pub-
lish in the Federal Register the inflation
adjustment factor for such calendar year
in accordance with section 45Y(c).
Section 45Y(g)(7) provides for an
increase in the section 45Y credit amount
for any qualified facility located in an
energy community, and section 45Y(g)
(11) provides for an increase in the section
45Y credit amount if the domestic content
bonus requirement is satisfied.
Section 45Y(g)(7) provides that in the
case of any qualified facility that is located
in an energy community (as defined in
section 45(b)(11)(B)), for purposes of
determining the amount of the credit
under section 45Y(a) with respect to any
electricity produced by the taxpayer at
such facility during the taxable year, the
applicable amount under section 45Y(a)
(2) will be increased by an amount equal
to 10 percent of the amount otherwise in
effect under such paragraph.
Section 45Y(g)(11) provides that in
the case of any qualified facility that sat-
isfies the domestic content bonus require-
ment under section 45Y(g)(11)(B)(i), the
amount of the credit determined under
section 45Y(a) will be increased by an
amount equal to 10 percent of the amount
so determined (as determined without
application of section 45Y(g)(7)). Section
45Y(g)(11)(B)(i) generally provides that
the domestic content bonus requirement
is satisfied with respect to any qualified
facility if the taxpayer certifies to the Sec-
retary (at such time, and in such form and
manner, as the Secretary may prescribe)
that any steel, iron, or manufactured prod-
uct that is a component of such facility
(upon completion of construction) was
produced in the United States (as deter-
mined under section 661 of title 49, Code
of Federal Regulations). Section 45Y(g)
(11)(B)(iii) provides that for purposes of
the domestic content bonus requirement,
the manufactured products that are com-
ponents of a qualified facility upon com-
pletion of construction will be deemed to
have been produced in the United States if
not less than the adjusted percentage (as
determined under section 45Y(g)(11)(C))
of the total cost of all such manufactured
products of such facility are attributable to
manufactured products (including compo-
nents) that are mined, produced, or manu-
factured in the United States.
B. Qualified facility
Section 45Y(b) provides guidance on
the meaning of a qualified facility for pur-
poses of section 45Y. Subject to section
45Y(b)(1)(B) through (D), section 45Y(b)
(1)(A) defines a qualified facility to mean
a facility owned by the taxpayer that is
used for the generation of electricity, that
is placed in service after December 31,
2024, and for which the greenhouse gas
emissions rate (as determined under sec-
tion 45Y(b)(2)) is not greater than zero.
Section 45Y(b)(1)(B) provides that
for purposes of section 45Y, a facility
will only be treated as a qualified facility
during the 10-year period beginning on
the date the facility was originally placed
in service.
Section 45Y(b)(1)(C) provides that a
qualified facility will include a new unit or
any additions of capacity that are placed in
service after December 31, 2024, if in con-
nection with a facility described in section
45Y(b)(1)(A) (without regard to section
45Y(b)(1)(A)(ii) describing the require-
ment that the facility be placed in service
after December 31, 2024) that was placed
in service before January 1, 2025, but only
to the extent of the increased amount of
electricity produced at the facility due to
the new unit or addition of capacity.
Section 45Y(b)(1)(D) provides that
a qualified facility will not include any
facility for which a credit determined
under section 45, 45J, 45Q, 45U, 48, 48A,
or 48E of the Code is allowed under sec-
tion 38 for the taxable year or any prior
taxable year.
Section 45Y(b)(2) describes the green-
house gas emissions rate referenced in
section 45Y(b)(1)(A)(iii). Section 45Y(b)
(2)(A) defines greenhouse gas emissions
2
To meet this requirement, the construction of the qualified facility must begin prior to January 29, 2023. See proposed §1.45Y–3 as proposed in the notice of proposed rulemaking (REG–
100908–23) published in the Federal Register (88 FaR 60018) on August 30, 2023, and corrected at 88 FR 73807 on October 27, 2023.

Bulletin No. 2024–32 353 August 5, 2024
rate for purposes of section 45Y to mean
the amount of greenhouse gases emitted
into the atmosphere by a facility in the
production of electricity, expressed as
grams of CO
2
e per kWh. Section 45Y(e)
(1) defines CO
2
e per kWh for purposes of
section 45Y to mean, with respect to any
greenhouse gas, the equivalent carbon
dioxide (as determined based on global
warming potential) per kWh of electric-
ity produced. Section 45Y(e)(2) defines
greenhouse gas for purposes of section
45Y to have the same meaning given such
term under section 211(o)(1)(G) of the
Clean Air Act (CAA) (42 U.S.C. 7545(o)
(1)(G)) as in effect on August 16, 2022.
Section 45Y(b)(2)(B) provides that in
the case of a facility that produces elec-
tricity through combustion or gasifica-
tion, the greenhouse gas emissions rate
(GHG emissions rate) for such facility is
equal to the net rate of greenhouse gases
emitted into the atmosphere by such
facility (taking into account lifecycle
greenhouse gas emissions, as described
in section 211(o)(1)(H) of the CAA (42
U.S.C. 7545(o)(1)(H))) in the production
of electricity, expressed as grams of CO
2
e
per kWh.
Section 45Y(b)(2)(C) provides for the
establishment of GHG emissions rates for
facilities either through the publication
of emissions rates described in section
45Y(b)(2)(C)(i) or a provisional emis-
sions rate as described in section 45Y(b)
(2)(C)(ii). Section 45Y(b)(2)(C)(i) states
that the Secretary will annually publish
a table that sets forth the GHG emissions
rates for types or categories of facilities,
that a taxpayer will use for purposes of
section 45Y. Section 45Y(b)(2)(C)(ii) pro-
vides that in the case of any facility for
which a GHG emissions rate has not been
established by the Secretary, a taxpayer
that owns such facility may file a petition
with the Secretary for determination of the
GHG emissions rate with respect to such
facility.
Section 45Y(b)(2)(D) provides that for
purposes of section 45Y(b) the amount of
greenhouse gases emitted into the atmo-
sphere by a facility in the production of
electricity cannot include any qualified
carbon dioxide that is captured by the
taxpayer and either (1) disposed of by
the taxpayer in secure geological storage
pursuant to any regulations established
under section 45Q(f)(2), or (2) utilized by
the taxpayer in a manner described in sec-
tion 45Q(f)(5). Section 45Y(e)(3) defines
qualified carbon dioxide for purposes of
section 45Y to mean carbon dioxide cap-
tured from an industrial source that would
otherwise be released into the atmosphere
as industrial emission of greenhouse gas,
is measured at the source of capture and
verified at the point of disposal or utiliza-
tion, and is captured and disposed or uti-
lized within the United States (within the
meaning of section 638(1) of the Code) or
a United States territory, which for pur-
poses of section 45Y and the section 45Y
regulations has the meaning of the term
“possession” of the United States (within
the meaning of section 638(2)).
C. Credit phase-out
Section 45Y(d) describes the credit
phase-out. Section 45Y(d)(1) provides
generally that the amount of the clean
electricity production credit under sec-
tion 45Y(a) for any qualified facility the
construction of which begins during a
calendar year described in section 45Y(d)
(2) is equal to the product of the amount
of the credit determined under section
45Y(a) without regard to section 45Y(d),
multiplied by the phase-out percentage
under section 45Y(d)(2). Section 45Y(d)
(2) provides that the phase-out percentage
is 100 percent for a facility the construc-
tion of which begins during the first cal-
endar year following the applicable year;
75 percent for a facility the construction
of which begins during the second cal-
endar year following the applicable year;
50 percent for a facility the construction
of which begins during the third calendar
year following the applicable year; and 0
percent for a facility the construction of
which begins during any calendar year
subsequent to the calendar year described
in section 45Y(d)(2)(C). Section 45Y(d)
(3) defines the “applicable year” for pur-
poses of section 45Y(d) to mean the later
of the calendar year in which the Secretary
determines that the annual greenhouse gas
emissions from the production of electric-
ity in the United States are equal to or less
than 25 percent of the annual greenhouse
gas emissions from the production of elec-
tricity in the United States for calendar
year 2022, or 2032.
D. Special rules
Section 45Y(g) provides special rules
for section 45Y. Section 45Y(g)(1) pro-
vides that consumption, sales, or storage
is taken into account under section 45Y
only with respect to electricity the produc-
tion of which is within the United States
(within the meaning of section 638(1)), or
a United States territory, which for pur-
poses of section 45Y and the section 45Y
regulations has the meaning of the term
“possession” of the United States (within
the meaning of section 638(2)).
Section 45Y(g)(2) provides a rule for
combined heat and power system (CHP)
property. For purposes of section 45Y(a),
section 45Y(g)(2)(A) generally provides
that the kWh of electricity produced by a
taxpayer at a qualified facility will include
any production in the form of useful ther-
mal energy by any CHP property within
such facility, and the amount of green-
house gases emitted into the atmosphere
by such facility in the production of such
useful thermal energy will be included
for purposes of determining the GHG
emissions rate for such facility. Section
45Y(g)(2)(B) defines CHP property for
purposes of section 45Y(g)(2) to have the
same meaning given such term by section
48(c)(3) (without regard to section 48(c)
(3)(A)(iv), (B), and (D) thereof). Section
45Y(g)(2)(C) provides the necessary
conversion from BTU to kWh for a tax-
payer to calculate a section 45Y credit
for useful thermal energy produced by a
CHP property.
Section 45Y(g)(3) provides that in the
case of a qualified facility in which more
than one person has an ownership inter-
est, except to the extent provided in reg-
ulations prescribed by the Secretary, pro-
duction from the facility will be allocated
among such persons in proportion to their
respective ownership interests in the gross
sales from such facility.
Section 45Y(g)(4) provides that per-
sons will be treated as related to each
other if such persons would be treated as
a single employer under the regulations
prescribed under section 52(b). In the
case of a corporation that is a member of
an affiliated group of corporations filing a
consolidated return, such corporation will
be treated as selling electricity to an unre-
lated person if such electricity is sold to

August 5, 2024 354 Bulletin No. 2024–32
such a person by another member of such
group.
Section 45Y(g)(5) provides that under
regulations prescribed by the Secretary,
rules similar to the rules of section 52(d)
will apply to a pass-thru in the case of
estates and trusts.
Section 45Y(g)(6) provides for the
allocation of the credit to patrons of an
agricultural cooperative.
Section 45Y(g)(8) provides that rules
similar to the rules of section 45(b)(3) will
apply to a credit reduced for tax-exempt
bonds.
Section 45Y(g)(9) provides that rules
similar to the rules of section 45(b)(7)
apply with respect to wage requirements.
Section 45Y(g)(10) provides rules similar
to the rules of section 45(b)(8) apply with
respect to apprenticeship requirements.
II. Overview of Section 48E
For purposes of the general business
credit under section 38, which includes
the investment credit under section 46,
section 48E(a)(1) provides a credit for any
taxable year in which a qualified invest-
ment is made with respect to any qualified
facility and any energy storage technology
(EST).
A. Amount of credit
The amount of the section 48E credit is
equal to the applicable percentage of the
qualified investment in any qualified facil-
ity and any EST. Section 48(E)(a)(2) pro-
vides a base rate and a higher alternative
rate for the applicable percentage. Section
48E(a)(2)(A)(i) provides that in the case
of a qualified facility that does not satisfy
the requirements for the higher alterna-
tive rate, the base rate will be 6 percent.
Section 48E(a)(2)(A)(ii) provides that the
alternative rate of 30 percent applies in
the case of any qualified facility (1) with a
maximum net output of less than 1 mega-
watt (as measured in alternating current),
(2) the construction of which begins prior
to the date that is 60 days after the Sec-
retary publishes guidance on the prevail-
ing wage requirements of section 48E(d)
(3) and the apprenticeship requirements
of section 48E(d)(4),
3
or (3) that satis-
fies the prevailing wage requirements of
section 48E(d)(3) and, with respect to the
construction of such facility, satisfies the
apprenticeship requirements of section
48E(d)(4).
Similarly, section 48E(a)(2)(B)(ii) pro-
vides that the alternative rate of 30 percent
applies in the case of an EST (1) with a
capacity of less than 1 megawatt, (2) the
construction of which begins prior to the
date that is 60 days after the Secretary
publishes guidance on the requirements
of section 48E(d)(3) and (4)
4
(prevailing
wage and apprenticeship requirements,
respectively), or (3) that satisfies section
48E(d)(3) and with respect to the construc-
tion of such EST, satisfies section 48E(d)
(4). Section 48E(a)(2)(B)(i) provides that
in the case of an EST that does not satisfy
the requirements for the alternative rate,
the base rate will be 6 percent.
Section 48E(a)(3)(A) provides for
an increase in credit rate for a qualified
facility or EST located in an energy com-
munity (as defined in section 45(b)(11)
(B)) and section 48E(a)(3)(B) similarly
provides for an increase in credit rate for
a qualified facility or EST that meets the
domestic content bonus requirements.
B. Qualified investment with respect to
a qualified facility
Section 48E(b) describes a qualified
investment with respect to a qualified
facility. Generally, for purposes of section
48E(a), section 48E(b)(1)(A) and (B)(i)
provide that the qualified investment with
respect to a qualified facility for any tax-
able year is the sum of the basis of any
qualified property placed in service by the
taxpayer during such taxable year that is
part of a qualified facility, plus the amount
of expenditures that are paid or incurred
by the taxpayer for qualified interconnec-
tion property that is properly chargeable to
capital account of the taxpayer.
Section 48E(b)(2) provides that for
purposes of section 48E, qualified prop-
erty means property that is tangible per-
sonal property, or other tangible property
(not including a building or its structural
components), but only if such property
is used as an integral part of the qualified
facility; with respect to which depreciation
(or amortization in lieu of depreciation) is
allowable; and the construction, recon-
struction, or erection of which is com-
pleted by the taxpayer, or that is acquired
by the taxpayer provided the original use
of such property commences with the tax-
payer.
Section 48E(b)(1)(B)(i)(I) and (II) pro-
vide that qualified interconnection prop-
erty must be in connection with a qualified
facility that has a maximum net output of
not greater than 5 megawatts (as measured
in alternating current) and be placed in
service during the taxable year of the tax-
payer. Section 48E(b)(4) provides that the
term “qualified interconnection property”
has the meaning given such term in sec-
tion 48(a)(8)(B).
Section 48E(b)(3)(A) provides that for
purposes of section 48E, the term “quali-
fied facility” means a facility that is used
for the generation of electricity, which
is placed in service after December 31,
2024, and for which the anticipated GHG
emissions rate (as determined under sec-
tion 48E(b)(3)(B)(ii)) is not greater than
zero.
Section 48E(b)(3)(B) provides addi-
tional rules for a qualified facility. Sec-
tion 48E(b)(3)(B)(i) provides rules on
an expansion of facility and incremental
production stating that rules similar to the
rules of section 45Y(b)(1)(C) apply for
purposes of section 48E(b)(3). Section
48E(b)(3)(B)(ii) provides rules to deter-
mine the GHG emissions rate of a qual-
ified facility by stating that rules similar
to the rules of section 45Y(b)(2) apply for
purposes of section 48E(b)(3).
Section 48E(b)(3)(C) provides that
a qualified facility will not include any
facility for which a renewable electricity
production credit determined under sec-
tion 45, an advanced nuclear power facil-
ity production credit determined under
section 45J, a carbon oxide sequestration
3
To meet this requirement, the construction of the qualified facility must begin prior to January 29, 2023. See proposed §1.48E–3 as proposed in the notice of proposed rulemaking (REG–
100908–23) published in the Federal Register (88 FR 60018) on August 30, 2023, and corrected at 88 FR 73807 on October 27, 2023.
4
To meet this requirement, the construction of the EST must begin prior to January 29, 2023. See proposed §1.48E–3 as proposed in the notice of proposed rulemaking (REG–100908–23)
published in the Federal Register at 88 FR 60018 on August 30, 2023, and corrected at 88 FR 73807 on October 27, 2023.

Bulletin No. 2024–32 355 August 5, 2024
credit determined under section 45Q, a
zero-emission nuclear power production
credit determined under section 45U, a
clean electricity production credit deter-
mined under section 45Y, an energy credit
determined under section 48, or a quali-
fying advanced coal project credit under
section 48A, is allowed under section 38
for the taxable year or any prior taxable
year. Section 48E(b)(5) provides a rule for
coordination with the rehabilitation credit
stating that the qualified investment with
respect to any qualified facility for any
taxable year will not include that portion
of the basis of any property that is attrib-
utable to qualified rehabilitation expendi-
tures (as defined in section 47(c)(2) of the
Code).
Section 48E(b)(6) provides that for pur-
poses of section 48E(b), the terms “CO
2
e
per kWh” and “greenhouse gas emissions
rate” have the same meaning given such
terms under section 45Y. Section 48E(f)
provides that, in section 48E, the term
“greenhouse gas” has the same meaning
given such term under section 45Y(e)(2).
C. Qualified investment with respect to
an energy storage technology
Section 48E(c) describes a qualified
investment with respect to EST. For pur-
poses of section 48E(a), section 48E(c)(1)
provides that the qualified investment with
respect to EST for any taxable year is the
basis of any EST placed in service by the
taxpayer during such taxable year. Sec-
tion 48E(c)(2) provides that for purposes
of section 48E, the term “energy storage
technology” has the meaning given such
term in section 48(c)(6) (except that sec-
tion 48(c)(6)(D) will not apply). Section
48(c)(6)(A)(i) defines “energy storage
technology” to mean property (other than
property primarily used in the transporta-
tion of goods or individuals and not for
the production of electricity) that receives,
stores, and delivers energy for conversion
to electricity (or, in the case of hydrogen,
which stores energy), and has a nameplate
capacity of not less than 5 kWh. Section
48(c)(6)(A)(ii) provides that the term
“energy storage technology” also includes
thermal energy storage property. Section
48(c)(6)(B) describes a rule for modifica-
tions of certain property.
Section 48(c)(6)(C)(i) defines “ther-
mal energy storage property” to mean for
purposes of section 48(c)(6), subject to
section 48(c)(6)(C)(ii), property compris-
ing a system that is directly connected to
a heating, ventilation, or air conditioning
system, removes heat from, or adds heat
to, a storage medium for subsequent use,
and provides energy for the heating or
cooling of the interior of a residential or
commercial building. Section 48(c)(6)(C)
(ii) describes the exclusion that thermal
energy storage property will not include
a swimming pool, combined heat and
power system property, or a building or its
structural components.
Section 48E(d) provides special rules
for section 48E, all of which refer to other
provisions. Section 48E(d)(1) provides a
rule for qualified progress expenditures,
stating that rules similar to the rules of
former section 46(c)(4) and (d) (as in
effect on the day before the date of the
enactment of the Revenue Reconcilia-
tion Act of 1990) apply for purposes of
section 48E(a).
5
Section 48E(d)(2) pro-
vides a special rule for property financed
by subsidized energy financing or private
activity bonds, stating that rules similar to
the rules of section 45(b)(3) apply. Section
48E(d)(3) provides a rule for prevailing
wage requirements, stating that rules sim-
ilar to the rules of section 48(a)(10) apply.
Likewise, section 48E(d)(4) provides a
rule for apprenticeship requirements stat-
ing that rules similar to the rules of section
45(b)(8) apply. Lastly, section 48E(d)(5)
provides a rule for the domestic content
requirement for elective payment stating
that in the case of a taxpayer making an
election under section 6417 with respect
to a credit under section 48E, rules similar
to the rules of section 45Y(g)(12) apply.
D. Credit phase-out
Section 48E(e) describes the credit
phase-out. Section 48E(e)(1) provides
generally that the amount of the clean
electricity investment credit under section
48E(a) for any qualified investment with
respect to any qualified facility or EST the
construction of which begins during a cal-
endar year described in section 48E(e)(2)
is equal to the product of the amount of the
credit determined under section 48E(a)
without regard to section 48E(e), multi-
plied by the phase-out percentage under
section 48E(e)(2). Section 48E(e)(2) pro-
vides that the phase-out percentage is 100
percent for any qualified investment with
respect to any qualified facility or EST the
construction of which begins during the
first calendar year following the applicable
year; 75 percent for any qualified invest-
ment with respect to any qualified facility
or EST the construction of which begins
during the second calendar year follow-
ing the applicable year; 50 percent for any
qualified investment with respect to any
qualified facility or EST the construction
of which begins during the third calendar
year following the applicable year; and 0
percent for any qualified investment with
respect to any qualified facility or EST the
construction of which begins during any
calendar year subsequent to the calendar
year described in section 48E(e)(2)(C).
Section 48E(e)(3) defines the “applicable
year” for purposes of section 48E(e) to
have the same meaning given such term in
section 45Y(d)(3).
E. Recapture rules
For purposes of the recapture rules
under section 50(a), section 48E(g) pro-
vides a special recapture rule applicable
to qualified facilities. Specifically, sec-
tion 48E(g) provides that, for purposes
of section 50, if the Secretary determines
that the GHG emissions rate for a qual-
ified facility is greater than 10 grams of
CO
2
e per kWh, any property for which a
credit was allowed under section 48E with
respect to such facility ceases to be invest-
ment credit property in the taxable year in
which the determination is made.
III. Notice 2022-49
On October 24, 2022, the Treasury
Department and the IRS published Notice
2022-49, 2022-43 I.R.B. 321. The notice
requested general comments on issues
arising under sections 45Y and 48E, as
5
The rules provided by §1.46-5 related to qualified progress expenditures apply for purposes of section 48E(a).

August 5, 2024 356 Bulletin No. 2024–32
well as on issues relating to three other
credits. For section 45Y, the notice spe-
cifically requested comments concerning
(1) industry standards for taxpayer eligi-
bility for the credit, (2) what the Treasury
Department and the IRS should consider,
including around the scope and factors,
for the annual GHG emissions rate table,
(3) whether guidance is needed to clarify
cases in which a metering device is owned
and operated by an unrelated person or in
which electricity produced at such a qual-
ified facility with such a device is sold,
consumed or stored by the taxpayer, and
(4) what procedures the Treasury Depart-
ment and the IRS should provide for a
taxpayer whose facility does not have an
emissions rate established by the annual
rate table, and what should the Secretary
consider in making such a determination.
For section 48E, the notice specifically
requested comments concerning what
industry mechanisms currently exist for a
taxpayer to demonstrate eligibility for the
credit.
The Treasury Department and the IRS
received over 100 comments specifically
addressing sections 45Y and 48E from
industry participants and other stakehold-
ers. The Treasury Department and the IRS
appreciate the commentors’ interest and
engagement on these issues. These com-
ments have been carefully considered in
the preparation of these proposed regula-
tions.
IV. Prior Guidance
On August 30, 2023, the Treasury
Department and the IRS published a notice
of proposed rulemaking and a notice of
public hearing (REG-100908-23) in the
Federal Register (88 FR 60018), provid-
ing guidance on the prevailing wage and
registered apprenticeship (PWA) require-
ments under sections 45, 45Y, 48, 48E and
several other sections of the Code (August
Proposed Regulations). The August Pro-
posed Regulations also proposed guidance
on the one-megawatt exception under sec-
tions 45, 45Y, 48, and 48E (One-Megawatt
Exception). Under this exception, with
respect to certain facilities with a max-
imum net output (or capacity for energy
storage technology under section 48E) of
less than one megawatt, increased credit
amounts are available.
On November 22, 2023, the Treasury
Department and the IRS published a notice
of proposed rulemaking and a notice of
public hearing (REG- 132569-17) in the
Federal Register (88 FR 82188), provid-
ing guidance under section 48 of the Code.
Among other matters, the proposed regu-
lations under section 48 (Section 48 Pro-
posed Regulations) withdrew and repro-
posed the regulations in §1.48-13 from the
August Proposed Regulations regarding
the PWA requirements under section 48,
the One-Megawatt Exception under sec-
tion 48(a)(9)(B)(i), and the recapture rules
under section 48(a)(10)(C).
Explanation of Provisions
I. Rules Applicable to the Clean
Electricity Production Tax Credit
The proposed regulations under section
45Y are organized in five sections, pro-
posed §§1.45Y-1 through 1.45Y-5 (sec-
tion 45Y regulations). Proposed §1.45Y-1
would provide an overview of the section
45Y regulations, generally applicable
definitions, and general rules applicable
to section 45Y, including a rule for calcu-
lating the credit for a CHP property. Pro-
posed §1.45Y-2 would provide rules relat-
ing to qualified facilities for purposes of
the section 45Y credit. Section 1.45Y-3 is
reserved for rules relating to the increased
credit amount for meeting the prevailing
wage and apprenticeship requirements. A
cross reference will be added to §1.45Y-3
in the final regulations after §1.45Y-3 is
finalized. Proposed §1.45Y-4 would pro-
vide the rules of general application under
section 45Y, including rules that attribute
production to the taxpayer, rules for the
expansion of a facility and incremental
production, and rules for retrofits of an
existing facility. Proposed §1.45Y-5 would
provide rules pertaining to the determina-
tion of a GHG emissions rate for a facility
under section 45Y.
A. Amount of credit
Proposed §1.45Y-1 would provide an
overview of the section 45Y regulations
and definitions of terms for purposes of
the section 45Y regulations, including
the terms “combined heat and power sys-
tem (CHP) property,” “metering device,”
“related person,” “unrelated person,” and
“qualified facility.”
Proposed §1.45Y-1(a)(5)(i) would
define, for purposes of section 45Y(a)(1)
(A)(ii)(II), the term “metering device” as
equipment that is owned and operated by
an unrelated person (as defined in para-
graph (a)(11) of this section) for energy
revenue metering to measure and register
the continuous summation of an electric-
ity quantity with respect to time. Further,
proposed §1.45Y-1(a)(5)(ii) would pro-
vide standards for maintaining and oper-
ating a metering device for purposes of
section 45Y(a)(1)(A)(ii)(II) and proposed
§1.45Y-1(a)(5) by requiring a metering
device to be maintained in proper work-
ing order according to the instructions of
its manufacturer. Proposed §1.45Y-1(a)
(5)(ii) would also provide that a metering
device should meet the requirements of
the American National Standards Institute
C12.1-2022 standard, or subsequent revi-
sions, be revenue grade with a +/- 0.5%
accuracy, and be properly calibrated. Pro-
posed §1.45Y-1(a)(5)(iii) would provide
that for purposes of monitoring the meter-
ing device, the unrelated person may share
network equipment, such as spare fiber
optic cable owned by the taxpayer that
produces the electricity, and may co-lo-
cate network equipment in the taxpay-
er’s facilities. Proposed §1.45Y-1(a)(5)
(iv) would provide examples illustrating
the proposed rules provided by proposed
§1.45Y-1(a)(5).
Proposed §1.45Y-1(a)(7)(i) would pro-
vide that for purposes of section 45Y(a),
the term “related person” means a per-
son who is related to another person if
such person would be treated as a single
employer under the regulations in 26 CFR
chapter 1 under section 52(b) of the Code.
Proposed §1.45Y-1(a)(7)(ii) would pro-
vide that in the case of a corporation that
is a member of a consolidated group (as
defined in §1.1502-1(h)), such corporation
will be treated as selling electricity to an
unrelated person if such electricity is sold
to an unrelated person by another member
of such group.
Proposed §1.45Y-1(a)(11) would pro-
vide that for purposes of section 45Y(a),
the term “unrelated person” means a
person who is not a related person as
defined in section 45Y(g)(4) and proposed
§1.45Y-1(a)(7). In the case of sales of

Bulletin No. 2024–32 357 August 5, 2024
electricity to an individual consumer, such
sales will be treated as sales to an unre-
lated party for purposes of the section 45Y
credit. Proposed §1.45Y-1(a)(11) provides
an example illustrating the application of
these rules.
Proposed §1.45Y-1(b)(1) would
describe the calculation of the section
45Y credit, providing that the credit is an
amount equal to the product of the kWh
of electricity that is produced by the tax-
payer at a qualified facility (as defined in
proposed §1.45Y-2(a)) and sold by the
taxpayer to an unrelated person during the
taxable year, multiplied by the applicable
amount (as described in proposed §1.45Y-
1(b)) with respect to such qualified facil-
ity. Proposed §1.45Y-1(b)(1) would fur-
ther provide that in the case of a qualified
facility that is equipped with a metering
device that is owned and operated by an
unrelated person, the section 45Y credit
for any taxable year is an amount equal to
the product of the kWh of electricity that
is both produced at the qualified facility
(as defined in proposed §1.45Y-2(a)) and
sold, consumed, or stored by the taxpayer
during the taxable year, multiplied by the
applicable amount with respect to such
qualified facility. Proposed §1.45Y-1(b)
(1) would also provide that only one sec-
tion 45Y credit may be claimed for each
kWh of electricity produced by the tax-
payer at a qualified facility.
Proposed §1.45Y-1(b)(2)(i) would
define the applicable amount as the base
amount described in §1.45Y-1(b)(2)(ii)
or the alternative amount described in
§1.45Y-1(b)(2)(iii). Proposed §1.45Y-
1(b)(2)(i) would further provide that the
applicable amount is subject to the infla-
tion adjustment as provided in section
45Y(c)(1) and proposed §1.45Y-1(b)
(3), and that the applicable amount may
also be increased as provided in section
45Y(g)(7)) and proposed §1.45Y-1(b)
(4), in the case of a qualified facility that
is located in an energy community. Pro-
posed §1.45Y-1(b)(2)(ii) would describe
the base amount as 0.3 cents in the case
of any qualified facility that does not sat-
isfy the requirements provided in section
45Y(a)(2)(B). Proposed §1.45Y-1(b)(2)
(iii) would describe the alternative amount
as 1.5 cents if prevailing wage and appren-
ticeship requirements are satisfied as pro-
vided in section 45Y(a)(2)(B).
Proposed §1.45Y-1(b)(3) would pro-
vide the rules related to the inflation
adjustment factor applicable to the sec-
tion 45Y credit. Proposed §1.45Y-1(b)
(4) would provide the rules applicable to
the energy communities increase in credit.
Proposed §1.45Y-1(b)(5) would provide
the domestic content bonus credit amount.
Proposed §1.45Y-1(c) would provide
the credit phase-out rules. Generally,
proposed §1.45Y-1(c)(1) would provide
that the amount of the clean electricity
production credit under section 45Y(a)
for any qualified facility the construction
of which begins during a calendar year
described in section 45Y(d)(2) is equal
to the product of the amount of the credit
determined under section 45Y(a) without
regard to the credit phaseout rules of sec-
tion 45Y(d) (credit phase-out), multiplied
by the phase-out percentage provided in
section 45Y(d)(2). Proposed §1.45Y-1(c)
(2) would provide that the phase-out per-
centage is 100 percent for a facility the
construction of which begins during the
first calendar year following the appli-
cable year; 75 percent for a facility the
construction of which begins during the
second calendar year following the appli-
cable year; 50 percent for a facility the
construction of which begins during the
third calendar year following the applica-
ble year; and 0 percent for a facility the
construction of which begins during any
calendar year subsequent to the calendar
year described in section 45Y(d)(2)(C).
Proposed §1.45Y-1(c)(3) would define
the “applicable year” for purposes of pro-
posed §1.45Y-1(c) to mean the later of
the calendar year in which the Secretary
makes the determination that the annual
greenhouse gas emissions from the pro-
duction of electricity in the United States
are equal to or less than 25 percent of the
annual greenhouse gas emissions from
the production of electricity in the United
States for calendar year 2022, or 2032.
Proposed §1.45Y-1(c)(4) would provide
that, for the purposes of determining the
applicable year, the annual greenhouse
gas emissions from the production of elec-
tricity in the United States for any year
must be assessed separately using both
the Energy Information Administration’s
(EIA) Electric Power Annual, using the
sum of the annual carbon dioxide emis-
sions data from conventional power plants
and combined heat and power plants
as currently listed in Table 9.1 and the
Monthly Energy Review annual carbon
dioxide emissions from the combustion
of biomass to produce electricity in the
electric power sector as currently listed
in Table 11.7, and the U.S. Environmen-
tal Protection Agency (EPA) Inventory
of U.S. Greenhouse Gas Emissions and
Sinks (GHGI) annual electric power-re-
lated carbon dioxide, methane, and nitrous
oxide emissions data including carbon
dioxide emissions from the combustion
of biomass to produce electricity. In the
most current version of the GHGI, annual
fossil and biogenic CO
2
from electricity
production in the electric power sector is
available in Table 2-11 and Tables 3-120
and 3-122, respectively; and CH
4
and
N
2
O from electricity production in the
electric power sector is available in Table
3-8 and Table 3-9, respectively. Based on
current and publicly available data in the
2024 GHGI, the estimate for 2022 GHG
emissions associated with the production
of electricity is 1,613 million metric tons
(MMT) CO
2
e. Currently, explicit data on
industrial and commercial sector GHG
emissions from the production of electric-
ity is not disaggregated from overall sec-
toral totals. See GHGI, https://www.epa.
gov/ghgemissions/inventory-us-green-
house-gas-emissions-and-sinks.
For 2022, the EIA Electric Power
Annual states that the annual carbon diox-
ide emissions from conventional power
plants and combined heat and power
plants are 1,650 MMT, and the Monthly
Energy Review annual carbon dioxide
emissions from the combustion of biomass
to produce electricity in the electric power
sector are 35 MMT. Thus, the EIA’s data
reflects a total of 1,685 MMT in 2022. See
EIA Electric Power Annual (https://www.
eia.gov/electricity/annual); MER (https://
eia.gov/totalenergy/monthly/).
Proposed §1.45Y-1(c)(5) would pro-
vide that, for the purposes of determin-
ing the applicable year, the Secretary
will make such determination only if the
annual greenhouse gas emissions from
the production of electricity in the United
States, as determined separately under
both of the data sources described in pro-
posed §1.45Y-1(c)(4), for the year is equal
to or less than 25 percent of the annual
greenhouse gas emissions from the pro-

August 5, 2024 358 Bulletin No. 2024–32
duction of electricity in the United States
for calendar year 2022. Proposed §1.45Y-
1(c)(5) would provide that if a data source
described in proposed §1.45Y-1(c)(4)
becomes unavailable (for example, it is no
longer published or it does not provide the
specified data), the Secretary must desig-
nate a similar data source to replace the
unavailable data source. Requiring the
applicable year to be determined using data
from the EIA’s Electric Power Annual and
Monthly Energy Review and the EPA’s
GHGI ensures that this important deter-
mination is made transparently and based
on reliable information. Both well-estab-
lished data sources are representative of
the annual greenhouse gas emissions from
the production of electricity in the United
States, but there are slight differences in
the greenhouse gases and the emissions
sources covered by each data source.
There are other United States Govern-
ment greenhouse gas datasets that could
serve as the basis for the Secretary’s
determination as to whether the annual
greenhouse gas emissions from the pro-
duction of electricity in the United States
are equal to or less than 25 percent com-
pared to 2022. Two such datasets are the
EPA Greenhouse Gas Reporting Program
(GHGRP) and Emissions & Generation
Resource Integrated Database (eGRID).
The Treasury Department and the IRS
request comment on which datasets are
most appropriate to determine the applica-
ble year and why.
Proposed §1.45Y-1(d) would pro-
vide requirements for CHP property and
special rules for calculating the section
45Y credit for CHP property. Proposed
§1.45Y-1(d)(1) would provide that CHP
property must produce at least 20 percent
of its total useful energy in the form of
thermal energy that is not used to produce
electrical or mechanical power (or com-
bination thereof), and at least 20 percent
of its total useful energy in the form of
electrical or mechanical power (or com-
bination thereof). Proposed §1.45Y-1(d)
(1) would further provide that the energy
efficiency percentage of CHP property
must exceed 60 percent, and that these
percentages are determined on a British
thermal unit (Btu) basis. Section 45Y(g)
(2)(B) incorporates these requirements by
providing that the term “combined heat
and power system property” has the same
meaning given such term by section 48(c)
(3) (without regard to section 48(c)(3)(A)
(iv), (B), and (D)).
Proposed §1.45Y-1(d)(2) would
describe the energy efficiency percentage
of a CHP property stating that it is the
fraction the numerator of which is the total
useful electrical, thermal, and mechanical
power produced by the system at normal
operating rates, and expected to be con-
sumed in its normal application, and the
denominator of which is the lower heating
value of the fuel sources for the system,
which is a measure of heat content based
on the net energy content of a combustible
fuel.
Proposed §1.45Y-1(d)(3) would pro-
vide a special rule for calculating elec-
tricity produced by CHP property. For
purposes of section 45Y(a) and proposed
§1.45Y-1(b), the kWh of electricity pro-
duced by a taxpayer at a qualified facility
will include any production in the form of
useful thermal energy by any CHP prop-
erty within such facility, and the amount
of greenhouse gases emitted into the
atmosphere by such facility in the produc-
tion of such useful thermal energy will be
included for purposes of determining the
GHG emissions rate for such facility.
Proposed §1.45Y-1(d)(3)(ii)(A) would
provide a conversion from Btu to kWh.
Proposed §1.45Y-1(d)(3)(ii))(A) would
provide that for purposes of section
45Y(g)(2)(A)(i) and §1.45Y-1(d)(3), the
amount of kWh of electricity produced in
the form of useful thermal energy is equal
to the quotient of the total useful thermal
energy produced by the CHP property
within the qualified facility, divided by the
heat rate for such facility.
Proposed §1.45Y-1(d)(3)(ii)(B) would
define the term “heat rate” to mean the
amount of energy used by the qualified
facility to generate 1 kWh of electricity,
expressed as Btus per net kWh generated.
In calculating the heat rate of a qualified
facility that includes CHP property that
uses combustion, a taxpayer must use the
annual average heat rate, defined as the
total annual fuel consumption of the CHP
property (in Btus, using the lower heat-
ing value of the fuel) during the taxable
year for which the section 45Y credit is
claimed, divided by the annual net elec-
tricity generation (in kWh) of the CHP
property during such taxable year.
Section 45Y(g)(2), by cross refer-
ence to section 48(c)(3), requires that the
energy efficiency percentage of the CHP
property must exceed 60 percent, cal-
culated as (1) the total useful electrical,
thermal, and mechanical power produced
by the system at normal operating rates,
and expected to be consumed in its normal
application, divided by (2) the lower heat-
ing value (LHV) of the fuel sources for
the system. The LHV is calculated based
on combustion. Some CHP property may
not involve combustion, such as nuclear
cogeneration. In these scenarios, because
there is no calculable LHV, the energy
efficiency percentage of the CHP property
cannot be determined using the calcula-
tion provided in the statute.
The Treasury Department and the IRS
request comments regarding the applica-
tion of the energy efficiency percentage
requirements to CHP property for which
there is no combustion. Relatedly, com-
ment is requested on whether the existing
definition of heat rate provided in section
45Y(g)(2)(C)(ii) for purposes of calculat-
ing the section 45Y credit for CHP prop-
erty that does not use combustion should
be clarified.
B. Qualified facility
Proposed §1.45Y-2(a) would define
a “qualified facility” to mean a facility
owned by the taxpayer and used for the
generation of electricity, that is placed in
service after December 31, 2024, and has
a GHG emissions rate of not greater than
zero (as determined under rules provided
in proposed §1.45Y-5).
1. Property Included in Qualified Facility
Proposed §1.45Y-2(b) would provide
a description of the property included in
a qualified facility. Proposed §1.45Y-2(b)
(1) would provide that a qualified facil-
ity includes a unit of qualified facility (as
defined in proposed §1.45Y-2(b)(2)(i))
that meets the requirements of proposed
§1.45Y-2(b)(2)(ii). Proposed §1.45Y-2(b)
(1) would provide that a qualified facility
also includes qualified property owned by
the taxpayer that is an integral part of a
qualified facility (as defined in proposed
§1.45Y-2(b)(3)). Section 45Y is silent
regarding the credit eligibility of compo-

Bulletin No. 2024–32 359 August 5, 2024
nents that are part of a qualified facility
but located in different locations. Pro-
posed §1.45Y-2(b)(1) would clarify that
any property that meets the requirements
of a qualified facility described in pro-
posed §1.45Y-2(b) is part of a qualified
facility, regardless of where such prop-
erty is located. Proposed §1.45Y-2(b)(1)
would provide that a qualified facility also
generally does not include equipment that
is an addition or modification to an exist-
ing qualified facility, however, proposed
§1.45Y-2(b)(1) would reference proposed
§1.45Y-4(c) for rules regarding the expan-
sion of a facility or incremental produc-
tion and proposed §1.45Y-4(d) for rules
regarding a retrofitted qualified facility
(80/20 Rule).
2. Unit of Qualified Facility
Proposed §1.45Y-2(b)(2)(i) would
provide that for purposes of the section
45Y credit, the unit of qualified facility
includes all functionally interdependent
components of property (as defined in
proposed §1.45Y-2(b)(2)(ii)) owned by
the taxpayer that are operated together and
that can operate apart from other property
to produce electricity. Proposed §1.45Y-
2(b)(2)(i) would clarify that no provision
of this section, §1.45Y-1, or §1.45Y-4
through §1.45Y-5 uses the term “unit”
in respect of a qualified facility with any
meaning other than that provided in pro-
posed §1.45Y–2(b)(2)(i). A reference to
§1.45Y-3 will also be added to the pre-
vious sentence in proposed §1.45Y-2(b)
(2)(i) when proposed §1.45Y-2(b)(2)(i)
is finalized, but it cannot be added until
§1.45Y-3 is finalized.
Proposed §1.45Y-2(b)(2)(ii) would
provide that components are functionally
interdependent if placing in service each
component is dependent upon placing in
service other components to produce elec-
tricity. See the discussion in section I.A.
of the Explanation of Provisions regarding
the special rule for CHP property.
3. Integral Part
Proposed §1.45Y–2(b)(3)(i) would
provide that for purposes of the section
45Y credit, a component of property
owned by a taxpayer is an integral part
of a facility if it is used directly in the
intended function of the qualified facil-
ity and is essential to the completeness of
such function.
Proposed §1.45Y–2(b)(3)(ii) would
provide that components of property that
are an integral part of a qualified facil-
ity include power conditioning equip-
ment and transfer equipment. Proposed
§1.45Y–2(b)(3)(ii) would provide that
power conditioning equipment includes
equipment that modifies the characteris-
tics of electricity into a form suitable for
use or transmission or distribution. Pro-
posed §1.45Y–2(b)(3)(ii) would provide
that parts related to the functioning or pro-
tection of power conditioning equipment
are also treated as power conditioning
equipment and includes examples.
Proposed §1.45Y–2(b)(3)(ii) would
provide that transfer equipment includes
components that permit the aggregation
of electricity generated by components of
qualified facilities and components that
alter voltage in order to permit transfer to a
transmission or distribution line. Proposed
§1.45Y–2(b)(3)(ii) would also clarify that
transfer equipment does not include trans-
mission or distribution lines. Proposed
§1.45Y–2(b)(3)(ii) would provide that
examples of transfer equipment include,
but are not limited to, wires, cables, and
combiner boxes that conduct electricity.
Proposed §1.45Y–2(b)(3)(ii) would pro-
vide that parts related to the functioning or
protection of transfer equipment are also
treated as transfer equipment and include
examples.
Proposed §1.45Y-2(b)(3)(iii) would
provide that roads that are an integral part
of a qualified facility are those roads inte-
gral to the intended function of the quali-
fied facility, such as onsite roads that are
used to operate and maintain the qualified
facility. Proposed §1.45Y–2(b)(3)(iii)
would also clarify that roads used primar-
ily for access to the site, or roads used
primarily for employee or visitor vehicles,
are not integral to the intended function of
the qualified facility and thus are not an
integral part of a qualified facility.
Proposed §1.45Y–2(b)(3)(iv) and (v)
would also provide that fences and build-
ings (also referred to as structures) are
generally not integral parts of a qualified
facility because they are not integral to the
intended function of the qualified facility.
However, a building (or structure) may be
an integral part of a qualified facility if it is
essentially an item of machinery or equip-
ment and a structure that houses compo-
nents of property that are integral to the
intended function of the qualified facility
if the use of the structure is so closely
related to the use of the housed compo-
nents of property therein that the structure
clearly can be expected to be replaced if
the components of property it initially
houses are replaced.
Proposed §1.45Y-2(b)(3)(vi) would
provide a rule for shared integral property
by stating that multiple qualified facilities
(whether owned directly by one or more
taxpayers), including qualified facili-
ties with respect to which a taxpayer has
claimed a credit under section 45Y or sec-
tion 48E, may include shared property that
can be considered an integral part of each
qualified facility. Proposed §1.45Y-2(b)
(3)(vi) would also provide that a compo-
nent of property that is shared by a quali-
fied facility (as defined in section 45Y(b))
(45Y Qualified Facility) and a qualified
facility (as defined in section 48E(b)(3))
(48E Qualified Facility) that is an integral
part of both qualified facilities will not
affect the eligibility of the section 45Y
Qualified Facility to claim the section 45Y
credit or the section 48E Qualified Facil-
ity to claim a section 48E credit. Proposed
§1.45Y-2(b)(3)(vii) would provide exam-
ples illustrating proposed §1.45Y-2(b)(3).
4. Coordination with Other Credits
Proposed §1.45Y-2(c)(1) would pro-
vide that the term “qualified facility” (as
defined in section 45Y(b)) will not include
any facility for which a credit determined
under section 45, 45J, 45Q, 45U, 48, 48A,
or 48E is allowed under section 38 of the
Code for the taxable year or any prior tax-
able year. Proposed §1.45Y-2(c)(1) would
further clarify that a taxpayer that directly
owns a qualified facility (as defined in
section 45Y(b)) that is eligible for both
a section 45Y credit and another Federal
income tax credit is eligible for the sec-
tion 45Y credit only if the other Federal
income tax credit was not allowed with
respect to the qualified facility. Proposed
§1.45Y-2(c)(1) would also add that noth-
ing in §1.45Y-2(c) precludes a taxpayer
from claiming a section 45Y credit with
respect to a qualified facility (as defined

August 5, 2024 360 Bulletin No. 2024–32
in section 45Y(b)) that is co-located with
another facility for which a credit deter-
mined under section 45, 45J, 45Q, 45U,
48, 48A, or 48E is allowed under section
38 for the taxable year or any prior taxable
year. Proposed §1.45Y-2(c)(2) would clar-
ify that for purposes of proposed §1.45Y-
2(c)(1), the term “allowed” only includes
credits that taxpayers have claimed on
a Federal income tax return or Federal
return, as appropriate, and that the IRS
has not challenged in terms of the taxpay-
er’s eligibility. Proposed §1.45Y-2(c)(3)
includes several examples illustrating the
rules of §1.45Y-2(c).
C. Rules of general application to section
45Y
1. Only Production in the United States
Taken into Account
Proposed §1.45Y-4(a) would provide
that consumption, sales, or storage of elec-
tricity are taken into account for purposes
of the section 45Y credit only with respect
to electricity produced within the United
States (as defined in section 638(1)), or a
United States territory, which for purposes
of section 45Y and the section 45Y regu-
lations has the meaning of the term “pos-
session” of the United States (as defined in
section 638(2)).
2. Production Attributable to the
Taxpayer and Section 761(a) Elections
Proposed §1.45Y-4(b)(1) would pro-
vide that in the case of a qualified facil-
ity in which more than one person has an
ownership share (and such arrangement is
not treated as a partnership for Federal tax
purposes), production from the qualified
facility is allocated among such persons
in proportion to their respective owner-
ship share in the gross sales from such
qualified facility during the taxable year.
The respective owners each determine
their respective section 45Y credit under
section 45Y(a) based on their respective
ownership shares in the gross sales from
such qualified facility. Proposed §1.45Y-
4(b)(2) would provide an example demon-
strating the application of this rule.
Proposed §1.45Y-4(b)(3) would pro-
vide that if a qualified facility is owned
through an unincorporated organization
that has made a valid election under sec-
tion 761(a) of the Code, each member’s
undivided ownership share in the qualified
facility will be treated as a separate quali-
fied facility owned by such member.
3. Expansion of Facility; Incremental
Production
Proposed §1.45Y-4(c)(1) would pro-
vide, solely for purposes of proposed
§1.45Y-4(c), that the term “qualified
facility” includes either a new unit or an
addition of capacity placed in service after
December 31, 2024, in connection with a
facility described in section 45Y(b)(1)(A)
(without regard to clause (ii) of such para-
graph), which was placed in service before
January 1, 2025, but only to the extent of
the increased amount of electricity pro-
duced at the facility by reason of such
new unit or addition of capacity. Proposed
§1.45Y-4(c)(1) would also provide that a
new unit or an addition of capacity will be
treated as a separate qualified facility. Pro-
posed §1.45Y-4(c)(1) would provide for
purposes of proposed §1.45Y-4(c), that a
new unit or an addition of capacity require
the addition or replacement of components
of property, including any new or replace-
ment integral property, added to a facility
necessary to increase capacity. If applica-
ble for purposes of proposed §1.45Y-4(c),
taxpayers must use modified or amended
facility operating licenses or the Interna-
tional Standard Organization (ISO) condi-
tions to measure the maximum electrical
generating output of a facility to deter-
mine its nameplate capacity. Additionally,
proposed §1.45Y-4(c)(1) would provide
that for purposes of section 45Y(a)(2)(B)
(i) (that is, the One-Megawatt Exception),
the capacity for a new unit or an addition
of capacity is the sum of the nameplate
capacity of the added qualified facility
and the nameplate capacity of the facility
to which the qualified facility was added.
Proposed §1.45Y-4(c)(2) would pro-
vide that solely for purposes of §1.45Y-
4(c), a facility that is decommissioned
or in the process of decommissioning
and restarts can be considered to have
increased capacity if the following condi-
tions are met: (1) the existing facility must
have ceased operations; (2) the existing
facility must have a shutdown period of
at least one calendar year during which it
is without a valid operating license from
its respective Federal regulatory authority
(that is, the Federal Energy Regulatory
Commission (FERC) or the Nuclear Reg-
ulatory Commission (NRC)); and (3) the
increased capacity of the restarted facility
must have a new, reinstated, or renewed
operating license issued by either FERC
or NRC.
Proposed §1.45Y-4(c)(3) would
describe how to compute the increased
amount of electricity produced as a result
of a new unit or an addition of capacity.
Proposed §1.45Y-4(c)(3) would provide
that to determine the increased amount of
electricity produced by a facility by rea-
son of a new unit or an addition of capac-
ity, a taxpayer must multiply the amount
of electricity that the facility produces
during a taxable year after the new unit or
addition of capacity is placed in service
by a fraction, the numerator of which is
the added nameplate capacity that results
from the new unit or addition of capacity,
and the denominator of which is the total
nameplate capacity of the facility with the
new unit or addition of capacity added.
Proposed §1.45Y-4(c)(4) would illus-
trate the application of these rules to deter-
mine the increased amount of electricity
attributable to a new unit or an addition of
capacity described in §1.45Y-4(c).
4. Retrofit of an Existing Facility (80/20
Rule)
Proposed §1.45Y-4(d)(1) would pro-
vide that for purposes of section 45Y(b)
(1)(B), a facility may qualify as originally
placed in service even if it contains some
used components of property within the
unit of qualified facility, provided the fair
market value of the used components of
the unit of qualified facility is not more
than 20 percent of the total value of the
unit of qualified facility (that is, the cost of
the new components of property plus the
fair market value of the used components
of property within the unit of qualified
facility) (80/20 Rule). Proposed §1.45Y-
4(d)(1) would further provide that if a
facility satisfies the requirements of the
80/20 Rule, then the date on which such
qualified facility is considered originally
placed in service for purposes of section
45Y(B)(1)(b) is the date on which the
new components of property of the unit

Bulletin No. 2024–32 361 August 5, 2024
of qualified facility are placed in service.
Proposed §1.45Y-4(d)(2) would provide
that, for purposes of this 80/20 Rule, the
cost of new components of the unit of
qualified facility includes all costs prop-
erly included in the depreciable basis of
the new components of property. Lastly,
proposed §1.45Y-4(d)(3) would provide
examples demonstrating the 80/20 Rule.
D. Greenhouse gas emissions rates
Section 45Y(b)(2) provides rules for
determining GHG emissions rates. Pro-
posed §1.45Y-5(a) would provide an over-
view of the rules pertaining to GHG emis-
sions rates for facilities under section 45Y.
1. Definitions Related to Greenhouse Gas
Emissions Rates
Proposed §1.45Y-5(b) would provide
definitions of terms relevant to determin-
ing GHG emissions rates. Section 45Y(e)
(1) defines the term “CO
2
e per kWh” as,
with respect to any greenhouse gas, the
equivalent carbon dioxide (as determined
based on global warming potential) per
kWh of electricity produced. Proposed
§1.45Y-5(b)(1) would clarify that the term
“CO
2
e per kWh” means with respect to
any greenhouse gas, the equivalent carbon
dioxide (as determined based on the 100-
year time horizon global warming poten-
tial (GWP-100)) per kWh of electricity
produced. Proposed §1.45Y-5(b)(1) would
also provide global warming potentials for
certain greenhouse gases from the Inter-
governmental Panel on Climate Change’s
Fifth Assessment Report (AR5).
Proposed §1.45Y-5(b)(8) would pro-
vide that the term “fuel” means material
directly used to produce electricity or
energy inputs that are used to produce
electricity. Proposed §1.45Y-5(b)(9)
would provide that the term “feedstock”
means any raw material used in a process
for electricity generation or to produce an
intermediate product or finished fuel used
for electricity generation.
Section 45Y(b)(2)(B) provides rules
for determining a GHG emissions rate
for a facility that produces electricity
through combustion or gasification. Pro-
posed §1.45Y-5(b)(2) would provide that
the term “combustion” means a rapid exo-
thermic chemical reaction, specifically the
oxidation of a fuel, which liberates energy
including heat and light. This proposed
definition of “combustion” would include,
for example, burning fossil fuels, but it
would not include the reaction that pro-
duces electricity inside a fuel cell.
Gasification produces fuel but not elec-
tricity. Proposed §1.45Y-5(b)(3) would
provide that the term “gasification” means
a thermochemical process that converts
carbon-containing materials into syngas, a
gaseous mixture that is composed primar-
ily of carbon monoxide, carbon dioxide,
and hydrogen. Because gasification does
not produce electricity, the inclusion of
the term “gasification” as a category sepa-
rate from “combustion” in section 45Y(b)
(2)(B) would have no independent signif-
icance unless it is interpreted as applying
to the production of an energy source that
is ultimately used by the facility to gener-
ate electricity (for example, syngas used to
make electricity). Thus, proposed §1.45Y-
5(b)(4) would interpret the phrase “facil-
ity which produces electricity through
combustion or gasification” in section
45Y(b)(2)(B) as applying to facilities that
produce electricity through combustion or
use an input energy source to produce elec-
tricity, which energy source was produced
through a fundamental transformation, or
multiple transformations, of one energy
source into another using combustion or
gasification. The Treasury Department
and the IRS request comment on this pro-
posed interpretation, including whether
the application of this proposed interpre-
tation should be clarified with respect to
any type of fundamental transformation of
an energy source and any related activities
or operations. Comment is also requested
on supply chain tracing requirements that
the Treasury Department and the IRS may
apply to verify whether or not a feedstock
or fuel (including energy inputs) used by
a facility to produce electricity was pro-
duced using combustion or gasification.
Section 45Y(b)(2)(B) provides that in
the case of electricity produced through
combustion or gasification, the GHG
emissions rate for such facility is equal to
the net rate of greenhouse gases emitted
into the atmosphere by such facility (tak-
ing into account lifecycle greenhouse gas
emissions, as described in section 211(o)
(1)(H) of the CAA (42 U.S.C. 7545(o)(1)
(H)) in the production of electricity. Pro-
posed §1.45Y-5(b)(4) would provide that a
“facility that produces electricity through
combustion or gasification” (C&G Facil-
ity) means a facility that produces electric-
ity through combustion or uses an input
energy source to produce electricity, if the
input energy source was produced through
a fundamental transformation, or multiple
transformations, of one energy source into
another using combustion or gasification.
Under proposed §1.45Y-5(b)(4), a facility
that produces electricity using any fuel
that was produced using electricity that
had been produced, in whole or in part,
from the combustion of fossil fuels would
be considered a C&G Facility. For exam-
ple, a hydrogen fuel cell would be consid-
ered a C&G Facility if it produced elec-
tricity using hydrogen that was produced
by an electrolyzer powered, in whole or in
part, by electricity from the grid because
some of the electricity from the grid was
produced through combustion or gasifi-
cation. A fuel cell facility such as a solid
oxide fuel cell, which uses methane as
fuel, would be considered a C&G Facil-
ity, because the methane reforming reac-
tion that produces syngas within the fuel
cell prior to the production of electricity
would be considered a gasification reac-
tion. In contrast, a hydrogen fuel cell facil-
ity using hydrogen produced exclusively
using electricity from a new solar array
or wind farm co-located with the hydro-
gen fuel cell facility would not be con-
sidered a C&G Facility, because the input
energy source was not produced through a
transformation of one energy source into
another using combustion or gasification.
The Treasury Department and the IRS
request comment on whether the proposed
definitions of gasification, combustion,
and C&G Facility would result in cer-
tain types of fuel cells that use fossil or
biogenic fuel inputs (via combustion or
gasification) to produce electricity being
unable to demonstrate a net rate of green-
house gas emissions that is not greater
than zero with a lifecycle analysis because
they are not classified as a C&G Facility
as defined in proposed §1.45Y-5(b)(4).
Because the energy transformation that
produces electricity in a fuel cell would
not be considered combustion under the
definition in proposed §1.45Y-5(b)(2), a
fuel cell facility would only qualify as a
C&G Facility if the fuel it used to produce

August 5, 2024 362 Bulletin No. 2024–32
electricity was produced through combus-
tion or gasification under these proposed
regulations.
Proposed §1.45Y-5(b)(7) would pro-
vide that a “Non-C&G Facility” means a
facility that produces electricity and is not
described in proposed §1.45Y-5(b)(4).
Proposed §1.45Y-5(b)(5) would pro-
vide that, consistent with section 45Y(b)
(2)(A), the term “greenhouse gas emis-
sions rate” means the amount of green-
house gases emitted into the atmosphere
by a facility in the production of electric-
ity, expressed as grams of CO
2
e per kWh.
Proposed §1.45Y-5(b)(6) would pro-
vide that, for the purposes of section
45Y(b)(2)(A), for both C&G Facilities
and Non-C&G Facilities, the term “green-
house gases emitted into the atmosphere
by a facility in the production of elec-
tricity” means emissions from a facility
that directly occur from the process that
transforms the input energy source into
electricity. Proposed §1.45Y-5(b)(6)(i)
through §1.45Y-5(b)(6)(vi) would exclude
emissions that may relate to a facility but
do not occur “in the production of elec-
tricity” as specified in section 45Y(b)(2)
(A). Proposed §1.45Y-5(c)(1) would pro-
vide, for Non-C&G Facilities only, addi-
tional types of excluded emissions under
section 45Y(b)(2)(A). Proposed §1.45Y-
5(d)(2) would provide, for C&G Facili-
ties only, that additional rules on included
and excluded emissions apply in order to
conduct a lifecycle analysis as required by
section 45Y(b)(2)(B).
Proposed §1.45Y-5(b)(6)(i) through
§1.45Y-5(b)(6)(vi) would clarify that
for the purposes of both Non-C&G and
C&G Facilities this definition excludes:
1) emissions from back-up generators that
are primarily used in maintaining critical
systems in case of a power system outage
or for supporting restart of a generator
after an outage; 2) emissions from routine
operational and maintenance activities
that are integral to the production of elec-
tricity, including, but not limited to, emis-
sions from internal combustion vehicles
used to access and perform maintenance
on remote electricity generating facilities
or emissions occurring from heating and
cooling control rooms or dispatch centers;
3) emissions from a step-up transformer
that conditions the electricity into a form
suitable for productive use or sale; 4)
emissions that occur before commercial
operations commence or after commer-
cial operations terminate, including, but
not limited to, on-site emissions occur-
ring from construction or manufacturing
of the facility itself, emissions from the
off-site manufacturing of facility compo-
nents, or emissions occurring due to siting
or decommissioning; 5) emissions from
infrastructure associated with the facility,
including, but not limited to, emissions
from road construction for feedstock pro-
duction; and 6) emissions from the distri-
bution of electricity to consumers.
2. Greenhouse Gas Emissions Rates for
Non-C&G Facilities
Proposed §1.45Y-5(c) would pro-
vide the rules for determining a GHG
emissions rate for Non-C&G Facilities,
including by the Secretary when publish-
ing a table described in section 45Y(b)
(2)(C)(i) or determining an emissions
rate as provided in section 45Y(b)(2)
(C)(ii). Proposed §1.45Y-5(c)(1) would
provide that GHG emissions rates for
Non-C&G Facilities must be determined
under proposed §1.45Y-5(c) and (e). In
addition, proposed §1.45Y-5(c)(1)(i)
would provide that, with respect to Non-
C&G Facilities only, greenhouse gases
emitted into the atmosphere by a facility
in the production of electricity excludes
emissions of greenhouse gases that are
not directly produced by the fundamental
transformation of the input energy source
into electricity, including, but not lim-
ited to, the following: 1) emissions from
hydropower reservoirs due to anoxic
conditions; 2) ebullitive, diffuse, and
degassing emissions from hydropower
operations; 3) emissions of non-con-
densable gases from underground reser-
voirs during geothermal operations; 4)
emissions from a step-up transformer
that conditions the electricity into a form
suitable for productive use or sale; and
5) emissions occurring due to activities
and operations occurring off-site, includ-
ing but not limited to, the production
and transportation of fuels used by the
facility, or land use change from siting
or changes in demand. Proposed §1.45Y-
5(c)(1)(i) would thus exclude emissions
that may relate to a Non-C&G Facility but
do not occur “in the production of elec-
tricity” as specified in section 45Y(b)(2)
(A) because such emissions do not arise
directly from the transformation of the
input energy source into electricity. For
example, emissions from land use change
from siting or changes in demand would
be excluded because such emissions do
not occur “in the production of electric-
ity” for Non-C&G Facilities under sec-
tion 45Y(b)(2)(A), but this exclusion
does not apply to C&G Facilities because
section 45Y(b)(2)(B) requires a broader
standard for assessing GHG emissions
than section 45Y(b)(2)(A).
Proposed §1.45Y-5(c)(1)(ii) would
provide that, subject to proposed §1.45Y-
5(b)(6) and (c)(1), a GHG emissions rate
for a Non-C&G Facility must be deter-
mined through a technical and engineer-
ing assessment of the fundamental energy
transformation into electricity, and that
such assessment must consider all input
and output energy carriers and chemical
reactions or mechanical processes taking
place at the facility in the production of
electricity. Proposed §1.45Y-5(c)(1)(iii)
would provide an example of a GHG
emissions rate determination for a Non-
C&G Facility.
Proposed §1.45Y-5(c)(2) would iden-
tify certain types or categories of facilities
that are categorically Non-C&G Facili-
ties with a GHG emissions rate that is not
greater than zero. Proposed §1.45Y-5(c)
(2)(i) through (viii) would provide that
these include wind facilities (including
small wind properties), hydropower facil-
ities (including retrofits adding power
production to non-powered dams, con-
duit hydropower, hydropower using new
impoundments, and hydropower using
diversions such as a penstock or chan-
nel), marine and hydrokinetic facilities,
solar facilities (including photovoltaic
and concentrating solar power), geother-
mal facilities (including flash and binary
plants), nuclear fission facilities, nuclear
fusion facilities, and waste energy recov-
ery property (WERP) that derives energy
from any of the energy sources described
in proposed §1.45Y-5(c)(2)(i) through
(vii) (including geothermal or solar waste
heat recovery such as from a district geo-
thermal heating system, and waste heat
recovery such as from a nuclear reactor
dedicated to heat production for an indus-
trial facility).

Bulletin No. 2024–32 363 August 5, 2024
WERP is property that generates elec-
tricity solely from heat from buildings
or equipment if the primary purpose of
such building or equipment is not the
generation of electricity. Examples of
buildings or equipment the primary pur-
pose of which is not the generation of
electricity include, but are not limited to,
manufacturing plants, medical care facil-
ities, facilities on school campuses, pipe-
line compressor stations, and associated
equipment. The Treasury Department
and the IRS request comment on whether
this definition of WERP is appropriate.
Comment is further requested on whether
and why it would be appropriate to revise
proposed §1.45Y-5(c)(2)(viii) to include
additional energy sources (such as energy
from exothermic chemical reactions or
pressure drop technologies) that do not
rely on combustion or gasification but
could include equipment related to the
transport of fossil fuels (for example,
natural gas).
For purposes of proposed §1.45Y-5(c)
(2)(ii), hydropower includes retrofits that
add electricity production to non-powered
dams, conduit hydropower, hydropower
using new impoundments, and hydro-
power using diversions such as a penstock
or channel. Greenhouse gas emissions are
not created by the fundamental transfor-
mation of electricity needed to produce
electricity in a hydropower facility. A
hydropower facility converts the poten-
tial energy of flowing water into elec-
tricity. The potential energy results from
changes in gravitational potential energy
from the flowing water, which the hydro-
power facility captures with a turbine
which spins a rotor within a generator to
produce electricity. Hydropower facil-
ities may release greenhouse gas emis-
sions from the hydropower reservoir due
to diffusion at the water surface or due
to ebullition, and from degassing when
water passes through a pump house or
turbine. Such emissions from hydropower
facilities would not be considered green-
house gases emitted into the atmosphere
by a Non-C&G Facility in the production
of electricity under proposed §1.45Y-5(b)
(6)(C), because emissions of greenhouse
gasses are not created by the fundamen-
tal transformation of potential energy in
flowing water into electricity, but rather
from processes that are not fundamental
to the transformation of potential energy
into electricity.
Similarly, greenhouse gas emissions
are not created by the fundamental trans-
formation of energy from high-pressure
hot water into electricity in a flash geo-
thermal facility, which is included in pro-
posed §1.45Y-5(c)(2)(v). A flash geother-
mal facility uses high-pressure hot water
from deep inside the earth and converts
it directly to steam that drives a turbine
and generator. After the steam passes
through the turbine, it is released into
the atmosphere and any non-condens-
able gases including greenhouse gases
dissolved in the steam are also released.
Such emissions from flash geothermal
facilities would not be considered green-
house gases emitted into the atmosphere
by a facility in the production of electric-
ity under proposed §1.45Y-5(c)(1)(i)(C),
because the greenhouse gases are already
present in the underground water and are
not created by the fundamental transfor-
mation of the thermal energy in the water
into electricity, but rather by processes
that are not fundamental to the transfor-
mation of the thermal energy into elec-
tricity. This proposed treatment of flash
geothermal facilities is supported by sur-
veys indicating that underground carbon
dioxide in certain geothermal reservoirs
is emitted passively into the atmosphere
even in the absence of geothermal elec-
tricity generation. The Treasury Depart-
ment and the IRS request comment on
whether the identification of flash geo-
thermal facilities as Non-C&G Facilities
with a GHG emissions rate that is not
greater than zero in proposed §1.45Y-
5(c)(2)(v) is appropriate.
For purposes of proposed §1.45Y-5(c)
(2)(iv), solar includes concentrated solar
power. Concentrated solar power facil-
ities may have auxiliary burners that in
some cases use combustion exclusively
for the purposes of cold starts or freeze
protection of thermal working fluids, but
in other cases, may also be used to gen-
erate electricity in hybrid configurations.
The Treasury Department and the IRS
request comment on whether the existing
definitions of C&G Facilities and Non-
C&G Facilities is sufficient to distinguish
between these two categories of facili-
ties, or whether additional clarification is
needed.
3. Greenhouse Gas Emissions Rates for
C&G Facilities
Section 45Y(b)(2)(B) provides that in
the case of electricity produced through
combustion or gasification, the GHG
emissions rate for such facility is equal to
the net rate of greenhouse gases emitted
into the atmosphere by such facility (tak-
ing into account lifecycle greenhouse gas
emissions, as described in section 211(o)
(1)(H) of the CAA) in the production of
electricity.
Section 211(o)(1)(H) of the CAA
provides that “lifecycle greenhouse gas
emissions” means the aggregate quantity
of greenhouse gas emissions (including
direct emissions and significant indirect
emissions such as significant emissions
from land use changes) related to the full
fuel lifecycle, including all stages of fuel
and feedstock production and distribution,
from feedstock generation or extraction
through the distribution and delivery and
use of the finished fuel to the ultimate
consumer, if the mass values for all green-
house gases are adjusted to account for
their relative global warming potential.
The EPA promulgated its interpretation
of section 211(o)(1)(H) of the CAA in a
2010 notice-and-comment rulemaking
establishing the regulatory framework
for the updated renewable fuel standard
(RFS2) program. The EPA interpreted
section 211(o)(1)(H) of the CAA in the
context of the facts and policy framework
of the RFS program and based on infor-
mation available at that time; however,
the EPA’s analysis and implementation of
the RFS2 rule offer relevant precedent for
the Treasury Department’s and the IRS’s
interpretation of section 45Y(b)(2)(B). In
the RFS2 rulemaking, the EPA interpreted
211(o)(1)(H) of the CAA as requiring the
agency to account for the real-world emis-
sions consequences of increased produc-
tion of biofuels. Thus, the EPA determined
in the RFS2 context that the inclusion of
direct emissions and significant indirect
emissions such as significant emissions
from land-use changes in section 211(o)
(1)(H) of the CAA requires a consequen-
tial approach to considering the real-
world emissions associated with biofuel
production. A “consequential” approach
considers the real-world greenhouse gas
emissions associated with biofuel produc-

August 5, 2024 364 Bulletin No. 2024–32
tion, including secondary or indirect emis-
sions resulting from market interactions
induced by expanded biofuel production
and use. Such an approach includes con-
sideration of market interactions induced
by expanded biofuel production and use
that may result in secondary or indirect
greenhouse gas emissions, domestically
and globally.
Proposed §1.45Y-5(d) would provide
the rules applicable to determining a net
rate of GHG emissions for C&G Facili-
ties, including by the Secretary when pub-
lishing a table described in section 45Y(b)
(2)(C)(i) or determining an emissions
rate as provided in section 45Y(b)(2)(C)
(ii). Proposed §1.45Y-5(d)(1) would pro-
vide that GHG emissions rates for C&G
Facilities must be determined by a life-
cycle analysis (LCA) that complies with
proposed §1.45Y-5(d) and (e), and that
such rate equals the net rate of greenhouse
gases emitted into the atmosphere by such
facility (taking into account lifecycle
greenhouse gas emissions, as described
in section 211(o)(1)(H) of the CAA) in
the production of electricity, expressed as
grams of CO
2
e per kWh.
Proposed §1.45Y-5(d)(2) would pro-
vide that an LCA used for determining
the net rate of greenhouse gases emitted
into the atmosphere by a facility must
comply with the requirements provided
in proposed §1.45Y-5(d)(2)(i) through
(vii). Proposed §1.45Y-5(d)(2)(i) would
provide that the starting boundary of
the LCA for an LCA involving genera-
tion-derived feedstocks (such as biogenic
feedstocks) is feedstock generation, and
the starting boundary of the LCA for an
LCA involving extraction-derived feed-
stocks (such as fossil fuel feedstocks) is
feedstock extraction. Under proposed
§1.45Y-5(d)(2)(i), the starting boundar-
ies would include the processes necessary
to produce and collect or extract the raw
materials used to produce electricity from
combustion or gasification technologies,
including those used as energy inputs to
electricity production. This includes the
emissions effects of relevant land man-
agement activities or changes related to
or associated with feedstock production.
The starting conditions are the material
and energy flows, including associated
direct and indirect greenhouse gas emis-
sions, of the processes associated with the
extraction or production of raw feedstock
materials or fuel.
Proposed §1.45Y-5(d)(2)(ii) would
provide that the ending boundary of an
LCA for electricity that is transmitted to
the grid or electricity that is used on-site
is the meter at the point of production of
the C&G Facility. The distribution, trans-
mission, and use of such electricity gener-
ated by a C&G Facility (and other types
of energy sources it may displace while
in use) are outside of the LCA boundary;
therefore, such emissions would not be
taken into account because they do not
occur in the “production of electricity” as
described in section 45Y(b)(2)(B). Given
the particular context of section 45Y(b)(2)
(B) (that is, a tax credit for the production
of clean electricity), proposed §1.45Y-5(d)
(2)(ii) is consistent with section 45Y(b)(2)
(B) of the Code (and the term “ultimate
consumer” in section 211(o)(1)(H) of the
CAA referenced therein) because it would
treat the C&G Facility as the ultimate con-
sumer of the fuel used to produce electric-
ity.
Proposed §1.45Y-5(d)(2)(iii) would
provide that an LCA must be based on a
future anticipated baseline, which proj-
ects future status quo in the absence of the
availability of the sections 45Y and 48E
credits (taking into account anticipated
changes in technology, policies, practices,
and environmental and other socioeco-
nomic conditions).
Proposed §1.45Y-5(d)(2)(iv) would
provide that offsets and offsetting activ-
ities that are unrelated to the production
of electricity by a C&G Facility, includ-
ing the production and distribution of any
input fuel, may not be taken into account
in an LCA.
Proposed §1.45Y-5(d)(2)(v) would
interpret the reference to section 211(o)
(1)(H) of the CAA as requiring that an
LCA must take into account direct emis-
sions, significant indirect emissions in the
United States or other countries, emissions
associated with market-mediated changes
in related commodity markets, emissions
associated with feedstock generation or
extraction, emissions consequences of
increased production of feedstocks, emis-
sions at all stages of fuel and feedstock
production and distribution, and emissions
associated with distribution, delivery, and
use of feedstocks to and by a C&G Facil-
ity. Proposed §1.45Y-5(d)(2)(v) would
interpret section 45Y(b)(2)(B) of the Code
(and the term “ultimate consumer” in sec-
tion 211(o)(1)(H) of the CAA referenced
therein) as applying to the C&G Facility
because it is the ultimate consumer of the
fuel used to produce electricity.
Proposed §1.45Y-5(d)(2)(v)(A) would
provide that direct emissions include,
but are not limited to: 1) emissions from
feedstock generation, production, and
extraction (including emissions from feed-
stock and fuel harvesting and extraction
and direct land use change and manage-
ment, including emissions from fertilizers,
and changes in carbon stocks); 2) emis-
sions from feedstock and fuel transport
(including emissions from transporting the
raw or processed feedstock to the fuel pro-
cessing facility); 3) emissions from trans-
porting and distributing fuels to the elec-
tricity production facility; 4) emissions
from handling, processing, upgrading,
and/or storing feedstocks, fuels and inter-
mediate products (including emissions
from on/offsite storage and preparation/
pre-treatment for use (for example, tor-
refaction or pelletization) and emissions
from process additives); and 5) emissions
from combustion and gasification at the
electricity generating facility (including
emissions from the combustion and/or
gasification process and emissions from
gasification or combustion additives).
Proposed §1.45Y-5(d)(2)(v)(B) would
provide examples of significant indirect
emissions including, but not limited to,
emissions from indirect land use and land
use change and other induced emissions
associated with the increased use of the
feedstock for electricity production. Sig-
nificant indirect emissions may include
positive or negative emissions. For bio-
genic resources, significant indirect emis-
sions may include emissions from growth
and regrowth.
Proposed §1.45Y-5(d)(2)(vi) would
provide principles for excluded emissions
by listing types of emissions that the LCA
must not take into account.
Proposed §1.45Y-5(d)(2)(vii) would
provide that an LCA may consider alter-
native fates and may account for avoided
emissions. Alternative fate means a set
of informed assumptions (for example,
production processes, material outcomes,
market-mediated effects) used to estimate

Bulletin No. 2024–32 365 August 5, 2024
the emissions from the use of each feed-
stock were it not for the feedstock’s new
use due to the implementation of policy
(that is, to produce electricity). Avoided
emissions means the estimated emissions
associated with the feedstock, includ-
ing the feedstock’s production and use,
that would have occurred in the alterna-
tive fate (if such feedstock had not been
diverted for electricity production) but are
instead avoided with the feedstock’s use
for electricity production. It is important
to note that, while, in some circumstances,
emissions may be avoided if compared to
the alternative fate, in others the new use
of the material (for example, for electric-
ity production) may involve additional
emissions that were not emitted in the
alternative fate estimation. Relatedly, in
some circumstances, emissions may be
avoided in one part of the supply chain
only to occur elsewhere along the supply
chain due to the new use.
4. Additional Issues Regarding
Greenhouse Gas Emissions Rates for
C&G Facilities
The determination of net GHG emis-
sions rates for C&G Facilities raises a
range of complex technical questions that
are relevant to determining eligibility for
the section 45Y and section 48E credits.
The Treasury Department and the IRS
request comment on the following topics:
(1) the treatment of renewable natural gas
(RNG) and fugitive sources of methane;
(2) analytical LCA parameters, includ-
ing spatial scales and time horizons; (3)
whether and how to distinguish between
co-products, byproducts, and waste prod-
ucts and how emissions should be allo-
cated to each in LCAs; (4) how to attribute
emissions to the heat produced by facili-
ties using combined heat and power sys-
tems; (5) how to create and maintain LCA
baselines; and (6) certain issues related to
LCA modeling.
a. Treatment of biogas, renewable
natural gas (RNG), or fugitive sources of
methane
The Treasury Department and the IRS
intend to provide rules addressing facili-
ties that produce electricity using biogas,
renewable natural gas (RNG), or fugi-
tive sources of methane (for example,
from coal mine operations) for purposes
of the section 45Y credit or the section
48E credit, collectively referred to as the
“Clean Electricity Tax Credits.” In the
context of this guidance, the term “RNG”
refers to biogas that has been upgraded to
be equivalent in nature to fossil natural
gas. Fugitive methane refers to the release
of methane through, for example, equip-
ment leaks during the extraction, process-
ing, transformation, and delivery of fossil
fuels to the point of final use, such as coal
mine methane. Such rules would apply to
all biogas, RNG, or fugitive methane used
for the purposes of the Clean Electricity
Tax Credits and would provide require-
ments that must be met to account for
any greenhouse gas emissions benefits
from biogas, RNG, or fugitive methane in
determining GHG emissions rates for pur-
poses of the Clean Electricity Tax Cred-
its. Such requirements would be designed
to reflect the ways in which additional
demand for biogas, RNG or fugitive meth-
ane can impact greenhouse gas emissions
outcomes.
The Treasury Department and the IRS
anticipate requiring that for purposes
of the Clean Electricity Tax Credits, in
order for biogas, biogas-based RNG, or
fugitive methane to receive an emissions
value consistent with such gases (and not
standard natural gas), the biogas or RNG
used to produce electricity or to produce
a feedstock or fuel that is used to produce
electricity must originate from the first
productive use of the relevant methane.
For any specific source of biogas, RNG,
or fugitive methane, productive use is
generally defined as any valuable appli-
cation of the relevant methane (including
to provide heat or cooling, generate elec-
tricity, or upgraded to RNG in the case of
biogas or fugitive methane), and specifi-
cally excludes venting to the atmosphere
or capture and flaring. The Treasury
Department and the IRS further propose
to define first productive use of the rele-
vant methane as the time when a producer
of that gas first begins using or selling it
for productive use in the same taxable
year as (or after) the electricity production
facility was placed in service. The impli-
cation of this proposal is that biogas, for
example, from any source that had been
productively used in a taxable year prior
to the taxable year in which the relevant
electricity production facility was placed
in service would not include GHG emis-
sions benefits that might otherwise be
attributable to biogas-based RNG, but
would instead receive a value consistent
with natural gas. This proposal would
limit emissions associated with the diver-
sion of biogas, RNG, or fugitive methane
from other pre-existing productive uses.
For existing biogas sources that typi-
cally productively use or sell a portion of
the biogas and flare or vent the remaining
excess, the flared or vented portion may be
eligible for first productive use as defined
above if the flaring or venting volume can
be adequately demonstrated and verified.
In such circumstances, the flared or vented
volume may be determined based on the
previous taxable year’s flared or vented
volume as demonstrated via reported data
to programs such as the Greenhouse Gas
Reporting Program. Requirements would
be established to reduce the risk that
entities will deliberately generate addi-
tional biogas for purposes of the Clean
Electricity Tax Credits, above historic
and expected future levels or an equiva-
lent metric, for example by generating
biogas through the intentional generation
of waste, and to ensure that other factors
affecting the emissions rate of electricity
produced with biogas, biogas-based RNG
or RNG procurement via RNG certifi-
cates are taken into account. The Treasury
Department and the IRS request comment
on these and other potential conditions.
Any fugitive sources of methane would
be treated in the same fashion as biogas or
RNG with respect to these requirements,
albeit with different considerations in
development of the counterfactual.
The Treasury Department and the IRS
also recognize that different sources of
methane may have significantly differ-
ent characteristics (for example, coun-
terfactuals, alternative fates, baseline
characteristics, upstream leakage rates,
etc.) and therefore significantly differ-
ent lifecycle emissions. For this reason,
the Treasury Department and the IRS are
considering requiring an LCA to be con-
ducted for electricity produced by each
category of feedstock, rather than across
all feedstocks used for the production
of electricity by a facility. The Treasury
Department and the IRS request com-

August 5, 2024 366 Bulletin No. 2024–32
ment on whether LCAs should be con-
ducted on a feedstock-by-feedstock basis
or averaged across feedstocks, and how
to determine the appropriate categories
of feedstock.
For purposes of the Clean Electric-
ity Tax Credits, producers using bio-
gas, RNG, or fugitive methane would be
required to acquire and retire correspond-
ing energy attribute certificates (EACs)
through a book-and-claim system that can
verify in an electronic tracking system
that all applicable requirements are met.
Electricity producers would also be
required to have a pipeline interconnec-
tion and measurement capability using a
revenue grade meter. These rules would
apply to the use of EACs with both direct
and non-direct claims of biogas, RNG, or
fugitive methane use. Direct use would
involve a direct exclusive pipeline con-
nection to a facility that generates biogas
or RNG or from which fugitive methane
is being sourced, while non-direct use
would involve production using biogas,
RNG, or fugitive methane sourced from
a commercial or common-carrier natu-
ral gas or other specified pipeline. In all
cases, EACs would need to document the
biogas, RNG, or fugitive methane pro-
curement use claims and that the energy
attributes of the RNG or fugitive methane
being used are not sold to other parties or
used for compliance with other policies or
programs.
The Treasury Department and the IRS
request comments on these and other
approaches related to biogas, RNG and
fugitive methane. Regarding these sources
of methane, the Treasury Department and
the IRS request comment on the appropri-
ate LCA considerations associated with
them, such as counterfactual scenarios
(that is, appropriate baselines), to account
for direct and significant indirect emis-
sions, and also the manner in which to
assess methane from these sources if the
current practice is flaring. In particular, the
Treasury Department and the IRS request
comments on the following questions:
(1) What data sources and peer
reviewed studies provide information on
fugitive methane, biogas, and RNG pro-
duction systems (including biogas pro-
duction and reforming systems), markets,
monitoring, reporting, and verification
processes, and greenhouse gas emissions
associated with these production systems
and markets?
(2) What conditions for the use of bio-
gas, RNG, and fugitive methane would
ensure that emissions accounting for pur-
poses of the Clean Electricity Tax Cred-
its reflect and reduce the risk of indirect
emissions effects from electricity produc-
tion using biogas and RNG? How can
taxpayers verify that they have met these
requirements?
(3) How broadly available and reliable
are existing electronic tracking systems
and verification protocols and practices
for biogas, RNG, or fugitive methane cer-
tificates in book and claim systems? What
developments may be required, if any,
before such systems are appropriate for
use with biogas or RNG certificates used
to claim the Clean Electricity Tax Credits?
(4) How should biogas, RNG or fugi-
tive methane resulting from the first pro-
ductive use of methane be defined, docu-
mented, and verified? What industry best
practices or alternative methods would
enable such verification to be reflected in
a biogas, RNG or methane certificate or
other documentation? What additional
information should be included in such
EACs to help certify compliance?
(5) What are the emissions associated
with different methods of transporting
biogas, RNG or fugitive methane to elec-
tricity producers (for example, vehicular
transport, pipeline)?
(6) How can the final regulations
reflect and mitigate indirect emissions
effects from the diversion of biogas, RNG,
or fugitive methane from potential future
productive uses? What other new uses of
biogas, RNG, or fugitive methane could
be affected in the future if more gas from
new capture and productive use of meth-
ane from these sources is used in the elec-
tricity production process?
(7) How can the potential for the gen-
eration of additional emissions from the
production of additional waste, waste
diversion from lower-emitting disposal
methods, and changes in waste manage-
ment practices be limited through emis-
sions accounting or rules for biogas and
RNG use established for purposes of the
Clean Electricity Tax Credits?
(8) To limit the additional production
of waste, should the final regulations
limit eligibility to methane sources that
existed as of a certain date or waste or
waste streams that were produced before
a certain date, such as the date that the
IRA was enacted? If so, how can that be
documented or verified? How should any
changes in volumes of waste and waste
capacity at existing methane sources be
documented and treated for purposes of
the Clean Electricity Tax Credits? How
should additional capture of existing
waste or waste streams be documented
and treated?
(9) Are geographic or temporal deliv-
erability requirements needed to reflect
and reduce the risk of indirect emissions
effects from biogas, RNG, or fugitive
methane use in the electricity production
process? If so, what should these require-
ments be and are electronic tracking sys-
tems able to capture these details?
(10) How should variation in methane
leakage across the existing natural gas
pipeline system be taken into account in
estimating the emissions from the trans-
portation of RNG or fugitive methane or
establishing rules for RNG or fugitive
methane use? How should methane leak-
age rates be estimated based on factors
such as the location where RNG or fugi-
tive methane is injected and withdrawn,
the distance between the locations where
RNG or fugitive methane is injected and
withdrawn, season of year, age of pipe-
lines, or other factors? Are data or analysis
available to support this?
(11) What counterfactual assumptions
and data should be used to assess the net
greenhouse gas emissions of facilities that
rely on biogas, RNG, or fugitive methane
(for example, venting, flaring, or other
practice)? Is venting an appropriate coun-
terfactual assumption in some cases? If
not, what other factors should be consid-
ered?
(12) What criteria should be used in
assessing biogas, fugitive methane, or
RNG-based provisional emissions rates?
What practices should be put in place
to reduce the risk of unintended conse-
quences (for example, gaming)? Should
conservative default parameters and coun-
terfactuals be used unless proven other-
wise by a third party?
(13) What are the effects on green-
house gas emissions of capturing methane
emissions for use as biogas or RNG, such
as on livestock farms?

Bulletin No. 2024–32 367 August 5, 2024
The Treasury Department and the IRS
recognize that sufficient tracking and ver-
ification mechanisms for biogas, RNG,
or fugitive methane are not yet avail-
able, and existing systems have limited
capabilities for tracking and verifying
RNG pathways, especially in the part of
the production process before the meth-
ane has been reformed to RNG. Exist-
ing tracking and verification systems do
not clearly distinguish between inputs,
verify or require verification of underly-
ing practices claimed by biogas or RNG
production sources, require proof of gen-
erator interconnection or revenue-quality
metering, provide validation of generation
methodology, include exclusively United
States based-generation, verify genera-
tor registration, and track the vintage of
generator interconnection. The Treasury
Department and the IRS are considering
providing rules to address whether or how
book-and-claim systems with sufficient
tracking and verification mechanisms may
be used to attribute the environmental
benefits of biogas, RNG, or fugitive meth-
ane in the final regulations.
The treatment of biogas, RNG, and
fugitive methane presents a range of com-
plex issues that the Treasury Department
and the IRS will consider in the develop-
ment of the final regulations.
b. Analytical LCA parameters, including
spatial scales and time horizons
An LCA may require decisions on a
wide range of analytical parameters that
may have a meaningful impact on the
accuracy and utility of its results. The
Treasury Department and the IRS request
comment on the analytical LCA param-
eters that are most relevant to particular
types of categories of facilities that may
be eligible for the Clean Electricity Tax
Credits.
The Treasury Department and the IRS
specifically request comment regarding
spatial and temporal scales, including the
factors that should be considered in set-
ting the spatial and temporal scales for
LCAs conducted for the Clean Electricity
Tax Credits. Spatial scale involves defin-
ing the area over which emissions impacts
will be evaluated. Temporal scale involves
defining the time period over which emis-
sions impacts will be evaluated. The deci-
sion of setting the spatial scale should be
considered in conjunction with decisions
on temporal scale, as the two can interact
in ways that affect greenhouse gas assess-
ment outcomes.
In conducting a greenhouse gas assess-
ment for biomass feedstocks, for exam-
ple, carbon stocks or flows that have
high variability at fine spatial or tempo-
ral scales may have much less variability
if averaged over larger areas or longer
temporal scales. Averaging over long
temporal scales may reduce the variabil-
ity observed at small spatial scales, and
averaging over large areas may reduce the
variability observed over small temporal
scales. However, it is not safe to assume
that integrating over large areas and long
timeframes is always preferable. Large
spatial scales and long temporal scales are
not necessarily the most accurate way to
conduct specific policy or program assess-
ments because the combination of the two
may obscure important information (for
example, biophysical differences in spe-
cies or landscapes, or shorter time frames
or subregional analysis needed for policy
analysis) or may mask important small-
er-scale impacts. It is important to note
that utilizing a large spatial scale and a
short temporal scale could yield the same
result as a small spatial scale combined
with a longer temporal scale.
The Treasury Department and the IRS
acknowledge that it may be appropriate
to utilize different spatial and temporals
scales for different feedstocks given their
heterogeneity. The Treasury Department
and the IRS request comment on the fol-
lowing questions regarding spatial and
temporal scale:
(1) What factors should be considered
in establishing the timeframe for the LCA
analysis? What timeframe would provide
confidence that significant emissions have
been accounted for?
(2) Should the LCA distinguish
between an “emissions horizon” (the time-
frame over which emissions effects from
the feedstock use persist into the future)
and an “assessment horizon” (the time-
frame over which the emissions effects are
included in the analysis), and how would
that be reflected in the choice of temporal
scale? What assessment horizon will pro-
vide reasonable confidence that significant
LCA emissions have been incorporated?
Should the modeled future anticipated
baseline include estimated emissions from
electricity production to reflect the effects
of the anticipated phase out of the Clean
Electricity Tax Credits?
(3) If the assessment horizon is shorter
than the emissions horizon, should an esti-
mate of the emissions beyond the assess-
ment horizon be included in the LCA?
(4) What considerations should be
reflected in the choice(s) of spatial scale?
For example, the increased use of some
fuels/feedstocks may have global effects
(for example, changes in commodity pro-
duction and ensuing land use and green-
house gas changes), though this may not
be the case for all feedstocks or fuels.
What factors should be considered to
assess whether a global scale is necessary
for certain feedstocks to ensure that signif-
icant emissions are captured? Should all
feedstock/fuels assessments be conducted
with the same spatial scale to determine
the extent to which increased use has esti-
mated global ramifications?
(5) The choice of spatial scale can
be greatly influenced by the availability
and accuracy of data and the precision
with which one can measure and model
feedstock production as well as market
dynamics. What sources of data would be
most important to consider for modeling?
What strengths or weaknesses do these
sources have?
c. Distinguish between co-products,
byproducts, and waste products and how
emissions should be allocated to each in
LCAs
The categorization and assessment
of products as co-products, byproducts,
or waste products in an LCA may affect
the LCA’s results. Products, co-products,
byproducts, and wastes may all be pro-
duced in the full fuel cycle or used as
inputs to the same. A co-product is a prod-
uct produced together with another prod-
uct, both of which are economic drivers
of the process. A byproduct is a product
that is produced together with another
product, and which has a productive use
but is not the primary economic driver of
the process from which it is produced. It is
not solely or separately produced. A waste
product is a substance or object that the
holder intends or is required to dispose of.

August 5, 2024 368 Bulletin No. 2024–32
See ISO:14040, “Environmental manage-
ment – Life cycle assessment – Principles
and framework. For biogenic sources, sci-
entific literature often classifies byprod-
ucts, wastes, and residues together in one
category.
The categorization of products as
co-products, byproducts, and waste prod-
ucts may be relevant to an LCA’s assess-
ment of the greenhouse gas emissions
related to the production of inputs to
electricity generation or in the generation
of electricity itself if the LCA modeling
approach or approaches used for purposes
of the Clean Electricity Tax Credits have
the ability to distinguish between such
categories. For example, in certain cir-
cumstances, the use of a waste product as
a feedstock or fuel for electricity produc-
tion may generate more, less, or the same
greenhouse gas emissions than relevant
disposal practices for that waste material.
The emissions released in the production
process during which a waste product
is created could be fully allocated to the
main product, co-products, and byprod-
ucts of that process meaning that the
emissions associated with the production
of the waste could be considered zero in
the LCA assessment pending further anal-
ysis, potentially reducing the overall LCA
GHG emissions rates for the electricity
production. Alternatively, if the waste
product were considered to have a produc-
tive use and therefore instead categorized
as a co-product it would be considered
as a driver of the production process and
could have a positive emissions value. A
material may initially have no economic
value or useful purpose, but if that mate-
rial later gains an economic value, its cat-
egorization may shift to a byproduct or
co-product.
The Treasury Department and the IRS
intend to clarify the principles for catego-
rizing products as co-products, byprod-
ucts, or waste input materials and prod-
ucts and assessing the emissions impacts
for such products in an LCA for C&G
Facilities in the final regulations for the
Clean Electricity Tax Credits if such cat-
egorization is relevant to the LCA model
or models used. Under such principles,
if byproducts are produced concurrently
with electricity production, then a portion
of the process emissions may be allocated
to those byproducts. If applying an ana-
lytical approach that considers the con-
sequences of the material being used for
electricity production and byproducts are
produced concurrent with electricity pro-
duction, the LCA may consider the market
impacts associated with the byproducts.
In addition, if wastes are produced con-
currently with electricity production, then
no process emissions may be allocated
to those wastes; all emissions must be
associated with the electricity produced.
Whether alternative productive uses of a
byproduct-derived feedstock exist would
be determined by expert analysis of the
likely alternative uses of the byproduct,
taking into account technological and
economic capabilities and common prac-
tice. The alternative fate of waste-derived
feedstocks would be determined by expert
analysis, literature review, and historical
practice.
To inform the development of these
categorization principles for the final reg-
ulations, the Treasury Department and the
IRS request comment on the following:
(1) What principles should be used to
distinguish between co-products, byprod-
ucts, and waste products for the purposes
of the Clean Electricity Tax Credits? Are
there common scientific or industry defi-
nitions that can be relied upon to distin-
guish between co-products, byproducts,
and waste products?
(2) What principles should be used to
determine whether a product has sufficient
value to be considered a co-product or
byproduct?
(3) The Clean Electricity Tax Credits
may provide additional economic incen-
tive for the consumption of a product cate-
gorized as waste prior to the availability of
the incentive provided by the Clean Elec-
tricity Tax Credits. How should this addi-
tional economic incentive be considered
to determine if a product is a waste prod-
uct, byproduct, or co-product? Should this
categorization be reevaluated and, if so,
how often?
(4) To limit the additional production
of waste, should the final regulations limit
eligible waste sources that existed as of
a certain date, or waste or waste streams
that were produced before a certain date,
such as the date that the IRA was enacted?
If so, how could that be documented or
verified? How should any changes in vol-
umes of waste and waste capacity at exist-
ing sources be documented and treated
for purposes of the Clean Electricity Tax
Credits? How should additional capture of
existing waste or waste streams be docu-
mented and treated?
(5) More generally, how could the
potential for the intentional generation of
waste or co-products for the purposes of
lowering the allocated process emissions
to electricity be addressed?
(6) Would the classification of feed-
stocks as products, co-products, byprod-
ucts, or waste change depending on the
technology? For example, would prod-
ucts, co-products, byproducts, and waste
be described and accounted for differently
if derived from biogenic sources, such as
biogenic biomass?
d. Attributing emissions to the heat
produced by facilities using CHP
property
Section 45Y(g)(2)(A) provides that
the kWh of electricity produced by a tax-
payer at a qualified facility includes any
production in the form of useful thermal
energy by any CHP property within such
facility, and the amount of greenhouse
gases emitted into the atmosphere by such
facility in the production of such useful
thermal energy will be included for pur-
poses of determining the GHG emissions
rate for such facility. See Explanation of
Provisions section I.A. for the definition
of CHP property. The inclusion of thermal
energy production-related emissions in an
LCA for a CHP facility introduces addi-
tional considerations, such as how to set
an appropriate baseline for useful energy
production-related emissions and what
rules should govern the attribution of
emissions for thermal energy production.
The Treasury Department and the IRS
intend to clarify the principles for assess-
ing the emissions related to the generation
of useful thermal energy by a CHP facility
in an LCA in the final regulations for the
Clean Electricity Tax Credits. Accord-
ingly, the Treasury Department and the
IRS request comment on the following:
(1) To determine the amount of green-
house gases emitted by a CHP facility,
the LCA must include the greenhouse gas
emissions emitted by that facility in the
production of useful thermal energy. For
purposes of the LCA of a CHP facility,

Bulletin No. 2024–32 369 August 5, 2024
what principles should govern how emis-
sions from the production of useful ther-
mal energy are calculated?
(2) What principles should be used to
determine the baseline for useful ther-
mal energy production by a CHP facility?
For example, should the baseline for the
heat production for a CHP facility be an
alternative form of thermal energy pro-
duction such as natural gas boilers, such
that emissions from the production of
thermal energy from the boilers would be
subtracted from the facility’s emissions?
Alternatively, is it more appropriate if the
baseline for a CHP facility is no thermal
energy production by the facility?
(3) There may be scenarios in which a
facility generates electricity that is used
(a) by the electricity generation facility in
the production of electricity or (b) in the
production of fuel ultimately consumed
by that facility to generate electricity. For
example, a wastewater treatment plant’s
post-processing materials are digested to
produce biogas; this biogas is then used
in a CHP facility that produces electricity;
this electricity is consumed by the waste-
water treatment facility. In such scenarios,
what principles should be used to deter-
mine how emissions from the consump-
tion of electricity in the production of
electricity or in the production of the fuel
consumed by the facility are calculated?
Similarly, there may be scenarios in which
a facility self-consumes thermal energy
that it produces, for example, if a facil-
ity generates steam as a byproduct that is
used (a) by the facility to turn a turbine
that generates electricity or (b) to clean
or compress fuel ultimately consumed by
that facility to generate electricity. What
principles should be used be used to deter-
mine emissions from the self-consumption
of thermal energy by the CHP facility?
e. Certain issues related to LCA baselines
and modeling
The Treasury Department and the IRS
intend to provide additional rules and
principles addressing what factors must be
considered to assess the emissions associ-
ated with feedstocks used by C&G Facil-
ities to produce electricity for purposes of
the Clean Electricity Tax Credits.
Such rules would apply to all feed-
stocks used for the purposes of the Clean
Electricity Tax Credits and would provide
conditions that must be met in determin-
ing GHG emissions rates for purposes
of the Clean Electricity Tax Credits. The
CAA explicitly defines the term “lifecy-
cle greenhouse gas emissions” to include
“the aggregate quantity of greenhouse
gas emissions (including direct emis-
sions and significant indirect emissions
such as significant emissions from land
use changes).” Given the highly intercon-
nected economic, energy, and agricultural
and other lands-based systems involved
in electricity production, the Treasury
Department and the IRS recognize that
electricity production may have effects,
including emissions effects, beyond the
direct supply chain. The Treasury Depart-
ment and the IRS think that the provision
“including direct emissions and significant
indirect emissions” requires any LCA for
the Clean Electricity Tax Credits to adopt
an approach that considers the conse-
quential, or market-mediated, impacts of
increased demand for the input feedstocks
or fuels used in electricity production.
The EPA interpreted CAA 211(o)(1)(H)
as requiring the agency in the RFS context
to account for the real-world emissions
consequences of increased production of
biofuels. Thus, the EPA determined that
CAA section 211(o)(1)(H)’s inclusion of
“direct emissions and significant indirect
emissions such as significant emissions
from land-use changes” requires a “con-
sequential” approach to considering the
real-world emissions associated with
biofuel production. Such an approach
includes consideration of market interac-
tions induced by expanded biofuel pro-
duction and use that may result in second-
ary or indirect greenhouse gas emissions.
The Treasury Department and the IRS
propose to use a future anticipated base-
line approach for analyzing the green-
house gas emissions associated with the
production of electricity by C&G Facili-
ties and feedstocks used by such facilities.
This approach would require generating
a baseline projection of the future, which
reflects estimated future conditions under
a business-as-usual (BAU) trajectory
that incorporates key drivers and trends
informed by historical data and other
considerations. This baseline would then
serve as the “reference” against which
another scenario in which specific condi-
tions or changes, such as implementation
of the policy embodied by the Clean Elec-
tricity Tax Credits, can be projected. This
construct would allow for the evaluation
of the projected estimated change or dif-
ference of emissions outcomes between
the two scenarios. These scenarios would
include (1) the baseline scenario (that is,
without the Clean Electricity Tax Credits)
and (2) a policy scenario (that is, with the
Clean Electricity Tax Credits).
These scenarios would require, to the
extent possible, data on: (1) feedstock or
fuel production systems (including fuel/
feedstock generation or extraction, etc.);
(2) associated greenhouse gas emissions
and, if applicable, carbon pool fluxes;
(3) the feedstock or fuel’s sector details;
(4) feedstock or fuel demand and prices;
(5) energy market projections, including
electricity demand and supply and prices,
if applicable; (6) future macroeconomic
factors (for example, EIA Annual Energy
Outlook-derived population growth, gross
domestic product projections, demand
functions tied to population or income);
(7) technological progress assumptions,
especially if applicable to stationary
sources for which efficiency improve-
ments are possible and anticipated; and (8)
other parameters (for example, represen-
tation of current and anticipated, energy,
environmental, or other policies including
expected outcomes from other parts of the
IRA or other policies, if relevant, that can
inform or constrain BAU trajectories).
For example, the list that follows iden-
tifies proposed key modeling approach
elements and considerations for simula-
tion of a future anticipated baseline and
policy scenarios specific to biomass-based
feedstocks: (1) model function types and
model dynamics (for example, economic
optimization, intertemporal and/or recur-
sive dynamic); (2) anticipated future con-
ditions (for example, macroeconomic,
biophysical, chemical); (3) greenhouse
gas emissions representation, by includ-
ing the different greenhouse gases and the
relevant greenhouse gas emissions and
sequestration sources (for example, how
greenhouse gases and their effects on the
environment are incorporated and repre-
sented, such as what emissions sources
and factors are reflected in the model or
models); (4) forest sector representation
(for example, how are forestry and forest

August 5, 2024 370 Bulletin No. 2024–32
industries reflected in the model and how
are they tied to the rest of the economy);
(5) agricultural sector representation; (6)
land use competition; (7) energy sector
representation; and (8) the appropriate
spatial scale (for example, international
representation) for all of these consider-
ations.
There may be different ways to model
or estimate greenhouse gas emissions
associated with the production of elec-
tricity by a C&G Facility. Consistent with
the parameters in proposed §1.45Y-5(d),
the Treasury Department and the IRS
seek comment on general principles and
factors to be considered to estimate net
greenhouse gas emissions associated with
electricity production by C&G Facilities,
including the selection or creation of an
assessment or modeling approach for the
purposes of Clean Electricity Tax Credits.
Comment is specifically requested on the
following topics:
(1) What factors should be considered
in deciding how to create and maintain
LCA baseline scenarios?
(2) What factors should be considered
in deciding how to create and maintain
LCA scenarios other than the baseline?
(3) What existing model or suite of
models are capable of completing an
LCA consistent with the section 45Y(b)
(2)(B) and proposed §1.45Y-5(d) and (e)?
Please explain whether any such model
or models are open source or proprietary
including what type of documentation is
publicly available detailing the model
design, data, inputs, and assumptions, as
well as whether such models are able to
link with external data sources or mod-
els. Please also explain which entities
own, manage, or update such models.
Furthermore, because some LCA models
may be used for only a certain aspect of
the total required analysis (for example,
a model may solely assess the agriculture
sector) or only include certain feedstocks
or technologies, please specify what tech-
nologies, feedstocks, or type of impacts
are included or are not included in the
recommended model or models. Please
also explain how widely and for what pur-
poses the recommended model or models
are used, including whether the model
has previously been used by a Federal or
State agency or national laboratory. Please
explain whether and how the model
has been peer-reviewed. Finally, please
explain whether the recommended model
or models would need to be updated or
combined with another model in order to
be fully consistent with section 45Y(b)(2)
(B) and proposed §1.45Y-5(d) and (e).
(4) What data sources and peer-re-
viewed studies provide information on
different feedstock production systems
that would be most important to consider
for gathering data for LCA modeling?
These sources and studies should provide
information on the feedstock produc-
tion process (ideally, beginning with the
extraction or generation of the feedstock
and ending at the electrical meter) and
on markets related to the feedstock pro-
duction process. Appropriate sources and
studies should also describe the green-
house gas emissions associated with these
production systems and markets, as well
as any monitoring, reporting, and verifi-
cation processes used in the creation of
the source or study. If recommending data
sources or peer-reviewed studies, please
specify whether they are open source
or proprietary; their temporal and spa-
tial scale (for example, regional versus
national studies); whether they are regu-
larly updated and with what frequency;
whether they are collected by a Federal
or State agency or statistical agency or
national laboratory; and whether they
employ direct measurements or model-
ing or use remote sensing data. Finally,
please assess overall the strengths and
weaknesses of the recommended sources
or studies with respect to their usefulness
as modeling data inputs.
(5) The availability of the Clean Elec-
tricity Tax Credits may create an incentive
to use a given material differently than in
the past (for example, a material that was
not typically used for electricity produc-
tion is initially used or used more broadly
after the credits are available). How could
an LCA or LCAs establish and account
for whether the incentives created by the
Clean Electricity Tax Credits have resulted
in a reduction, removal of, or increase in
greenhouse gas emissions beyond the
emissions that would have occurred in the
absence of the Clean Electricity Tax Cred-
its? For example, consider a scenario in
which, in the absence of the incentive pro-
vided by the Clean Electricity Tax Cred-
its, an amount of woody biomass would
be either left standing or laying in a forest,
pile burned, or used to create timber prod-
ucts, such as charcoal or mulch, each an
“alternative fate.” In the presence of the
Clean Electricity Tax Credits, that amount
of woody biomass is now being used to
generate electricity. How should the pos-
sible fates of the feedstock in the absence
of the Clean Electricity Tax Credits (for
example, left in standing or laying in a
forest, pile burned, or used to create a tim-
ber product, such as charcoal or mulch) be
represented in an LCA, including the dif-
ferent potential direct and indirect green-
house gas effects of those fates?
(6) How could an LCA account for
alternative fates stemming from events
such as potential future greenhouse gas
emissions from wildfires that could be
associated with woody biomass feed-
stocks that may be left on the landscape in
the absence of the incentive created by the
Clean Electricity Tax Credits? How would
these considerations be affected if, in the
absence of the incentive provided by the
Clean Electricity Tax Credits, a feedstock
is used productively but not in electricity
production?
(7) Which feedstock classification cat-
egories should be established for purposes
of LCA analyses, if any? To what extent
should the LCA or LCAs differentiate
between the sources and subtypes of a
given feedstock for electricity production
or not (for example, all forest-derived
materials as one category, or subcatego-
ries such as logging residues)? If applied,
should subcategories of feedstocks be
aggregated in modeling, or should they
be should they be separately modeled?
How could the LCA or LCAs account
for the emissions attributed to feedstocks
that include a mixture of sub-types of
feedstocks, such as products, coproducts,
byproducts and residues? Should LCAs be
standardized or provide average estimates
for feedstocks and how could such stan-
dardization best be done?
(8) What factors should be considered
to determine the appropriate scale(s) of
feedstock demand changes or other shocks
to evaluate the extent to which the produc-
tion, processing, and use of the feedstocks
used for electricity production results in
net greenhouse gas emissions?
(9) Should the shock reflect a small
incremental increase in use of the feed-

Bulletin No. 2024–32 371 August 5, 2024
stock to reflect the marginal impact, or a
large increase to reflect the average effect
of all potential users?
(10) What could the general increment
of the shock be? Should it be specified as
an absolute or relative increase?
(11) What factors should be considered
to determine whether shocks for differ-
ent feedstocks should be implemented in
isolation (separate model runs), in aggre-
gate (for example, as an across-the-board
increase in biomass usage endogenously
allocated by the model across feedstocks),
or something in between (for example,
separately model agriculture-derived and
forest-derived feedstocks, but endoge-
nously allocate within each category)?
(12) How should variation and uncer-
tainty be considered in evaluating model
estimates of the GHG emissions asso-
ciated with an increase in the use of a
feedstock for electricity generation?
Feedstock modeling will likely involve
uncertainties and variabilities associated
with data, parameterization, scenario, and
model choices. For example, if the mod-
eling reports a range of GHG emissions
changes that are greater and less than zero,
how should such a range of outcomes be
evaluated under section 45Y(b)(2)(B)?
f. Book and claim accounting
The Treasury Department and the IRS
are considering whether to allow and
provide rules governing the use of book
and claim accounting in the final regula-
tions for the Clean Electricity Tax Cred-
its. Under these proposed regulations, the
methods used, and emissions associated
with the production of fuels and feed-
stocks used in the generation of electric-
ity are essential to determining whether a
facility is a C&G Facility and assessing its
GHG emissions rate. See Explanation of
Provisions sections I.D.1 and I.D.3 for dis-
cussion of tracking fuel or feedstock pro-
duction to determine whether a facility is a
C&G Facility or Non-C&G Facility. EACs
are a form of book-and-claim accounting
that conveys information about the attri-
butes associated with a unit of energy,
including the fuel or feedstock used to
create the energy. EACs may also include
information about the location of the facil-
ity that generated the unit of energy, when
that facility began operations, and when
the unit of energy was produced. Because
EACs can serve as a system for tracking
the attributes associated with the produc-
tion of a unit of energy and as a means
to avoid double-counting, the Treasury
Department and the IRS are considering
whether to provide rules that address the
use of book-and-claim systems as a means
of verifying the emissions profile of a
facility’s use of fuel and electricity pro-
duction. The Treasury Department and the
IRS request comment on whether and how
it may be appropriate for such systems to
be used in determining GHG emissions
rates in the final regulations for the Clean
Electricity Tax Credits. In particular, com-
ment is requested regarding what types of
energy inputs, including fuels and feed-
stocks, have or may develop sufficiently
robust book-and-claim systems that may
be suitable for use in substantiating and
verifying claims of use of such energy
inputs for purposes of the Clean Electric-
ity Tax Credits. The Treasury Department
and the IRS are considering providing
rules that may permit the use of book and
claim accounting in the final regulations
if there are sufficient assurances that the
energy attributes claimed under such sys-
tem are verifiable and not susceptible to
double counting.
5. Carbon Capture and Sequestration
Proposed §1.45Y-5(e) would provide
that, for purposes of proposed §1.45Y-
5(c) and (d), the GHG emissions rate for
a Non-C&G Facility or C&G Facility
must exclude any qualified carbon dioxide
in such facility’s production of electric-
ity that is captured by the taxpayer, and,
pursuant to any regulations established
under section 45Q(f)(2), disposed of by
the taxpayer in secure geological storage,
or utilized by the taxpayer in a manner
described in section 45Q(f)(5) and any
regulations established under such sec-
tion. The Treasury Department and the
IRS request comment on the following:
(1) What requirements should apply to
substantiate and verify that carbon diox-
ide that is captured by the taxpayer is (a)
disposed of by the taxpayer in secure geo-
logical storage pursuant to any regulations
established under section 45Q(f)(2), dis-
posed of by the taxpayer in secure geolog-
ical storage, or (b) utilized by the taxpayer
in a manner described in section 45Q(f)
(5)? For example, would it be appropriate
to limit the carbon dioxide that may be
considered to be qualified carbon diox-
ide under section 45Y(e)(3), and thus
excluded under section 45Y(b)(2)(D), to
carbon dioxide that has been reported to
the U.S. Greenhouse Gas Reporting Pro-
gram (GHGRP)? If so, which GHGRP
subpart or subparts should be used?
(2) In the event that carbon dioxide that
was captured and sequestered as required
by section 45Y(e)(3) subsequently escapes
into the atmosphere after such carbon
dioxide was taken into account by a tax-
payer that claimed a Clean Electricity Tax
Credit, what enforcement mechanisms or
regulatory regimes should be used to iden-
tify when such emissions leakages have
occurred? How should such emissions
leakages be taken into account in deter-
mining compliance with the GHG emis-
sions rate requirements under sections
45Y and 48E? Are the existing recapture
provisions under section 45Q sufficient
for this purpose?
(3) Should carbon capture and seques-
tration that occurs in the production of fuel
that is used by a facility to produce elec-
tricity be taken into account under pro-
posed §1.45Y-5(e) and section 45Y(e)(3)?
If so, how should such use of carbon cap-
ture and sequestration (for example, emis-
sions from CO
2
capture, purification and
compression, transportation, and CO
2
site
injection) be assessed in an LCA? Should
emissions that occur from carbon capture
and sequestration be taken into account
in determining the net rate of greenhouse
gases emitted into the atmosphere by a
C&G Facility in the production of elec-
tricity? What verification and substantia-
tion requirements would be appropriate to
establish that carbon capture and seques-
tration that met the requirements of pro-
posed §1.45Y-5(e) and section 45Y(e)(3)
were met in the production of a fuel or
feedstock? Are the existing recapture pro-
visions under section 45Q sufficient for
this purpose?
6. Annual Table
Proposed §1.45Y-5(f)(1) would pro-
vide that, as required by section 45Y(b)(2)
(C)(i), the Secretary will annually publish
a table that sets forth the GHG emissions

August 5, 2024 372 Bulletin No. 2024–32
rates for types or categories of facilities
(Annual Table), which a taxpayer must
use for purposes of section 45Y. Proposed
§1.45Y-5(f)(1) would further provide that,
except as provided in proposed §1.45Y-
5(h), a taxpayer that owns a facility that
is described in the Annual Table on the
first day of the taxpayer’s taxable year
in which the section 45Y or section 48E
credit is determined with respect to such
facility must use the Annual Table as of
such date to determine an emissions rate
for such facility for such taxable year.
Types or categories of facilities must be
added or removed from the Annual Table
consistent with, for Non-C&G Facilities,
a technical assessment of the fundamen-
tal energy transformation into electricity
as provided in proposed §1.45Y-5(c)(1)
(ii), and, for C&G Facilities, an LCA that
complies with proposed §1.45Y-5(d) and
(e). Proposed §1.45Y-5(f)(2) would also
provide that in connection with the pub-
lication of the Annual Table, the Secretary
must publish an accompanying expert
analysis that addresses any types or cat-
egories of facilities added or removed
from the Annual Table since its last pub-
lication. Such analysis must be prepared
by one or more of the National Labora-
tories, in consultation with other agency
experts, such as experts from DOE, the
Treasury Department, the United States
Department of Agriculture (USDA), and
the EPA, as appropriate, and must address
whether the addition or removal of types
or categories of facilities from the Annual
Table complies with section 45Y(b)(2)
(A) and 45Y(b)(2)(B) (which refers to
the definition of lifecycle greenhouse gas
emissions in section 211(o)(1)(H) of the
CAA) of the Code and proposed §1.45Y-
5. The Treasury Department and the IRS
view the requirement to publish an expert
analysis prepared by the National Labora-
tories of changes to the Annual Table as
essential to ensuring public accountability
and adherence to sound scientific princi-
ples. This requirement would also ensure
that the Secretary has a robust record to
inform any changes to the Annual Table.
The Treasury Department and the IRS
intend to include in the Annual Table
the types or categories of facilities that
are described in the final regulations as
having a GHG emissions rate that is not
greater than zero. The Treasury Depart-
ment and the IRS intend to publish the
first Annual Table after the publication of
the final regulations. Until the first publi-
cation of the Annual Table, taxpayers may
treat the types or categories of facilities
that are listed in proposed §1.45Y-5(c)(2)
(i) through (viii) as being described in an
Annual Table as having a GHG emissions
rate that is not greater than zero. Further,
any types or categories of facilities that
are added or removed from this list in the
first publication of the Annual Table must
be accompanied by the publication of an
expert analysis of such change as pro-
vided in proposed §1.45Y-5(f)(2).
7. Provisional Emissions Rates
Proposed §1.45Y-5(g) would pro-
vide the rules applicable to provisional
emissions rates. Proposed §1.45Y-5(g)
(1) would provide that, in the case of
any facility that is of a type or category
for which an emissions rate has not been
established by the Secretary under pro-
posed §1.45Y-5(g), a taxpayer that owns
such facility may file a petition with the
Secretary for the determination of the
emissions rate with respect to such facility
(Provisional Emissions Rate or PER).
Proposed §1.45Y-5(g)(2) would pro-
vide that an emissions rate has not been
established by the Secretary for a facil-
ity for purposes of section 45Y(b)(2)(C)
(ii) if such facility is not described in the
Annual Table. Proposed §1.45Y-5(g)(2)
would further provide that if a taxpayer’s
request for an emissions value pursuant to
proposed §1.45Y-5(g)(5) is pending at the
time such facility is or becomes described
in the Annual Table, the taxpayer’s request
for an emissions value will be automati-
cally denied.
Proposed §1.45Y-5(g)(3) would pro-
vide the process for filing a PER petition.
Proposed §1.45Y-5(g)(3) would provide
that to file a PER petition with the Secre-
tary, a taxpayer must submit a PER peti-
tion by attaching it to the taxpayer’s Fed-
eral income tax return or Federal return,
as appropriate, for the first taxable year
in which the taxpayer claims the section
45Y credit with respect to the facility to
which the PER petition applies. Proposed
§1.45Y-5(g)(3) would further provide that
a PER petition must contain an emissions
value and, if applicable, the associated
DOE letter. An emissions value may be
obtained from DOE or by using the LCA
model designated in proposed §1.45Y-
5(g)(6). An emission value obtained from
DOE will be based on an analytical assess-
ment of the emissions rate associated with
the facility, performed by one or more
National Laboratories, in consultation
with other agency experts as appropriate,
consistent with proposed §1.45Y-5. A tax-
payer would be required to retain in its
books and records the request to DOE for
an emissions value, including any infor-
mation provided by the taxpayer to DOE
pursuant to the emissions value request
process provided in proposed §1.45Y-5(g)
(5). Alternatively, an emissions value can
be determined by the taxpayer for a facil-
ity using the most recent version of an
LCA model or models, as of the time the
PER petition is filed, that have been desig-
nated by the Secretary for such use under
proposed §1.45Y-5(g)(6). If an emissions
value is determined using the designated
model, a taxpayer is required to provide to
the IRS information to support its deter-
mination of the emissions value in the
form and manner prescribed in IRS forms
or instructions or in publications or guid-
ance published in the Internal Revenue
Bulletin. A taxpayer may not request an
emissions value from DOE for a facility
for which an emissions value can be deter-
mined by using the most recent version of
an LCA model or models that have been
designated by the Secretary for such use
under proposed §1.45Y-5(g)(6).
Proposed §1.45Y-5(g)(4) would pro-
vide that, upon the IRS’s acceptance of the
taxpayer’s Federal income tax return or
Federal return, as appropriate, containing
a PER petition, the emissions value of the
facility specified on such petition will be
deemed accepted. Proposed §1.45Y-5(g)
(4) would further provide that a taxpayer
would be able to rely upon an emissions
value provided by DOE for purposes of
calculating and claiming a section 45Y
credit, provided that any information,
representations, or other data provided to
DOE in support of the request for an emis-
sions value are accurate. If applicable, a
taxpayer may rely upon an emissions
value determined for a facility using the
most recent version of the LCA model or
models that, as of the time the PER peti-
tion is filed, have been designated by the

Bulletin No. 2024–32 373 August 5, 2024
Secretary for such use under proposed
§1.45Y-5(g)(6), provided that any infor-
mation, representations, or other data
used to obtain such emissions value are
accurate. The IRS’s deemed acceptance
of an emissions value is the Secretary’s
determination of the PER. Finally, pro-
posed §1.45Y-5(g)(4) would provide that
the taxpayer must still comply with all
applicable requirements for the section
45Y credit and any information, represen-
tations, or other data supporting an emis-
sions value are subject to later examina-
tion by the IRS.
Proposed §1.45Y-5(g)(5) would pro-
vide the rules applicable to the emissions
value request process. Proposed §1.45Y-
5(g)(5) would provide that an applicant
that submits a request for an emissions
value must follow the procedures spec-
ified by DOE to request and obtain such
emissions value, and that emissions val-
ues will be determined consistent with
the rules provided in proposed §1.45Y-5.
Proposed §1.45Y-5(g)(5) would further
provide that an applicant may request an
emissions value from DOE only after a
front-end engineering and design (FEED)
study or similar indication of project
maturity, as determined by DOE, such as
the completion of a project specification
and cost estimation sufficient to inform a
final investment decision for the facility.
Proposed §1.45Y-5(g)(5) would provide
that DOE may decline to review appli-
cations that are non-responsive and those
applications that relate to a facility that is
described in the Annual Table (consistent
with proposed §1.45Y-5(g)(2)) or a facil-
ity that can determine an emissions value
using a designated LCA model under pro-
posed §1.45Y-5(g)(6) (consistent with
proposed §1.45Y-5(g)(3)), or applications
that are incomplete. Proposed §1.45Y-5(g)
(5) would also provide that applicants must
follow DOE’s guidance and procedures
for requesting and obtaining an emissions
value from DOE. DOE will publish guid-
ance and procedures that applicants must
follow to request and obtain an emissions
value from DOE. DOE’s guidance and
procedure will include a process, under
limited circumstances, for a taxpayer to
request a revision to DOE’s initial assess-
ment of an emissions value on the basis
of revised technical information or facil-
ity design and operation. The Treasury
Department and the IRS anticipate that
the emissions value request process will
open after the publication of the final reg-
ulations.
Proposed §1.45Y-5(g)(6) would pro-
vide that the Secretary may designate
one or more LCA models for a taxpayer
to determine an emissions value for
C&G Facilities that are not described in
the Annual Table. Proposed §1.45Y-5(g)
(6) would further provide that a model
may only be designated if it complies
with section 45Y(b)(2)(B) and proposed
§1.45Y-5(d) and (e). The Secretary may
revoke the designation of an LCA model
or models. In connection with the desig-
nation or revocation of a designation of
an LCA model or models, the Secretary
would be required to publish an accom-
panying expert analysis of the model
prepared by one or more of the National
Laboratories, in consultation with other
agency experts as appropriate, and such
analysis must address the model’s com-
pliance with section 45Y(b)(2)(B) of the
Code and proposed §1.45Y-5(d) and (e).
The Treasury Department and the IRS
view the requirement to publish an expert
analysis prepared by the National Labora-
tories of the designation or revocation of
designation of an LCA model or models as
essential to ensuring public accountability
and adherence to sound scientific princi-
ples. This requirement would also ensure
that the Secretary has a robust record to
inform any designations or revocations of
an LCA model or models.
Proposed §1.45Y-5(g)(7) would pro-
vide the rules governing the effect of a
PER. Proposed §1.45Y-5(g)(7) would
provide that a taxpayer may use a PER
determined by the Secretary to determine
the section 45Y credit for the facility to
which the PER applies, provided all other
requirements of section 45Y are met. Pro-
posed §1.45Y-5(g)(7) would further pro-
vide that the Secretary’s PER determina-
tion is not an examination or inspection of
books of account for purposes of section
7605(b) of the Code and does not preclude
or impede the IRS (under section 7605(b)
or any administrative provisions adopted
by the IRS) from later examining a return
or inspecting books or records with respect
to any taxable year for which the section
45Y credit is claimed. Finally, proposed
§1.45Y-5(g)(7) would provide that a PER
determination does not signify that the
IRS has determined that the requirements
of section 45Y have been satisfied for any
taxable year.
8. Reliance on Annual Table or
Provisional Emissions Rate
Proposed §1.45Y-5(h) would provide
that taxpayers may rely on the Annual
Table in effect as of the date a facility
began construction or the provisional
emissions rate that has been determined
by the Secretary for the taxpayer’s facility
under proposed §1.45Y-5(g)(4) to deter-
mine the facility’s GHG emissions rate
for that facility for any taxable year that
is within the 10-year period described in
section 45Y(b)(1)(B), provided that the
facility continues to operate as a type of
facility that is described in the Annual
Table or the facility’s emissions value
request, as applicable, for the entire tax-
able year.
9. Substantiation
Taxpayers have a general obligation
to substantiate and verify that they have
met the requirements of any tax credits
claimed on their tax returns. Section 6001
of the Code provides that every person
liable for any tax imposed by the Code,
or for the collection thereof, must keep
such records as the Secretary may from
time to time prescribe. Section 1.6001-
1(a) provides that any person subject to
income tax must keep such permanent
books of account or records as are suf-
ficient to establish the amount of gross
income, deductions, credits, or other mat-
ters required to be shown by such person
in any return of such tax. Section 1.6001-
1(e) provides that the books and records
required by §1.6001-1 must be retained so
long as the contents thereof may become
material in the administration of any inter-
nal revenue law.
In addition to this general obligation
to substantiate eligibility for a claimed
tax credit, taxpayers may also be required
to keep specific records as prescribed by
the Secretary. This may be appropriate
for purposes of the section 45Y credit
because certain types of facilities may
depend on operational choices, such as
the use of certain types of feedstocks

August 5, 2024 374 Bulletin No. 2024–32
or fuels or engaging in carbon capture
and sequestration, to achieve a net GHG
emissions rate that is not greater than
zero for a taxable year, and these oper-
ational choices may vary by year. Pro-
posed §1.45Y-5(i)(1) would provide that
a taxpayer must maintain in its books
and records documentation regarding
the design, operation, and if applicable,
feedstock or fuel source used by the facil-
ity that establishes that such facility had
a GHG emissions rate, as determined
under §1.45Y-5, that is not greater than
zero for the taxable year. The Treasury
Department and the IRS intend to require
in the final regulations that taxpayers
maintain specific types of documentation
to substantiate that a facility for which a
section 45Y credit is claimed has a net
GHG emissions rate that is not greater
than zero. The Treasury Department and
the IRS request comment on the types
of documentation taxpayers should be
required to maintain to substantiate eligi-
bility for the section 45Y credit.
Proposed §1.45Y-5(i)(2) would further
provide that documentation that is suffi-
cient to substantiate that a facility had a
GHG emissions rate of not greater than
zero includes documentation or a report
prepared by an unrelated party that veri-
fies that a facility had such an emissions
rate. Proposed §1.45Y-5(i)(2) would
also provide that facilities described in
§1.45Y-5(c)(2) can maintain sufficient
documentation to demonstrate a GHG
emissions rate showing that the facility
is described in §1.45Y-5(c)(2). Finally,
proposed §1.45Y-5(i)(2) would provide
that future guidance may describe suffi-
cient documentation to substantiate that
certain facilities have a GHG emissions
rate of not greater than zero. Because
certain types or categories of facilities
may have emissions rates that are highly
variable and dependent on complex inter-
actions between design choices, oper-
ational choices, and fuel and feedstock
sourcing choices, the Treasury Depart-
ment and the IRS seek comment on the
relative risk of inadvertently crediting
above-zero-emissions electricity genera-
tion for types or categories of facilities
that may potentially be ineligible for the
section 45Y credit. In addition, comment
is also requested on supply chain tracing
and substantiation requirements that the
Treasury Department and the IRS may
require in the final regulations to demon-
strate whether a facility used a specific
fuel to produce electricity and that such
fuel has the emissions attributes claimed
by the taxpayer. Specifically, to inform
the development of the substantiation
rules for the Clean Electricity Tax Cred-
its, comment is requested on the follow-
ing topics:
(1) What types of documentation or
substantiation should a taxpayer maintain
to establish that an input in the supply
chain of a fuel/feedstock used for electric-
ity production has the energy attributes or
other relevant characteristics (for exam-
ple, source and production process) that
were taken into account in determining a
GHG emissions rate?
(2) What existing systems, industry
standards, or practices may be used to
substantiate that a facility’s operations
and the supply chain for the inputs it used
to produce electricity resulted in a GHG
emissions rate that is not greater than zero
for a taxable year? If existing systems,
standards, or practices are currently not
sufficiently developed to serve as a form
of substantiation, how should such track-
ing and verification systems be developed
and how long might such development
take?
(3) What supply chain tracing systems
or verification bodies address fuels or
feedstocks that may be commonly used
by facilities that may be eligible for the
Clean Electricity Tax Credits? What fuels
or feedstocks could these systems or bod-
ies address and for what purpose?
E. One-Megawatt Exception for section
45Y
The Treasury Department and the IRS
intend to provide a more detailed defi-
nition for the One-Megawatt Exception
in section 45Y(a)(2)(B)(i) by expanding
upon the definition provided in the August
Proposed Regulations. The final regula-
tions would provide that, for purposes of
section 45Y(a)(2)(B)(i), the determination
of whether a qualified facility has a maxi-
mum net output of less than one megawatt
of electricity (as measured in alternating
current) is determined based on the name-
plate capacity. If applicable, taxpayers
must use the International Standard Orga-
nization (ISO) conditions to measure the
maximum electrical generating output of
a qualified facility. For purposes of this
measurement, the nameplate capacity is
the maximum electrical generating out-
put in MW (as measured in alternating
current) that the qualified facility is capa-
ble of producing on a steady state basis
and during continuous operation under
standard conditions, as measured by the
manufacturer and consistent with the defi-
nition of nameplate capacity provided in
40 CFR 96.202. The Treasury Department
and the IRS request comment on this pro-
posed definition. This rule is proposed to
apply to qualified facilities placed in ser-
vice after December 31, 2024, and during
taxable years ending on or after the date of
publication of the final regulations in the
Federal Register.
II. Rules Applicable to the Clean
Electricity Investment Tax Credit
These proposed regulations are orga-
nized in five sections, proposed §§1.48E-1
through 1.48E-5 (section 48E regula-
tions). Proposed §1.48E-1 would provide
an overview of the section 48E regula-
tions, generally applicable definitions, and
the rules applicable to the calculation of
the section 48E credit. Proposed §1.48E-2
would provide rules relating to a qualified
facility, a qualified investment, a qualified
property, and an energy storage technol-
ogy (EST). Section 1.48E-3 is reserved
for rules relating to the increased credit
amount for meeting the prevailing wage
and apprenticeship requirements. A cross
reference will be added to §1.48E-3 in the
final regulations when §1.48E-3 is final-
ized. Proposed §1.48E-4 would provide
the rules of general application under
section 48E, including the rules regarding
the inclusion of qualified interconnection
costs in the basis of a low-output associ-
ated qualified facility, rules for expansion
of a facility and incremental production,
rules for retrofitting an existing facility,
rules for the ownership of a qualified
facility or an EST, rules regarding the
coordination of the section 48E credit
with other Federal income tax credits,
and rules for credit recapture. Proposed
§1.48E-5 would provide rules pertaining
to the determination of a GHG emissions
rate for a facility under section 48E.

Bulletin No. 2024–32 375 August 5, 2024
A. Amount of credit
Proposed §1.48E-1(a) would provide
an overview of the section 48E regula-
tions and provide definitions of terms for
purposes of the section 48E regulations.
Proposed §1.48E-1(b) would explain how
to calculate the amount of the section 48E
credit for any taxable year.
Proposed §1.48E-1(b)(1) would pro-
vide that the credit is an amount equal to
the applicable percentage of the qualified
investment for such taxable year with
respect to any qualified facility (as defined
in proposed §1.48E-2(a)) and any EST (as
defined in proposed §1.48E-2(g)). Pro-
posed §1.48E-1(b)(2) would define the
applicable percentage as the base rate in
proposed §1.48E-1(b)(3) or the alterna-
tive rate in proposed §1.48E-1(b)(4). Pro-
posed §1.48E-1(b)(2) would also propose
that the applicable percentage may be
increased as provided in section 48E(a)
(3)(A) and proposed §1.48E-1(b)(5) in the
case of a qualified facility that is located in
an energy community. Similarly, §1.48E-
1(b)(2) would propose that the applicable
percentage may be increased as provided
in section 48E(a)(3)(B) and proposed
§1.48E-1(b)(6) in the case of a qualified
facility that satisfies the domestic content
requirements.
Proposed §1.48E-1(b)(3) would
describe the base rate as 6 percent. Pro-
posed §1.48E-1(b)(4) would describe
the alternative rate as 30 percent if cer-
tain prevailing wage and apprenticeship
requirements are satisfied.
Proposed §1.48E-1(b)(5) would pro-
vide rules applicable to the energy com-
munities increase in credit rate. Proposed
§1.48E-1(b)(6) would provide rules appli-
cable to the domestic content increase in
credit rate.
Proposed §1.48E-1(c) would provide
the credit phase-out rules. Generally, pro-
posed §1.48E-1(c)(1) would provide that
the amount of the clean electricity invest-
ment credit under section 48E for any
qualified facility or EST the construction
of which begins during a calendar year
described in section 48E(e)(2) is equal
to the product of the amount of the credit
determined under section 48E(a) and
proposed §1.48E-1(b) without regard to
section 48E(e), multiplied by the phase-
out percentage under section 48E(e)(2)
and proposed §1.48E-1(c)(2). Proposed
§1.48E-1(c)(2) would provide that the
phase-out percentage is 100 percent for
any qualified investment with respect
to any qualified facility or EST the con-
struction of which begins during the first
calendar year following the applicable
year; 75 percent for any qualified invest-
ment with respect to any qualified facility
or EST the construction of which begins
during the second calendar year follow-
ing the applicable year; 50 percent for any
qualified investment with respect to any
qualified facility or EST the construction
of which begins during the third calendar
year following the applicable year; and 0
percent for any qualified investment with
respect to any qualified facility or EST
the construction of which begins during
any calendar year subsequent to the cal-
endar year described in section 48E(e)
(2)(C). Proposed §1.48E-1(c)(3) would
define “applicable year” for purposes of
proposed §1.48E-1(c) as having the same
meaning as provided in proposed §1.45Y-
1(c)(3).
B. Qualified facility
Proposed §1.48E-2(a) would define
a “qualified facility” to mean a facility
that is used for the generation of electric-
ity; is placed in service by the taxpayer
after December 31, 2024; and has a GHG
emissions rate of not greater than zero
(as determined under rules provided in
§1.45Y-5).
1. Property included in Qualified Facility
Proposed §1.48E-2(b) would provide
that a qualified facility includes a unit of
qualified facility (as defined in proposed
§1.48E-2(b)(2)(i)) and property owned
by the same taxpayer that is integral to
the unit of qualified facility (as described
in proposed §1.48E-2(b)(3)). Proposed
§1.48E-2(b)(1) would provide that any
component of property that meets the
requirements of proposed §1.48E-2(b)
is part of a qualified facility regardless
of where such component of property is
located. Proposed §1.48E-2(b)(1) would
provide that a qualified facility does
not include any electrical transmission
equipment, such as transmission lines
and towers, or any equipment beyond the
electrical transmission stage. Proposed
§1.48E-2(b)(1) would also provide that
a qualified facility generally does not
include equipment that is an addition
or modification to an existing qualified
facility. However, proposed §1.48E-2(b)
(1) would reference proposed §1.48E-
4(b) regarding the expansion of a facility
or incremental production and proposed
§1.48E-4(c) for rules regarding retrofit-
ted facilities (80/20 Rule).
2. Functionally Interdependent
Proposed §1.48E-2(b)(2)(i) would
provide that the unit of a qualified facil-
ity includes functionally interdependent
components of a property (as defined
in §1.48E-2(b)(2)(ii) owned by the tax-
payer that are operated together and that
can operate apart from other property to
produce electricity. Proposed §1.48E-
2(b)(2)(i) would further provide that no
provision of this section, §1.48E-1, or
§1.48E-4 through 1.48E-5 uses the term
“unit” in respect of a qualified facility
with any meaning other than that pro-
vided in §1.48E-2(b)(2)(ii). A reference to
§1.48E-3 will also be added to the previ-
ous sentence in proposed §1.48E-2(b)(2)
(i) when that regulation is finalized, but it
cannot be added until §1.48E-3 is final-
ized. Proposed §1.48E-2(b)(2)(ii) would
define components as “functionally inter-
dependent” if the placing in service of
each of the components is dependent upon
the placing in service of each of the other
components to produce electricity.
3. Integral Part
Proposed §1.48E-2(b)(3)(i) would pro-
vide that property owned by a taxpayer
is an integral part of a qualified facility
owned by the same taxpayer if it is used
directly in the intended function of the
qualified facility and is essential to the
completeness of the intended function.
Proposed §1.48E–2(b)(3)(i) would also
clarify that property that is an integral part
of a qualified facility is part of the quali-
fied facility. Lastly, proposed §1.48E–2(b)
(3)(i) would explain that a taxpayer may
not claim the section 48E credit for any
property that is an integral part of a qual-
ified facility that is not owned by the tax-
payer.

August 5, 2024 376 Bulletin No. 2024–32
Proposed §1.48E–2(b)(3)(ii) would
describe power conditioning equipment
and transfer equipment as integral parts of
a qualified facility. Proposed §1.48E–2(b)
(3)(ii) would further provide that power
conditioning equipment includes equip-
ment that modifies the characteristics of
electricity into a form suitable for use or
transmission or distribution. Proposed
§1.48E–2(b)(3)(ii) would also provide
that parts related to the functioning or pro-
tection of power conditioning equipment
are also treated as power conditioning
equipment and include examples.
Proposed §1.48E–2(b)(3)(ii) would
further provide that transfer equipment
includes components that permit the
aggregation of electricity generated by
components of qualified facilities and
components that alter voltage to permit
transfer to a transmission or distribution
line and would clarify that transfer equip-
ment does not include transmission or
distribution lines. Proposed §1.45Y–2(b)
(3)(ii) would provide examples of transfer
equipment that include, but are not limited
to, wires, cables, and combiner boxes that
conduct electricity. Proposed §1.45Y–
2(b)(3)(ii) would provide that parts related
to the functioning or protection of trans-
fer equipment are also treated as transfer
equipment and include examples.
Proposed §1.48E-2(b)(3)(iii) would
provide that roads that are an integral part
of a qualified facility are those roads inte-
gral to the intended function of the quali-
fied facility such as onsite roads that are
used to operate and maintain the qualified
facility. Proposed §1.48E–2(b)(3)(iii)
would also clarify that roads primarily for
access to the site, or roads used primarily
for employee or visitor vehicles, are not
integral to the intended function of the
qualified facility, and thus are not an inte-
gral part of a qualified facility.
Proposed §1.48E-2(b)(3)(iv) and (v)
would provide that fences and buildings
(also referred to as structures) are gener-
ally not integral parts of a qualified facil-
ity because they are not integral to the
intended function of the qualified facility.
However, a building (or structure) may
be an integral part of a qualified facility
if it is essentially an item of machinery
or equipment and a structure that houses
property that is integral to the intended
function of the qualified facility, if the use
of the structure is so closely related to the
use of the housed components of property
therein that the structure clearly can be
expected to be replaced if the components
of property it initially houses are replaced.
Proposed §1.48E-2(b)(3)(vi) would
provide a rule for shared integral property
stating that multiple qualified facilities
(whether owned by one or more taxpayers),
including qualified facilities with respect to
which a taxpayer has claimed a credit under
section 48E or another Federal income
tax credit, may include shared property
that may be considered an integral part of
each qualified facility so long as the cost
basis for the shared property is properly
allocated to each qualified facility and the
taxpayer only claims a section 48E credit
with respect to the portion of the cost basis
properly allocable to a facility for which
the taxpayer is claiming a section 48E
credit. Proposed §1.48E-2(b)(3)(vi) would
further clarify that the total cost basis of
such shared property divided among the
qualified facilities may not exceed 100
percent of the cost of such shared property.
Lastly, proposed §1.48E-2(b)(3)(vi) speci-
fies that property that is shared by a qual-
ified facility (as defined in section 48E(b)
(3)) (48E Qualified Facility) and a qualified
facility (as defined by section 45Y(b) (45Y
Qualified Facility) that is an integral part of
both qualified facilities will not affect the
eligibility of the 48E Qualified Facility for
the section 48E credit or the 45Y Qualified
Facility for the section 45Y credit.
4. Coordination with Other Credits
Proposed §1.48E-2(c)(1) would pro-
vide that the term “qualified facility” (as
defined in section 48E(b)(3)) will not
include any facility for which a credit
determined under section 45, 45J, 45Q,
45U, 45Y, 48, or 48A is allowed under
section 38 for the taxable year or any
prior taxable year. Proposed §1.48E-2(c)
(1) would further clarify that a taxpayer
that directly owns a qualified facility (as
defined in section 48E(b)(3)) that is eli-
gible for both a section 48E credit and
another Federal income tax credit is eli-
gible for the section 48E credit only if
the other Federal income tax credit was
not allowed with respect to the qualified
facility. Proposed §1.48E-2(c)(1) would
provide that nothing in proposed §1.48E-
2(c) precludes a taxpayer from claiming a
section 48E credit with respect to a qual-
ified facility (as defined in section 48E(b)
(3)) that is co-located with another facility
for which a credit determined under sec-
tion 45, 45J, 45Q, 45U, 45Y, 48, or 48A
is allowed under section 38 for the taxable
year or any prior taxable year.
Proposed §1.48E-2(c)(2) would clar-
ify that for purposes of proposed §1.48E-
2(c)(1), the term “allowed” only includes
credits that taxpayers have claimed on
a Federal income tax return or Federal
return, as appropriate, and that the IRS has
not challenged in terms of the taxpayer’s
eligibility.
Proposed §1.48E-2(c)(3) would
include several examples that illustrate the
application of the rules provided in pro-
posed §1.48E-2(c).
5. Qualified Investment with Respect to a
Qualified Facility
Proposed §1.48E-2(d) would describe
a qualified investment with respect to any
qualified facility for any taxable year as the
sum of the basis of any qualified property
(as defined in proposed §1.48E-2(e)(1))
placed in service by the taxpayer during
such taxable year that is part of a qualified
facility (as defined in proposed §1.48E-
2(a)) and the amount of any expenditures
paid or incurred by the taxpayer for qual-
ified interconnection property (as defined
in proposed §1.48E-4(a)(2)).
6. Qualified Property
a. Generally
Proposed §1.48E-2(e) would define
“qualified property” for purposes of pro-
posed §1.48E-2(a) to mean property that
meets three requirements. First, proposed
§1.48E-2(e)(1)(i) would require that the
property is tangible personal property (as
defined in proposed §1.48E-2(f)(1)) or
other tangible property (not including a
building or its structural components) (as
defined in proposed §1.48E-2(f)(2)), but
only if such other tangible property is used
as an integral part (as defined in proposed
§1.48E-2(b)(3)) of the qualified facility
(as defined in proposed §1.48E-2(a)).
Second, proposed §1.48E-2(e)(1)(ii)
would require that depreciation (or amor-

Bulletin No. 2024–32 377 August 5, 2024
tization in lieu of depreciation) be allow-
able (as defined in proposed §1.48E-2(f)
(6)) with respect to the property.
Third, proposed §1.48E-2(e)(1)(iii)
would require that the taxpayer either con-
structs, reconstructs, or erects the property
(as defined in proposed §1.48E-2(f)(3)) or
acquires the property (as defined in pro-
posed §1.48E-2(f)(4)) if the original use
of the property (as defined in proposed
§1.48E-2(f)(5)) commences with the tax-
payer.
Proposed §1.48E-2(e)(2) would pro-
vide that any component of a qualified
property that meets the requirements of
proposed §1.48E-2(e) is part of a qualified
facility regardless of where such compo-
nent of property is located.
b. Definitions related to qualified property
Tangible personal property
Proposed §1.48E-2(f)(1) would define
the term “tangible personal property”
for purposes of section 48E and pro-
posed §1.48E-2(b) to mean any tangible
property except land and improvements
thereto, such as buildings or other inher-
ently permanent structures (including
items that are structural components of
such buildings or structures). Proposed
§1.48E-2(f)(1) would further provide that
tangible personal property includes all
property (other than structural compo-
nents) that is contained in or attached to a
building and that all property that is in the
nature of machinery (other than structural
components of a building or other inher-
ently permanent structure) is considered
tangible personal property even though
located outside a building. Finally, pro-
posed §1.48E-2(f)(1) would clarify that
local law is not controlling for purposes
of determining whether property is or is
not tangible property or tangible personal
property. Therefore, proposed §1.48E-2(f)
(1) would explain that tangible property
may be personal property for purposes of
the section 48E credit even though under
local law the property is considered a fix-
ture and therefore real property.
Other tangible property
Proposed §1.48E-2(f)(2) would define
the term “other tangible property” to mean
tangible property other than tangible per-
sonal property (not including a building
and its structural components), that is used
as an integral part of furnishing electricity
by a person engaged in a trade or business
of furnishing any such service.
Construction, reconstruction, or erection
of qualified property
Proposed §1.48E-2(f)(3) would define
the term “construction, reconstruction, or
erection of qualified property” to mean
work performed to construct, reconstruct,
or erect qualified property either by the
taxpayer or for the taxpayer in accordance
with the taxpayer’s specifications.
Acquisition of qualified property
Proposed §1.48E-2(f)(4) would define
the term “acquisition of qualified prop-
erty” to mean a transaction by which a
taxpayer obtains rights and obligations
with respect to qualified property includ-
ing title to the qualified property under
the law of the jurisdiction in which the
qualified property is placed in service,
unless the qualified property is possessed
or controlled by the taxpayer as a lessee,
and physical possession or control of the
qualified property.
Original use of qualified property
Proposed §1.48E-2(f)(5)(i) would pro-
vide that the term “original use of quali-
fied property” means the first use to which
qualified property is put, whether or not
such use is by the taxpayer. Proposed
§1.48E-2(f)(5)(ii) would clarify that a
retrofitted qualified facility acquired by
the taxpayer will not be treated as being
put to original use by the taxpayer unless
the rules in proposed §1.48E–4(c) regard-
ing retrofitted qualified facilities (80/20
Rule) apply. Proposed §1.48E-2(f)(5)(ii)
explains that the question of whether a
qualified facility meets the 80/20 Rule is
a facts and circumstances determination.
Depreciation allowable
Proposed §1.48E-2(f)(6)(i) would
provide a general rule for purposes of
applying proposed §1.48E-2(b), that
depreciation (or amortization in lieu of
depreciation) is allowable with respect to
qualified property if such property is of
a character subject to the allowance for
depreciation under section 167 of the Code
and the basis or cost of such property is
recovered using a method of depreciation
(for example, the straight line method),
which includes any additional first year
depreciation deduction method of depre-
ciation (for example, under section 168(k)
of the Code). Proposed §1.48E-2(f)(6)
(i) would further clarify that if an adjust-
ment with respect to the Federal income
tax or Federal return for such taxable year
requires the basis or cost of such qualified
property to be recovered using a method
of depreciation, depreciation is allowable
to the taxpayer with respect to the quali-
fied property. Proposed §1.48E-2(f)(6)(ii)
would describe exclusions from allowable
depreciation stating that for purposes of
proposed §1.48E-2(b), depreciation is not
allowable with respect to a qualified facil-
ity if the basis or cost of such qualified
facility is not recovered through a method
of depreciation but, instead, such basis or
cost is recovered through a deduction of
the full basis or cost of the qualified facil-
ity in one taxable year (for example, under
section 179 of the Code).
Placed in service
Proposed §1.48E-2(f)(7)(i) would
provide the general rule for determining
when a qualified facility has been placed
in service for purposes of the section 48E
credit. Proposed §1.48E-2(f)(7)(ii) would
provide that notwithstanding the general
placed in service rules provided in pro-
posed §1.48E-2(f)(7)(i), a qualified facil-
ity with respect to which an election is
made under §1.48-4 to treat the lessee as
having purchased such qualified facility is
considered placed in service by the lessor
in the taxable year in which possession is
transferred to such lessee.
Claim
Proposed §1.48E-2(f)(8) would pro-
vide that with respect to a section 48E
credit determined with respect to qualified
facility of a taxpayer, the term “claim”
would be defined to mean filing a com-
pleted Form 3468, Investment Credit, or
any successor form(s), with the taxpayer’s

August 5, 2024 378 Bulletin No. 2024–32
timely filed (including extensions) Federal
income tax return or Federal return, as
appropriate, for the taxable year in which
the qualified facility is placed in service,
and includes making an election under
section 6417 or 6418 of the Code and
corresponding regulations with respect to
such section 48E credit and made on the
taxpayer’s filed return.
C. Energy storage technology
1. General Rule
Proposed §1.48E-2(g)(1) would pro-
vide that an EST includes a unit of EST
that meets the requirements of proposed
§1.48E-2(g)(2)(i). An EST also would
include property owned by the taxpayer
that is an integral part (as defined in pro-
posed §1.48E-2(g)(3)) of the unit of EST.
Proposed §1.48E-2(g)(1) would provide
that equipment that is an addition or mod-
ification to an existing EST is not eligi-
ble for the section 48E credit. Proposed
§1.48E-2(g)(1) would further provide
that, an EST would include electrical
energy storage property described in pro-
posed §1.48E-2(g)(6)(i), thermal energy
storage property described in proposed
§1.48E-2(g)(6)(ii), and hydrogen energy
storage property described in proposed
§1.48E-2(g)(6)(iii).
Proposed §1.48E-2(g)(2) would pro-
vide that a unit of EST includes all func-
tionally interdependent components of
property (as defined in proposed §1.48E-
2(g)(2)(ii)), owned by the taxpayer that
are operated together and that can operate
apart from other property to perform the
intended function of the EST.
2. Functionally Interdependent
Proposed §1.48E-2(g)(2)(i) would pro-
vide that for purposes of the section 48E
credit, a unit of EST includes all function-
ally interdependent components of prop-
erty (as defined in proposed §1.48E-2(g)
(2)(ii)) owned by the taxpayer that are
operated together and that can operate
apart from other property to perform the
intended function of the EST. Proposed
§1.48E-2(g)(2)(i) would also provide that
no provision of this section, §1.48E-1, or
§1.48E-4 through 1.48E-5 uses the term
unit in respect of an EST with any mean-
ing other than that provided in §1.48E-2(g)
(2)(i). Proposed §1.48E-2(g)(2)(ii) would
provide that components are functionally
interdependent if the placing in service of
each of the components is dependent upon
the placing in service of each of the other
components to perform the intended func-
tion of the EST.
3. Integral Part
Proposed §1.48E-2(g)(3) would pro-
vide that property owned by a taxpayer
is an integral part of EST owned by the
same taxpayer if it is used directly in the
intended function of the EST and is essen-
tial to the completeness of such function.
Proposed §1.48E-2(g)(3) would also pro-
vide that property that is an integral part of
an EST is part of an EST. Lastly, proposed
§1.48E-2(g)(3) would provide that a tax-
payer may not claim the section 48E credit
for any property that is an integral part of
an EST that is not owned by the taxpayer.
4. Qualified Investment with Respect to
Energy Storage Technology
Proposed §1.48E-2(g)(4) would
describe the qualified investment with
respect to any EST for any taxpayer year
as the basis of any EST placed in service
by the taxpayer during such taxable year.
5. Placed in Service
Proposed §1.48E-2(g)(5)(i) would pro-
vide rules for determining when an EST
has been placed in service for purposes of
the section 48E credit. Proposed §1.48E-
2(g)(5)(ii) also would provide that not-
withstanding the general placed in service
rules provided in proposed §1.48E-2(g)
(5)(i), an EST with respect to which an
election is made under §1.48-4 to treat the
lessee as having purchased such EST is
considered placed in service by the lessor
in the taxable year in which possession is
transferred to such lessee.
6. Types of Energy Storage Technologies
Proposed §1.48E-2(g)(6)(i) would
describe electrical energy storage property
as property (other than property primar-
ily used in the transportation of goods or
individuals and not for the production of
electricity) that receives, stores, and deliv-
ers energy for conversion to electricity and
has a nameplate capacity of not less than
5 kWh. See subsection C of Overview of
Section 48E. Proposed §1.48E-2(g)(6)(i)
also would provide examples of such elec-
trical energy storage property, subject to
the exclusion for property primarily used in
the transportation of goods or individuals.
The Treasury Department and the IRS
understand that this exclusion for prop-
erty primarily used in the transportation of
goods or individuals, at a minimum, would
apply to batteries and other EST that are
incorporated into or otherwise physically
integrated within motor vehicles and other
modes of transportation of goods or indi-
viduals and from which an electric motor
of such vehicle or other mode of transpor-
tation draws electricity for propulsion.
Proposed §1.48E-2(g)(6)(ii) would
describe thermal energy storage property
as property comprising a system that is
directly connected to a heating, ventila-
tion, or air conditioning (HVAC) system;
removes heat from, or adds heat to, a stor-
age medium for subsequent use; and pro-
vides energy for the heating or cooling of
the interior of a residential or commercial
building. See section C of Overview of
Section 48E. Proposed §1.48E-2(g)(6)(ii)
would also provide that thermal energy
storage property includes equipment and
materials, and parts related to the func-
tioning of such equipment, to store ther-
mal energy for later use to heat or cool,
or to provide hot water for use in heat-
ing a residential or commercial building.
In addition, proposed §1.48E-2(g)(6)(ii)
would provide that thermal energy stor-
age property does not include a swimming
pool, CHP property, or a building or its
structural components. Lastly, proposed
§1.48E-2(g)(6)(ii) would provide exam-
ples of thermal energy storage property.
Proposed §1.48E-2(g)(6)(iii) would
provide that hydrogen energy storage prop-
erty is property (other than property pri-
marily used in the transportation of goods
or individuals and not for the production of
electricity) that stores hydrogen and has a
nameplate capacity of not less than 5 kWh,
equivalent to 0.127 kg of hydrogen or 52.7
standard cubic feet (scf) of hydrogen. Pro-
posed §1.48E-2(g)(6)(iii) would also pro-
vide that hydrogen energy storage property
must store hydrogen that is solely used as

Bulletin No. 2024–32 379 August 5, 2024
energy and not for other purposes such as
for the production of end products such
as fertilizer. Proposed §1.48E-2(g)(6)(iii)
would also provide examples of hydrogen
energy storage property.
Although the list of examples of
energy storage technologies that pro-
posed §1.48E–2(g)(6) would provide is
nonexclusive, and therefore many other
technologies that are not addressed would
meet these functional definitions, there
are some examples that do not meet the
functional definition. For example, some
technologies are marketed as “virtual bat-
teries,” which are aggregations of control-
lable electricity demand providing similar
electrical grid services to an electrical grid
battery. Such “virtual batteries” receive
energy in the form of electricity, but they
do not store it for later discharge as elec-
tricity. The function of “virtual batteries”
is to shift demand to different points in
time. Because such demand shifting is not
a storage activity for purposes of section
48(c)(6) (and thus for purposes of section
48E(c)(2)), this technology is not an EST.
There are other technologies for which the
determination of whether they meet the
statutory requirements is less clear.
7. Modification of Energy Storage
Technology
Proposed §1.48E-2(g)(7) would pro-
vide rules for modification of EST. Based
on the rules in section 48(c)(6)(B), pro-
posed §1.48E-2(g)(7) would provide that
with respect to electrical energy storage
property and hydrogen energy storage
property, modified as set forth in pro-
posed §1.48E-2(g)(7), such property will
be will be treated as an electrical energy
storage property (as described in proposed
§1.48E-2(g)(6)(i)) or a hydrogen energy
storage property (as described in proposed
§1.48E-2(g)(6)(iii)), except that the basis
of any existing electrical energy storage
property or hydrogen energy storage prop-
erty prior to such modification is not taken
into account for purposes of proposed
§1.48E-2(g)(7) and section 48E.
8. Claim
Proposed §1.48E-2(g)(8) would pro-
vide that with respect to a section 48E
credit determined with respect to an EST
of a taxpayer, the term “claim” means fil-
ing a completed Form 3468, Investment
Credit, or any successor form(s), with the
taxpayer’s timely filed (including exten-
sions) Federal income tax return or Fed-
eral return, as appropriate, for the taxable
year in which the EST is placed in service,
and includes making an election under
section 6417 or 6418 and corresponding
regulations with respect to such section
48E credit and made on the taxpayer’s
filed return.
D. Rules of general application to
section 48E
1. Rules for Certain Lower-Output
Qualified Facilities
Proposed §1.48E-4(a)(1) would pro-
vide rules for qualified facilities with a
maximum net output of not greater than
5 megawatts to include qualified inter-
connection costs in the basis of an asso-
ciated qualified facility. Proposed §1.48E-
4(a)(1) would provide that the qualified
investment for a qualified facility includes
amounts paid or incurred by the taxpayer
for qualified interconnection property in
connection with the installation of a quali-
fied facility that has a maximum net output
of not greater than 5 MW (as measured in
alternating current) (Five-Megawatt Lim-
itation). Proposed §1.48E-4(a)(1) would
provide that the qualified interconnection
property must provide for the transmis-
sion or distribution of the electricity pro-
duced by a qualified facility and must be
properly chargeable to the capital account
of the taxpayer as reduced by proposed
§1.48E-4(a)(6). Proposed §1.48E-4(a)(2)
would define the term “qualified intercon-
nection property.” Proposed §1.48E-4(a)
(2) would further provide that qualified
interconnection property is not taken into
account to determine if a qualified facility
meets the requirements for the increase
in credit rate for energy communities or
domestic content because qualified inter-
connection property is not part of a qual-
ified facility.
Proposed §1.48E-4(a)(3) would
describe the Five-Megawatt Limitation
as a measurement taken at the qualified
facility level. Proposed §1.48E-4(a)(3)
(i) would provide that the maximum net
output of a qualified facility is measured
only by the nameplate generating capac-
ity of the unit of qualified facility, which
does not include the nameplate capacity of
any integral property, at the time that the
qualified facility is placed in service. Fur-
ther, proposed §1.48E-4(a)(3)(i) would
also provide that the nameplate generating
capacity of the unit of qualified facility is
measured independently from any other
qualified facilities that share the same
integral property.
Proposed §1.48E-4(a)(4) would define
the term “interconnection agreement.” and
proposed §1.48E-4(a)(5) would define the
term “utility.”
Proposed §1.48E-4(a)(6) would pro-
vide that expenses paid or incurred for
qualified interconnection property and
amounts otherwise chargeable to capital
account with respect to such expenses
must be reduced under rules similar to
the rules contained in section 50(c). The
taxpayer must pay or incur the intercon-
nection property costs, and therefore, any
reimbursement, including by a utility,
must be accounted for by reducing the
taxpayer’s expenditure to determine eligi-
ble costs.
A taxpayer that is reimbursed for these
costs may not include such reimbursed
costs in the amount paid or incurred by
the taxpayer for qualified interconnection
property. Proposed §1.48E-4(a)(6) would
adopt this rule. In the case of a utility
reimbursing a taxpayer for costs the tax-
payer pays or incurs for qualified inter-
connection property, the utility should
provide the taxpayer with information
regarding such costs by the date on which
the project is placed in service.
The Treasury Department and the IRS
are aware of common situations in which
a taxpayer could ultimately receive a
payment, credit, or service from another
entity, including a utility, related to the
costs the taxpayer pays or incurs for qual-
ified interconnection property. For exam-
ple, one taxpayer may place in service a
qualified facility and make payments to a
utility with respect to qualified intercon-
nection property involving the addition,
modification, or upgrade to the utility’s
transmission system related to such quali-
fied facility. Subsequently, a different tax-
payer may, at a later date, place in service
a qualified facility and make payments to
the same utility related to the same addi-

August 5, 2024 380 Bulletin No. 2024–32
tions, modifications, or upgrades to the
utility’s transmission system that were
made in response to the first taxpayer’s
interconnection. The utility may pay,
credit, or provide services to the first tax-
payer in an amount related to the costs
paid by the second taxpayer. The likely
amount or timing of any such payment,
credit, or service would not be known at
the time the first taxpayer interconnects to
the utility’s transmission system.
The Treasury Department and the IRS
request comment on whether such pay-
ment, credit, or service received by the
first taxpayer, as the result of subsequent
payments made to a utility by other par-
ties, should be treated as a reimbursement
to the first taxpayer and impact the amount
of the costs of qualified interconnection
property that the first taxpayer may include
in its basis for purposes of the section 48E
credit. The Treasury Department and the
IRS also request comment on whether the
costs paid by the second taxpayer should
be treated as amounts paid or incurred for
qualified interconnection property in con-
nection with the installation of the second
taxpayer’s qualified facility. The Treasury
Department and the IRS request com-
ment on industry practices relevant to the
determination of costs paid or incurred for
qualified interconnection property, includ-
ing the accounting treatment of costs paid
or incurred for qualified interconnection
property. The Treasury Department and
the IRS also request comment on whether
any clarifications are needed regarding the
tax treatment of amounts paid or incurred
for qualified interconnection property,
including reimbursement of costs paid or
incurred by a taxpayer for qualified inter-
connection costs.
In section 3.02(1)(b)(ii) of Notice
2022-49, the Treasury Department and
the IRS requested comments concerning
what type of documentation, in addition to
interconnection agreements and cost cer-
tification reports, is readily available for
a taxpayer to demonstrate that they have
paid or incurred interconnection costs in
the context of the section 48 credit. Tax-
payers must retain documentation in com-
pliance with section 6001. The proposed
regulations do not provide any specific
type of required documentation, and any
documentation that satisfies section 6001
will suffice to substantiate that a taxpayer
has paid or incurred qualified interconnec-
tion costs. Commenters to Notice 2022-49
provided feedback on the documentation
that taxpayers may use to substantiate
costs paid or incurred for qualified inter-
connection property in the context of the
section 48 credit. The Treasury Depart-
ment and the IRS request comments on
this same question in the context of the
section 48E credit.
Qualified interconnection property
is either constructed, reconstructed, or
erected by the taxpayer, or the taxpayer
pays or incurs the cost with respect to the
construction, reconstruction, or erection
of such property; and the original use of
which, pursuant to an interconnection
agreement, commences with a utility.
Therefore, in some cases, taxpayers will
have the necessary information and doc-
umentation on these costs. In other cases,
the taxpayers will need to receive this
information from the utility, which, the
Treasury Department and the IRS under-
stand, will be a common scenario. For sit-
uations in which property is constructed,
reconstructed, or erected by a party other
than the taxpayer, final information with
conclusive details such as a true-up report
with the actual costs, final invoices, proof
of payment or reimbursement, and per-
mission to operate documentation or
any other final project accounting docu-
mentation should be maintained. Other
examples of cost documentation records
include, but are not limited to, the inter-
connection agreement, interconnection
study, signed customer contracts, and cost
certification reports.
2. Expansion of Facility; Incremental
Production
Proposed §1.48E-4(b) would provide
rules related to the expansion of capacity
of a qualified facility by the addition of a
new unit or an addition of capacity. Pro-
posed §1.48E-4(b)(1) would provide, that
solely for purposes of §1.48E-4(b), the
term “qualified facility” includes either a
new unit or an addition of capacity placed
in service after December 31, 2024, in con-
nection with a facility described in section
48E(b)(3)(A) (without regard to clause (ii)
of such paragraph), which was placed in
service before January 1, 2025, but only to
the extent of the increased amount of elec-
tricity produced at the facility by reason
of such new unit or addition of capacity.
Proposed §1.48E-4(b)(1) further provides
that a new unit or an addition of capacity
that meets the requirements of proposed
§1.48E-4(b) will be treated as a separate
qualified facility. Proposed §1.48E-4(b)
provides that a new unit or addition of
capacity requires the addition or replace-
ment of qualified property (as defined
in §1.48E-2(e)), including any new or
replacement integral property added to the
facility necessary to increase capacity. If
applicable, taxpayers must use modified
or amended facility operating licenses or
the International Standard Organization
(ISO) conditions to measure the maximum
electrical generating output of a facility to
determine nameplate capacity. Addition-
ally, §1.48E-4(b)(1) would provide that
for purposes of section 48E(a)(2)()(ii)(I)
(that is, the One-Megawatt Exception),
the capacity for a new unit or an addition
of capacity is the sum of the nameplate
capacity of the added qualified facility
and the nameplate capacity of the facility
to which the qualified facility was added.
Proposed §1.48E-4(b)(2) would pro-
vide that solely for purposes of §1.48E-
4(b), a facility that is decommissioned
or in the process of decommissioning
and restarts can be considered to have
increased capacity if the following condi-
tions are met: (1) the existing facility must
have ceased operations; (2) the existing
facility must have a period of at least one
calendar year during which it is without a
valid operating license from its respective
Federal regulatory authority (that is, the
Federal Energy Regulatory Commission
(FERC) or the Nuclear Regulatory Com-
mission (NRC)); and (3) the increased
capacity of the restarted facility must have
a new, reinstated, or renewed operating
license issued by either FERC or NRC.
Proposed §1.48E-4(b)(3) would
describe two different methods for a tax-
payer to compute the qualified investment
that increased the amount of electricity
produced by either a new unit or an addi-
tion of capacity described in §1.48E-4(b)
(1). Proposed §1.48E-4(b)(3)(i) would
provide that the term “new unit” means
components of property including any new
or replacement integral property added to
a facility necessary to increase the capac-
ity of the facility but do not replace the

Bulletin No. 2024–32 381 August 5, 2024
existing capacity of the facility. Further,
proposed §1.48E-4(b)(3)(i) would provide
that the taxpayer’s qualified investment in
the new unit during the taxable year that
results in an increase in capacity is eligible
for the section 48E credit.
Proposed §1.48E-4(b)(3)(ii) would
address the application of the rule to an
addition of capacity by providing that the
term “addition of capacity” means com-
ponents of property, including any new or
replacement integral property added to a
facility necessary to increase the capacity
of the facility by replacing, in whole or in
part, the existing capacity of the facility.
Proposed §1.48E-4(b)(3)(ii) would pro-
vide that to determine a taxpayer’s qual-
ified investment during the taxable year
that resulted in an increased capacity of a
facility by reason of an addition of capac-
ity not described in proposed §1.48E-4(b)
(3)(i), a taxpayer must multiply its total
qualified investment during the taxable
year with respect to the facility, by a frac-
tion, the numerator of which is the increase
in nameplate capacity that results from the
addition of capacity, and the denominator
of which is the total nameplate capacity
associated with the components of prop-
erty that result in the addition of capacity.
Proposed §1.48E-4(b)(4) would pro-
vide examples to illustrate the application
of both methods to determine the increased
amount of electricity attributable to a new
unit or an addition of capacity described in
§1.48E-4(b)(1).
3. Retrofit of an Existing Facility (80/20
Rule)
Proposed §1.48E-4(c) would provide
rules related to the retrofit of an existing
qualified facility. Proposed §1.48E-4(c)
(1) would provide that for purposes of
section 48E(b)(3)(A)(ii), a facility may
qualify as originally placed in service
even if it contains some used compo-
nents of property within the unit of quali-
fied facility, provided that the fair market
value of the used components of the unit
of qualified facility is not more than 20
percent of the unit of qualified facility’s
total value (that is, the cost of the new
components of property plus the value of
the used components of property within
the unit of qualified facility) (80/20
Rule).
Proposed §1.48E-4(c)(2) would pro-
vide that only expenditures paid or
incurred that related to the new compo-
nents of the unit of qualified facility are
taken into account for computing the sec-
tion 48E credit with respect to the unit of
qualified facility.
Proposed §1.48E-4(c)(3) would pro-
vide that the cost of new components of
the unit of qualified facility includes all
costs properly included in the depreciable
basis of the new components.
Proposed §1.48E-4(c)(4) would pro-
vide that if the taxpayer satisfies the
80/20 Rule with regard to a unit of qual-
ified facility, and the taxpayer incurs new
costs for property that is an integral part
of the qualified facility, the taxpayer may
include these new costs paid or incurred
for property that is an integral part of the
qualified facility in the basis of the quali-
fied facility for purposes of calculating the
section 48E credit.
Proposed §1.48E-4(c)(5) would pro-
vide that costs incurred for new compo-
nents of property added to used compo-
nents of a unit of qualified facility may
not be taken into account for purposes of
the section 48E credit unless the taxpayer
satisfies the 80/20 Rule. Proposed §1.48E-
4(c)(6) would provide examples.
4. Special Rules Regarding Ownership
Proposed §1.48E-4(d) would provide
rules related to the ownership of a qual-
ified facility or EST. Proposed §1.48E-
4(d)(1) would provide that a taxpayer that
owns a qualified investment with respect
to a qualified facility or EST is eligible for
the section 48E credit only to the extent
of the taxpayer’s eligible investment in
the qualified facility or EST. In the case
of multiple taxpayers holding direct own-
ership through their qualified investments
in a single qualified facility or EST, each
taxpayer determines its eligible invest-
ment based on the taxpayer’s fractional
ownership interest in the qualified facility
or EST.
Proposed §1.48E-4(d)(2) would provide
that a taxpayer must directly own at least a
fractional interest in the entire unit of quali-
fied facility (as defined in §1.48E-2(b)(2) or
unit of EST (as defined in §1.48E-2(g)(2))
for a section 48E credit to be determined
with respect to such taxpayer’s interest.
Proposed §1.48E-4(d)(2) also provides that
no section 48E credit may be determined
with respect to a taxpayer’s ownership of
one or more separate components of a qual-
ified facility or EST if the components do
not constitute a unit of qualified facility (as
defined in proposed §1.48E-2(b)(2)) or unit
of EST (as defined in proposed §1.48E-
2(g)(2)). However, proposed §1.48E-4(d)
(2) provides that the use of the components
of property owned by one taxpayer that is
an integral part of a qualified facility or
EST owned by another taxpayer will not
prevent a section 48E credit from being
determined with respect to the second tax-
payer’s qualified investment in a qualified
facility or EST.
Proposed §1.48E-4(d)(3) would pro-
vide that if a qualified facility or EST is
owned through an unincorporated organi-
zation that has made a valid election under
section 761(a), each member’s undivided
ownership share in the facility or EST will
be treated as a separate qualified facility or
EST owned by such member.
Proposed §1.48E-4(d)(4)(i) would
define the term “related taxpayers” and
proposed §1.48E-4(d)(4)(ii) would pro-
vide a related taxpayer rule, that related
taxpayers are treated as one taxpayer in
determining whether a taxpayer has made
an investment in a qualified facility or EST
with respect to which a section 48E credit
may be determined. Proposed §1.48E-4(d)
(5) would provide examples illustrating
these ownership rules.
5. Coordination Rule for Section 42 and
48E Credits
Proposed §1.48E-4(e) would provide
that as provided under section 50(c)(3)
(C), in the case of a taxpayer determin-
ing eligible basis for purposes of cal-
culating a credit under section 42 of the
Code (section 42 credit), a taxpayer is not
required to reduce its basis in a qualified
facility or EST by the amount of the sec-
tion 48E credit determined with respect
to the qualified investment with respect
to such qualified facility or EST. Further,
proposed §1.48E-4(e) would provide that
the qualified investment with respect to a
qualified facility or EST may be used to
determine a section 48E credit and may
also be included in eligible basis to deter-
mine a section 42 credit.

August 5, 2024 382 Bulletin No. 2024–32
6. Credit Recapture
Proposed §1.48E-4(f)(1) would provide
recapture rules for the section 48E credit
that incorporate the recapture provisions
of section 50(a). Proposed §1.48E-4(f)
(1) would further provide that the credit
calculated under proposed §1.48E-1(b)
is subject to recapture for any qualified
facility that has a GHG emissions rate (as
determined under proposed §1.48E-5) that
exceeds 10 grams of CO
2
e per kWh during
the five-year period beginning on the date
such qualified facility is originally placed
in service (five-year recapture period).
Recapture Event
Proposed §1.48E-4(f)(2)(i) would pro-
vide that any failure of the qualified facil-
ity to not exceed a GHG emissions rate of
10 grams per CO
2
e per kWh during the
five-year recapture period is a recapture
event. If a qualified facility’s GHG emis-
sions rate exceeds 10 grams of CO
2
e per
kWh averaged over the taxable year, the
section 48E credit is subject to recapture.
Proposed §1.48E-4(f)(2)(ii) would pro-
vide that a change to the GHG emissions
rate for a type or category of facility that is
published in the Annual Table (as defined
in proposed §1.45Y-5(f)) after the facility
is placed in service does not result in a
recapture event.
Proposed §1.48E-4(f)(2)(iii) would
provide that a determination of whether
a recapture event has occurred must be
made for each taxable year (or portion
thereof) occurring within the five-year
recapture period, beginning with the tax-
able year ending after the date the quali-
fied facility is placed in service. For each
taxable year that begins or ends within
the five-year recapture period, the tax-
payer must determine, for any qualified
facility for which it has claimed the sec-
tion 48E credit, whether such facility has
maintained a GHG emissions rate of not
greater than 10 grams of CO
2
e per kWh. A
taxpayer that has claimed the section 48E
credit amount under proposed §1.48E-1
or transferred a specified credit portion
under section 6418 of the Code is required
to provide to the IRS information on the
GHG emissions rate of the qualified facil-
ity during the recapture period at the time
and in the form and manner prescribed in
IRS forms or instructions or in publica-
tions or guidance published in the Internal
Revenue Bulletin.
Proposed §1.48E-4(f)(2)(iv) would
provide that in the case of any recapture
event, the carrybacks and carryforwards
under section 39 must be adjusted by rea-
son of such recapture event.
Proposed §1.48E-4(f)(3)(i) would pro-
vide that if a recapture event has occurred,
the tax under chapter 1 of the Code for
the taxable year in which the recapture
event occurs is increased by an amount
equal to the applicable recapture percent-
age multiplied by the credit amount that
was claimed by the taxpayer under pro-
posed §1.48E-1. Proposed §1.48E-4(f)(3)
(ii) provides the applicable recapture per-
centage for each year during the five-year
recapture period.
Proposed §1.48E-4(f)(4) would pro-
vide that the five-year recapture period
begins on the date the qualified facility is
placed in service and ends on the date that
is five full years after the placed-in-ser-
vice date. Each 365-day period (366-day
period in the case of a leap year) within
the five-year recapture period is a separate
recapture year for recapture purposes.
Proposed §1.48E-4(f)(5) would pro-
vide that the increased tax under chapter 1
of the Code for the recapture of the credit
amount under proposed §1.48E-1 occurs
in the year of the recapture event.
E. Greenhouse gas emissions rates
Section 48E(b)(3)(B)(ii) provides that
rules similar to the rules of section 45Y(b)
(2) regarding greenhouse emissions rates
apply for purposes of section 48E. Pro-
posed §1.48E-5(a) would provide an
overview of the rules pertaining to GHG
emissions rates for qualified facilities
under section 48E. Proposed §1.48E-5(b)
through (f) would clarify that the defini-
tions of certain terms, rules for determin-
ing GHG emissions rates for Non-C&G
Facilities, the rules for determining net
GHG emissions rates for C&G Facili-
ties, rules regarding carbon capture and
sequestration, and requirement to publish
the Annual Table provided in proposed
§1.45Y-5(b) through (f) also apply for
purposes of section 48E and this section.
Proposed §1.48E-5(g) would pro-
vide the rules applicable to provisional
emissions rates. Proposed §1.48E-5(g)
(1) would provide that, in the case of any
facility for which an emissions rate has
not been established by the Secretary, a
taxpayer that owns such facility may file a
petition with the Secretary for determina-
tion of the emissions rate with respect to
such facility (Provisional Emissions Rate
or PER).
Proposed §1.48E-5(g)(2) would pro-
vide that an emissions rate has not been
established by the Secretary for a facil-
ity if such facility is not described in the
Annual Table. Proposed §1.48E-5(g)(2)
would further provide that if a taxpayer’s
request for an emissions value pursuant to
proposed §1.48E-5(g)(5) is pending at the
time such facility is or becomes described
in the Annual Table, the taxpayer’s request
for an emissions value would be automat-
ically denied.
Proposed §1.48E-5(g)(3) would pro-
vide the process for filing a PER petition.
Proposed §1.48E-5(g)(3) would provide
that to file a PER petition with the Secre-
tary, a taxpayer must submit a PER peti-
tion attached to the taxpayer’s Federal
income tax return or Federal return, as
appropriate, for the taxable year in which
the taxpayer claims the section 48E credit
with respect to the facility. Proposed
§1.48E-5(g)(3) would further provide that
a PER petition must contain an emissions
value and, if applicable, include as an
attachment the DOE letter. An emissions
value obtained from DOE will be based on
an analytical assessment of the emissions
rate associated with the facility performed
by one or more of the National Labora-
tories, in consultation with other agency
experts as appropriate, consistent with
proposed §1.48E-5. A taxpayer would be
required to retain its books and records a
copy of the taxpayer’s request to DOE for
an emissions value, including any infor-
mation provided by the taxpayer to DOE
pursuant to the emissions value request
process provided in proposed §1.48E-5(g)
(5). Alternatively, an emissions value can
be determined for a facility by using the
most recent version of an LCA model, as
of the time the PER petition is filed, that
has been designated by the Secretary for
such use under paragraph (g)(6) of this
section. If an emissions value is deter-
mined using a designated LCA model or
models, the taxpayer would be required

Bulletin No. 2024–32 383 August 5, 2024
to provide to the IRS information to sup-
port its use of the model or models in the
form and manner prescribed in IRS forms
or instructions or in publications or guid-
ance published in the Internal Revenue
Bulletin. A taxpayer may not request an
emissions value from DOE for a facility
for which an emissions value can be deter-
mined by using the most recent version of
an LCA model or models that have been
designated by the Secretary for such use
under proposed §1.48E-5(g)(6).
Proposed §1.48E-5(g)(4) would pro-
vide that, upon the IRS’s acceptance of the
taxpayer’s Federal income tax return or
Federal return, as appropriate, containing
a PER petition, the emissions value of the
facility specified on such petition will be
deemed accepted. Proposed §1.48E-5(g)
(4) would further provide that a taxpayer
would be able to rely upon an emissions
value provided by DOE for purposes of
claiming a section 48E credit, provided
that any information, representations, or
other data provided to DOE in support
of the request for an emissions value are
accurate. If applicable, a taxpayer may
rely upon an emissions value determined
for a facility using an LCA model or
models that have been designated by the
Secretary for such use under proposed
§1.48E-5(g)(6), provided that any infor-
mation, representations, or other data
used to obtain such emissions value are
accurate. The IRS’s deemed acceptance
of an emissions value would be the Sec-
retary’s determination of the PER. Finally,
proposed §1.48E-5(g)(4) would provide
that the taxpayer must also comply with
all applicable requirements for the section
48E credit, and any information, repre-
sentations, or other data provided to DOE
in support of the request for an emissions
value would be subject to later examina-
tion by the IRS.
Proposed §1.48E-5(g)(5) would pro-
vide the rules applicable to the emissions
value request process. Proposed §1.48E-
5(g)(5) would provide that an applicant
that submits a request for an emissions
value must follow the procedures spec-
ified by DOE to request and obtain such
emissions value, and that emissions val-
ues will be determined consistent with
the rules provided in proposed §1.48E-5.
Proposed §1.48E-5(g)(5) would further
provide that an applicant may request an
emissions value from DOE only after a
front-end engineering and design (FEED)
study or similar indication of project
maturity, as determined by DOE, such as
the completion of a project specification
and cost estimation sufficient to inform a
final investment decision for the facility.
Proposed §1.48E-5(g)(5) would provide
that DOE may decline to review applica-
tions that are non-responsive, and those
applications that relate to a facility that is
described in the Annual Table (consistent
with proposed §1.48E-5(g)(2)) or a facil-
ity that can determine an emissions value
using a designated LCA model under
proposed §1.48E-5(g)(6) (consistent with
proposed §1.48E-5(g)(3)), or applications
that are incomplete. Proposed §1.45Y-5(g)
(5) would also provide that applicants must
follow DOE’s guidance and procedures
for requesting and obtaining an emissions
value from DOE. DOE will publish guid-
ance and procedures that applicants must
follow to request and obtain an emissions
value from DOE. DOE’s guidance and
procedures will include a process that,
under limited circumstances, a taxpayer
may request a revision to DOE’s initial
assessment of an emissions value on the
basis of revised technical information or
facility design and operation. The Trea-
sury Department and the IRS anticipate
that the emissions value request process
will open after the publication of the final
regulations.
Proposed §1.48E-5(g)(6) would pro-
vide that the rules provided in proposed
§1.45Y-5(g)(6) regarding the designation
of an LCA model or models for determin-
ing an emissions value for C&G Facilities
apply for purposes of section 48E and this
section.
Proposed §1.48E-5(g)(7) would pro-
vide rules governing the effect of a PER.
Proposed §1.48E-5(g)(7) would provide
that a taxpayer may use a PER deter-
mined by the Secretary to determine the
eligibility for the section 48E credit for a
taxable year for the facility to which the
PER relates, provided all other require-
ments of section 48E are met, unless the
emissions rate for such type or category of
facility is provided in the Annual Table for
any portion of the taxable year. Proposed
§1.48E-5(g)(7) would further provide that
the Secretary’s PER determination is not
an examination or inspection of books of
account for purposes of section 7605(b)
of the Code and does not preclude or
impede the IRS (under section 7605(b) or
any administrative provisions adopted by
the IRS) from later examining a return or
inspecting books or records with respect
to any taxable year for which the section
48E credit is claimed. Finally, proposed
§1.48E-5(g)(7) would provide that a PER
determination does not signify that the
IRS has determined that the requirements
of section 48E have been satisfied for any
taxable year.
Proposed §1.48E-5(h) would provide
the rules applicable to determining an
anticipated GHG emissions rate. Proposed
§1.48E-5(h)(1) would provide that a facil-
ity’s anticipated GHG emissions rate must
be objectively determined based on an
examination of all the facts and circum-
stances. Proposed §1.48E-5(h)(1) would
further provide that certain Non-C&G
Facilities, such as the facilities described
in proposed §1.45Y-5(c)(2), may have an
anticipated GHG emissions rate that is not
greater than zero based on the technology
and practices they rely upon to generate
electricity. Finally, proposed §1.48E-5(h)
(1) would provide that for facilities that
require the use of certain feedstocks or
carbon capture and sequestration, which
may vary, to generate electricity with a
GHG emissions rate that is not greater
than zero, objective indicia that such facil-
ities will operate with a GHG emissions
rate that is not greater than zero for at
least 10 years beginning from the date the
facility is placed in service are required to
establish that its anticipated GHG emis-
sions rate is not greater than zero.
Proposed §1.48E-5(h)(2) would pro-
vide a non-exhaustive list of examples
of objective indicia that may establish an
anticipated GHG emissions rate that is
not greater than zero. Proposed §1.48E-
5(h)(2)(i) through (iv) would provide that
these examples include co-location of the
facility with a fuel source for which the
combination of fuel, type of facility, and
practice is reasonably expected to result in
a GHG emissions rate that is not greater
than zero; a 10-year contract to purchase
fuels for which the combination of fuel,
type of facility, and practice is reasonably
expected to result in a GHG emissions
rate that is not greater than zero; a facility
type that only accommodates one type of

August 5, 2024 384 Bulletin No. 2024–32
fuel or a small range of fuels for which
the combination of fuel, type of facil-
ity, and practice is reasonably expected
to result in a GHG emissions rate that is
not greater than zero; or a 10-year con-
tract for the capture, disposal, or utiliza-
tion of qualified carbon dioxide from the
facility for which the combination of fuel,
type of facility, and practice is reasonably
expected to result in a GHG emissions rate
that is not greater than zero.
The Treasury Department and the IRS
interpret the reference in section 48E(b)
(3)(A)(iii) to an “anticipated greenhouse
gas emissions rate” that is not greater
than zero to require a reasonable expec-
tation that a facility will operate with a
rate or net rate of greenhouse gas emis-
sions that is not greater than zero over a
specified period of time (for example, the
anticipated lifetime of the facility). The
Treasury Department and the IRS request
comment on what evidence or substan-
tiation taxpayers should be required to
maintain to establish an anticipated GHG
emissions rate for a facility. In addition,
comment is requested on the appropriate
period of time for which taxpayers should
be required to demonstrate that there is a
reasonable expectation that a facility will
operate with a GHG emissions rate that is
not greater than zero.
Proposed §1.48E-5(i) would provide
that taxpayers may rely on the Annual
Table in effect as of the date a facility
began construction or the provisional
emissions rate determined by the Secretary
for the taxpayer’s facility to determine the
facility’s GHG emissions rate, provided
that the facility continues to operate as
a type of facility that is described in the
Annual Table or the facility’s emissions
value request, as applicable, for the entire
taxable year.
Proposed §1.48E-5(j)(1) would pro-
vide that a taxpayer must maintain in its
books and records documentation regard-
ing the design and operation of a facility
that establishes that such facility had an
anticipated GHG emissions rate that is
not greater than zero in the year in which
the section 48E credit is determined and
operated with a GHG emissions rate that
is not greater than 10 grams of CO
2
e per
kWh during each year of the recapture
period that applies for purposes of section
48E(g).
Proposed §1.48E-5(j)(2) would fur-
ther provide that documentation suffi-
cient to substantiate that a facility had a
GHG emissions rate that is not greater
than 10 grams of CO
2
e per kWh during
each year of the recapture period includes
documentation or a report prepared by an
unrelated party that verifies the facility’s
actual emissions rate. Proposed §1.48E-
5(j)(2) would also provide that facilities
described in §1.45Y-5(c)(2) can maintain
sufficient documentation to demonstrate
a GHG emissions rate that is not greater
than 10 grams of CO
2
e per kWh during
each year of the recapture period by show-
ing that the facility is described in §1.45Y-
5(c)(2). Finally, proposed §1.48E-5(j)(2)
would provide that future guidance may
describe sufficient documentation to sub-
stantiate that certain other types of facili-
ties have a GHG emissions rate that is not
greater than 10 grams of CO
2
e per kWh
during each year of the recapture period.
Proposed Applicability Dates
These regulations are proposed to apply
to qualified facilities (and for §1.48E-1
through 1.48E-4, energy storage technolo-
gies) placed in service after December 31,
2024, and during taxable years ending on
or after the date of publication of the final
regulations in the Federal Register.
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Pursuant to the Memorandum of
Agreement, Review of Treasury Regula-
tions under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520) (PRA) generally
requires that a Federal agency obtain the
approval of the Office of Management and
Budget (OMB) before collecting infor-
mation from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit.
The collections of information in these
proposed regulations contain recordkeep-
ing and reporting requirements that are
required to substantiate eligibility to claim
a section 45Y or section 48E credit. These
collections of information would gener-
ally be used by the IRS for tax compliance
purposes and by taxpayers to facilitate
proper reporting and compliance. The
general recordkeeping requirements men-
tioned within these proposed regulations
are considered general tax records under
§1.6001-1(e).
The recordkeeping requirements in
these proposed regulations with respect
to section 45Y would include the require-
ment in proposed §1.45Y-5(i)(1) that tax-
payers claiming the section 45Y credit
must maintain in its books and records
documentation regarding the design and
operation of a facility that establishes that
such facility had a GHG emissions rate
that is not greater than zero for the taxable
year. Included in proposed §1.45Y-5(i)(2)
are examples of documentation that suf-
ficiently substantiates that a facility has
a GHG emissions rate that is not greater
than zero for the taxable year, which
includes documentation, or a report pre-
pared by an unrelated party that verifies
that a facility had such an emissions rate. A
facility described in proposed §1.45Y-5(c)
(2) can maintain sufficient documentation
to demonstrate a GHG emissions rate that
is not greater than zero for the taxable
year by showing that it is a type of facil-
ity described in proposed §1.45Y-5(c)(2).
Proposed §1.45Y-5(i)(2) would provide
that Secretary may determine that other
types of facilities can sufficiently substan-
tiate a GHG emissions rate, as determined
under this section, that is not greater than
zero with certain documentation and will
describe such facilities and documentation
in IRS forms or instructions or in publica-
tions or guidance published in the Inter-
nal Revenue Bulletin. For PRA purposes,
these general tax records are already
approved by OMB under 1545–0074 for
individuals, 1545–0123 for business enti-
ties, 1545–0092 for trust and estate filers,
and 1545–0047 for tax-exempt organiza-
tions.
The recordkeeping requirements in
these proposed regulations with respect to

Bulletin No. 2024–32 385 August 5, 2024
section 48E would include the requirement
in proposed §1.48E-5(i)(1) that a taxpayer
must maintain in its books and records
documentation regarding the design and
operation of a facility that establishes
that such facility had an anticipated GHG
emissions rate that is not greater than 10
grams of CO
2
e per kWh during each year
of the recapture period that applies for
purposes of section 48E(g). Included in
proposed §1.48E-5(i)(2) are examples of
documentation that sufficiently substanti-
ates that a facility has a GHG emissions
rate that is not greater 10 grams of CO
2
e
per kWh during each year of the recap-
ture period, which includes documenta-
tion, or a report prepared by an unrelated
party that verifies that a facility had such
an emissions rate. A facility described in
proposed §1.45Y-5(c)(2) can maintain
sufficient documentation to demonstrate
a GHG emissions rate that is not greater
than 10 grams of CO
2
e per kWh by show-
ing that it is a type of facility described
in proposed §1.45Y-5(c)(2). The Secretary
may determine that other types of facili-
ties can sufficiently substantiate a GHG
emissions rate that is not greater than 10
grams of CO
2
e per kWh with certain doc-
umentation and will describe such facil-
ities and documentation in IRS forms or
instructions or in publications or guidance
published in the Internal Revenue Bulle-
tin. For PRA purposes, these general tax
records are already approved by OMB
under 1545–0074 for individuals, 1545–
0123 for business entities, 1545–0092 for
trust and estate filers, and 1545–0047 for
tax-exempt organizations.
The reporting requirements in these
proposed regulations are in proposed
§§ 1.45Y–5 and 1.48E-5, which provide
the process for applicants to file a peti-
tion with the Secretary for a PER deter-
mination. To file a PER petition with
the Secretary, a taxpayer must submit
the PER petition attached to the taxpay-
er’s Federal income tax return or Federal
return, as appropriate, for the taxable year
in which the taxpayer claims the section
45Y credit or the section 48E credit with
respect to the facility to which the PER
petition relates. A PER petition must con-
tain an emissions value. If the applicant
obtained an emissions value from DOE,
the PER petition made to the IRS must
include and emissions value letter from
DOE. This emission value letter process
will be approved by OMB under the DOE
Control Number 1910-####. A taxpayer
must retain in its books and records a copy
of the taxpayer’s request to DOE for an
emissions value, including the supporting
documentation provided to DOE with the
request. Alternatively, if applicable, a PER
petition may contain an emissions value
determined for a facility using the most
recent version of an LCA model, as of
the time the PER petition is filed, that has
been designated by the Secretary for such
use. If an emissions value is determined
using a designated model, a taxpayer is
required to provide to the IRS information
to support its determination of the emis-
sions value in the form and manner pre-
scribed in IRS forms or instructions or in
publications or guidance published in the
Internal Revenue Bulletin. The burden for
these requirements will be included within
the forms and instructions applicable to
sections 45Y and 48E. For section 45Y,
the burden for these requirements will be
associated the form and instructions appli-
cable to claiming this credit and will be
approved by OMB, in accordance with 5
CFR 1320.10, under the following OMB
control numbers: 1545–0074 for indi-
viduals/sole proprietors, 1545–0123 for
business entities, 1545–0047 for tax-ex-
empt organizations, and 1545–0092 for
trust and estate filers. For section 48E,
the burden for these requirements will be
associated with Form 3468, Investment
Credit, and will be approved by OMB, in
accordance with 5 CFR 1320.10, under
the following OMB control numbers:
1545–0074 for individuals/sole propri-
etors, 1545–0123 for business entities,
1545–0047 for tax-exempt organizations,
and 1545–0092 for trust and estate filers.
III. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes certain
requirements with respect to Federal rules
that are subject to the notice and comment
requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C.
551 et seq.) and that are likely to have a
significant economic impact on a sub-
stantial number of small entities. Unless
an agency determines that a proposal is
not likely to have a significant economic
impact on a substantial number of small
entities, section 603 of the RFA requires
the agency to present an initial regulatory
flexibility analysis (IRFA) of the proposed
rule. The Treasury Department and the IRS
have not determined whether the proposed
rule, when finalized, will likely have a sig-
nificant economic impact on a substantial
number of small entities. This determi-
nation requires further study. However,
because there is a possibility of significant
economic impact on a substantial number
of small entities, an IRFA is provided in
these proposed regulations. The Treasury
Department and the IRS invite comments
on both the number of entities affected and
the economic impact on small entities.
Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking
has been submitted to the Chief Counsel
of the Office of Advocacy of the Small
Business Administration for comment on
its impact on small business.
A. Need for and objectives of the rule
The proposed regulations would pro-
vide greater clarity to taxpayers for pur-
poses of claiming the section 45Y credit
or the section 48E credit. The proposed
regulations would provide necessary defi-
nitions and rules regarding the determina-
tion of credit amounts and the procedure
for requesting a provisional emissions
rate. The proposed regulations will pro-
vide greater clarity to taxpayers for pur-
poses of claiming the section 45Y credit
and the section 48E credit and encour-
age taxpayers to produce clean energy or
invest in clean energy facilities and energy
storage technologies. Thus, the Treasury
Department and the IRS intend and expect
that the proposed rules will deliver bene-
fits across the economy that will benefi-
cially impact various industries.
B. Affected small entities
The RFA directs agencies to provide
a description of, and if feasible, an esti-
mate of, the number of small entities that
may be affected by the proposed rules,
if adopted. The Small Business Admin-
istration’s Office of Advocacy estimates
in its 2023 Frequently Asked Questions
that 99.9 percent of American businesses
meet its definition of a small business.

August 5, 2024 386 Bulletin No. 2024–32
The applicability of these proposed regu-
lations does not depend on the size of the
business, as defined by the Small Business
Administration.
As described more fully in the preamble
to this proposed regulation and in this IRFA,
the section 45Y credit and the section 48E
credit incentivize the production of clean
energy and the investment in clean energy
facilities and energy storage technologies.
Because the potential credit claimants can
vary widely, it is difficult to estimate at this
time the impact of these proposed regula-
tions, if any, on small businesses.
The Treasury Department and the IRS
expect to receive more information on the
impact on small businesses through com-
ments on these proposed rules and again
once taxpayers start to claim the section
45Y credit or the section 48E credit using
the guidance and procedures provided in
these proposed regulations.
C. Impact of the rules
The proposed regulations will allow tax-
payers to plan investments and transactions
based on the ability to claim the section
45Y production credit and/or the section
48E investment credit. The increased use
of these credits will incentivize increased
production and use of clean energy as well
as the development of new methods and
technologies for generating clean energy.
The use of the credits will also incentivize
additional investment in facilities that pro-
duce and develop clean energy.
Because recordkeeping and reporting
requirements relating to the section 45Y
and 48E credits will not materially differ
from the requirements relating to exist-
ing energy production and investment
tax credits, the recordkeeping and report-
ing requirements should not materially
increase for taxpayers that already claim
existing credits. To claim the section 45Y
credit or the 48E credit, taxpayers will
continue to need to execute the relevant
form (or successor form, or pursuant to
instructions and other guidance) and file
such form with the taxpayer’s timely filed
return (including extensions) for the tax-
able year in which the property is placed
in service.
Although the Treasury Department
and the IRS do not have sufficient data
to precisely determine the likely extent
of the increased costs of compliance, the
estimated burden of complying with the
recordkeeping and reporting requirements
are described in the Paperwork Reduction
Act section of this preamble.
D. Alternatives considered
The Treasury Department and the IRS
considered alternatives to the proposed reg-
ulations. For example, the Treasury Depart-
ment and the IRS considered whether to
impose different rules for determining if a
section 48E qualified facility had a recap-
ture event, and how and when a taxpayer
was required to notify the Secretary that
the emissions rate at a qualified facility was
greater than 10 grams of CO
2
e per kWh.
The proposed regulations were designed
to minimize burdens on taxpayers while
ensuring that the IRS has sufficient infor-
mation to determine if a section 48E qual-
ified facility’s emissions rate exceeded the
recapture threshold. The proposed guid-
ance requires that a taxpayer that claimed
the section 48E credit to annually report
to the IRS its GHG emissions rate in the
form and manner prescribed in IRS forms
or instructions or in published guidance as
published in the Internal Revenue Bulletin.
An additional example is that the Trea-
sury Department and the IRS considered
alternatives to how a taxpayer should com-
pute any increase in capacity at a qualified
facility that for purposes of section 45Y
and 48E was a qualified facility due to an
increase in capacity. The proposed regula-
tions were designed to provide a rule that
was administrable for the IRS and taxpay-
ers. Thus, the proposed regulations adopt a
rule for taxpayers to compute the increase
in capacity by multiplying the amount of
electricity that the facility produces during
a taxable year after the new unit or an
addition of capacity is placed in service
by a fraction, the numerator of which is
the nameplate capacity that results from
the new unit or an addition of capacity,
and the denominator of which is the total
nameplate capacity of the facility with the
new unit or an addition of capacity
Comments are requested on the require-
ments in the proposed regulations, includ-
ing specifically, whether there are less
burdensome alternatives that ensure the
IRS has sufficient information to adminis-
ter the Clean Electricity Tax Credits.
E. Duplicative, overlapping, or
conflicting Federal rules
The proposed rules would not dupli-
cate, overlap, or conflict with any relevant
Federal rules. As discussed above, the pro-
posed regulations would provide guidance
relating to the section 45Y tax credit and
the section 48E tax credit. The Treasury
Department and the IRS invite input from
interested members of the public about
identifying and avoiding overlapping,
duplicative, or conflicting requirements.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Indian Tribal government, in the
aggregate, or by the private sector, of $100
million (updated annually for inflation).
This proposed rule does not include any
Federal mandate that may result in expen-
ditures by State, local, or Indian Tribal
governments, or by the private sector in
excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local gov-
ernments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Execu-
tive order. This proposed rule does not
have federalism implications and does
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consulta-
tion and Coordination With Indian Tribal
Governments) prohibits an agency from

Bulletin No. 2024–32 387 August 5, 2024
publishing any rule that has Tribal impli-
cations if the rule either imposes substan-
tial, direct compliance costs on Indian
Tribal governments, and is not required
by statute, or preempts Tribal law, unless
the agency meets the consultation and
funding requirements of section 5 of the
Executive order. This proposed rule does
not have substantial direct effects on one
or more federally recognized Indian tribes
and does not impose substantial direct
compliance costs on Indian Tribal govern-
ments within the meaning of the Execu-
tive order.
Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final regula-
tions, consideration will be given to com-
ments regarding the notice of proposed
rulemaking that are submitted timely to
the IRS as prescribed in the preamble
under the ADDRESSES section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. All comments will be made
available at https://www.regulations.gov.
Once submitted to the Federal eRulemak-
ing Portal, comments cannot be edited or
withdrawn.
A public hearing with respect to this
notice of proposed rulemaking has been
scheduled for August 12, 2024, beginning
at 10 a.m. (ET) and August 13, 2024, at
10 a.m. (ET). The hearing scheduled for
August 12, 2024, will be held in the Audi-
torium at the Internal Revenue Building,
1111 Constitution Avenue, NW., Wash-
ington, D.C. Due to building security
procedures, visitors must enter at the Con-
stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
Participants may alternatively attend the
public hearing on August 12, 2024, by
telephone. On August 13, 2024, the public
hearing will be by telephone only.
The rules of 26 CFR 601.601(a)(3)
apply to the public hearing. Persons who
wish to present oral comments at the pub-
lic hearing must submit an outline of the
topics to be discussed and the time to be
devoted to each topic by August 2, 2024.
A period of 10 minutes will be allotted to
each person for making comments. An
agenda showing the scheduling of the
speakers will be prepared after the dead-
line for receiving outlines has passed.
Copies of the agenda will be available
free of charge at the public hearing. If no
outline of the topics to be discussed at the
public hearing is received by August 2,
2024, the public hearing will be cancelled.
If the public hearing is cancelled, a notice
of cancellation of the public hearing will
be published in the Federal Register.
Individuals who want to testify in per-
son at the public hearing must send an
email to publichearings@irs.gov to have
your name added to the building access
list. The subject line of the email must
contain the regulation number REG-
119283-23 and the language TESTIFY In
Person. For example, the subject line may
say: Request to TESTIFY In Person at
Hearing for REG-119283-23.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the public hearing. The subject
line of the email must contain the regu-
lation number REG-119283-23 and the
language TESTIFY Telephonically. For
example, the subject line may say: Request
to TESTIFY Telephonically at Hearing for
REG-119283-23.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number REG-119283-23 and the language
ATTEND In Person. For example, the
subject line may say: Request to ATTEND
Hearing In Person for REG-119283-23.
Requests to attend the public hearing must
be received by 5 p.m. ET on August 8,
2024.
Individuals who want to attend the pub-
lic hearing by telephone without testifying
must also send an email to publichear-
ings@irs.gov to receive the telephone
number and access code for the public
hearing. The subject line of the email
must contain the regulation number REG-
119283-23 and the language ATTEND
Hearing Telephonically. For example, the
subject line may say: Request to ATTEND
Hearing Telephonically for REG-119283-
23. Requests to attend the public hearing
must be received by 5 p.m. ET on August
8, 2024.
Public hearings will be made accessi-
ble to people with disabilities. To request
special assistance during a public hearing
please contact the Publications and Regu-
lations Branch of the Office of Associate
Chief Counsel (Procedure and Adminis-
tration) by sending an email to publichear-
ings@irs.gov (preferred) or by telephone
at (202) 317-6901 (not a toll-free number)
and must be received by 5 p.m. ET on
August 7, 2024.
Statement of Availability of IRS
Documents
Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin
and is available from the Superintendent
of Documents, U.S. Government Publish-
ing Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.
Drafting Information
The principal author of these proposed
regulations is the Office of the Associate
Chief Counsel (Passthroughs and Spe-
cial Industries). However other personnel
from the Treasury Department, the DOE,
the EPA, the USDA, and the IRS partici-
pated in the development of the proposed
regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding entries
in numerical order for §§1.45Y-1 through
1.45Y-5 and 1.48E-1 through 1.48E-5 to
read in part as follows:

August 5, 2024 388 Bulletin No. 2024–32
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.45Y-1 also issued under 26
U.S.C. 45Y(a), (c), (d), and (g).
Section 1.45Y-2 also issued under 26
U.S.C. 45Y(b) and (e).
Section 1.45Y-3 also issued under 26
U.S.C. 45Y(a) and (g).
Section 1.45Y-4 also issued under 26
U.S.C. 45Y(b) and (g).
Section 1.45Y-5 also issued under 26
U.S.C. 45Y(b).
* * * * *
Section 1.48E-1 also issued under 26
U.S.C. 48E(a) and (c).
Section 1.48E-2 also issued under 26
U.S.C. 48E(b) and (c).
Section 1.48E-3 also issued under 26
U.S.C. 48E(a) and (b).
Section 1.48E-4 also issued under 26
U.S.C. 48E(b), (d), and (g).
Section 1.48E-5 also issued under 26
U.S.C. 48E(b).
* * * * *
Par. 2. An undesignated center heading
is added immediately following §1.37-3
to read as follows:
General Business Credits
* * * * *
Par. 3. Sections 1.45Y-0 through
1.45Y-5 are added to read as follows:
Sec.
* * * * *
1.45Y-0 Table of contents.
1.45Y-1 Clean electricity production
credit.
1.45Y-2 Qualified facility for purposes of
section 45Y.
1.45Y-3 [Reserved]
1.45Y-4 Rules of general application.
1.45Y-5 Greenhouse gas emissions rates
for qualified facilities under section 45Y.
* * * * *
§1.45Y-0 Table of contents.
This section lists the captions con-
tained in §§1.45Y-1 through 1.45Y-5.
§1.45Y-1 Clean electricity production
credit.
(a) Overview.
(1) In general.
(2) CHP property.
(i) In general.
(ii) Components excluded.
(iii) Unit of qualified facility.
(3) Code.
(4) kWh.
(5) Metering device.
(i) In general.
(ii) Standards for maintaining and
operating a metering device.
(iii) Network equipment.
(iv) Examples.
(6) Qualified facility.
(7) Related person.
(i) In general.
(ii) Member of a consolidated group.
(8) Secretary.
(9) Section 45Y credit.
(10) Section 45Y regulations.
(11) Unrelated person.
(b) Credit amount.
(1) In general.
(2) Applicable amount.
(i) In general.
(ii) Base amount.
(iii) Alternative amount.
(3) Inflation adjustment.
(i) In general.
(ii) Annual computation.
(iii) Inflation adjustment factor.
(iv) GDP implicit price deflator.
(4) Energy communities increase in
credit.
(5) Domestic content bonus credit
amount.
(c) Credit phase-out.
(1) In general.
(2) Phase-out percentage.
(3) Applicable year.
(4) Phase-out data.
(5) Determination of phase-out.
(d) Requirements for CHP property.
(1) In general.
(2) Energy efficiency percentage.
(3) Special rule for calculating electric-
ity produced by CHP property.
(i) In general.
(ii) Conversion from Btu to kWh.
(e) Applicability date.
§1.45Y-2 Qualified facility for purposes
of section 45Y.
(a) Qualified facility.
(b) Property included in qualified facil-
ity.
(1) In general.
(2) Unit of qualified facility.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(i) In general.
(ii) Power conditioning and transfer
equipment.
(iii) Roads.
(iv) Fences.
(v) Buildings.
(vi) Shared integral property.
(vii) Examples.
(c) Coordination with other credits.
(1) In general.
(2) Allowed.
(3) Examples.
(d) Applicability date.
§1.45Y-3 [Reserved]
§1.45Y-4 Rules of general application.
(a) Only production in the United
States taken into account.
(b) Production attributable to the tax-
payer.
(1) In general.
(2) Example of gross sales.
(3) Section 761(a) election.
(c) Expansion of facility; Incremental
production.
(1) In general.
(2) Special rule for restarted facilities.
(3) Computation of increased amount
of electricity produced.
(4) Examples.
(d) Retrofit of an existing facility
(80/20 Rule).
(1) In general.
(2) Cost of new components of prop-
erty.
(3) Examples.
(e) Applicability date.
§1.45Y-5 Greenhouse gas emissions
rates for qualified facilities under
section 45Y.
(a) In general.
(b) Definitions.
(1) CO
2
e per kWh.
(2) Combustion.
(3) Gasification.
(4) Facility that produces electricity
through combustion or gasification.
(5) Greenhouse gas emissions rate.

Bulletin No. 2024–32 389 August 5, 2024
(6) Greenhouse gases emitted into the
atmosphere by a facility in the production
of electricity.
(7) Non-C&G Facility.
(8) Fuel.
(9) Feedstock.
(c) Non-C&G Facilities.
(1) Determining a greenhouse gas
emissions rate for Non-C&G Facilities.
(i) Excluded emissions.
(ii) Emissions assessment process.
(iii) Example of greenhouse gas emis-
sions rate determination for a Non-C&G
Facility.
(2) Non-C&G Facilities with a green-
house gas emissions rate that is not greater
than zero.
(d) C&G Facilities.
(1) Determining a greenhouse gas
emissions rate for C&G Facilities.
(2) LCA requirements.
(i) Starting boundary.
(ii) Ending boundary.
(iii) Baseline.
(iv) Offsets and offsetting activities.
(v) Principles for included emissions.
(vi) Principles for excluded emissions.
(vii) Alternative fates and avoided
emissions.
(e) Carbon capture and sequestration.
(f) Annual publication of emissions
rates.
(1) In general.
(2) Publication of analysis required for
changes to the Annual Table.
(g) Provisional emissions rates.
(1) In general.
(2) Rate not established.
(3) Process for filing a PER petition.
(4) PER determination.
(5) Emissions value request process.
(6) LCA model for determining an
emissions value for C&G Facilities.
(7) Effect of PER.
(h) Reliance on Annual Table or Provi-
sional Emissions Rate.
(i) Substantiation.
(1) In general.
(2) Sufficient substantiation.
(j) Applicability date.
§1.45Y-1 Clean electricity production
credit.
(a) Overview—(1) In general. For
purposes of section 38 of the Code, the
section 45Y credit is determined under
section 45Y of the Code and the section
45Y regulations (as defined in paragraph
(a)(10) of this section). This paragraph
(a) provides definitions of terms that,
unless otherwise specified, apply for
purposes of section 45Y, the section
45Y regulations, and any provision of
the Code or this chapter that expressly
refers to any provision of section 45Y or
the section 45Y regulations. Paragraph
(b) of this section provides rules for
determining the amount of the section
45Y credit for any taxable year. Para-
graph (c) of this section provides rules
regarding the phase-out of the section
45Y credit. Paragraph (d) of this section
provides rules regarding combined heat
and power system (CHP) property. See
§1.45Y–2 for rules relating to qualified
facilities for purposes of the section 45Y
credit. See §1.45Y–4 for rules of general
application for the section 45Y credit.
See §1.45Y–5 for rules to determine
greenhouse gas emissions rates for qual-
ified facilities.
(2) CHP property—(i) In general. For
purposes of section 45Y(g)(2)(B) and
paragraph (d) of this section, the term
CHP property means property comprising
a system that uses the same energy source
for the simultaneous or sequential genera-
tion of electrical power, mechanical shaft
power, or both, in combination with the
generation of steam or other forms of use-
ful thermal energy (including for heating
and cooling applications).
(ii) Components excluded. CHP prop-
erty does not include property used to
transport the energy source to the gener-
ating facility or to distribute energy pro-
duced by the facility.
(iii) Unit of qualified facility. For pur-
poses of §1.45Y-2(a), a unit of qualified
facility includes all functionally interde-
pendent components of property owned
by the taxpayer that are operated together
and that can operate apart from other
property to produce useful thermal energy
and electricity.
(3) Code. The term Code means the
Internal Revenue Code.
(4) kWh. The term kWh means kilowatt
hours.
(5) Metering device—(i) In general.
For purposes of section 45Y(a)(1)(A)
(ii)(II), the term metering device, means
equipment that is owned and operated by
an unrelated person (as defined in para-
graph (a)(11) of this section) for energy
revenue metering to measure and register
the continuous summation of an electric-
ity quantity with respect to time.
(ii) Standards for maintaining and
operating a metering device. For pur-
poses of section 45Y(a)(1)(A)(ii)(II) and
this section, a metering device must be
maintained in proper working order in
accordance with the instructions of its
manufacturer, meet the requirements of
the American National Standards Institute
C12.1-2022 standard, or subsequent revi-
sions, be revenue grade with a +/- 0.5%
accuracy and be properly calibrated.
(iii) Network equipment. For pur-
poses of operating the metering device,
the unrelated person may share network
equipment, such as spare fiber optic cable
owned by the taxpayer that produces the
electricity and co-locate network equip-
ment in the taxpayer’s facilities.
(iv) Examples. This paragraph (a)(5)
(iv) provides examples illustrating the
application of this paragraph (a)(5).
(A) Example 1. Qualified facility equipped with a
metering device owned and operated by an unrelated
person. X owns a qualified facility equipped with a
metering device that is owned and operated by Y,
an unrelated person. The metering device meets the
requirements of paragraphs (a)(5)(i) through (iii). X
sells electricity produced at the qualified facility to
Z, a related person during the taxable year. Because
the qualified facility is equipped with a metering
device that is owned and operated by an unrelated
person and meets the requirements of paragraphs (a)
(5)(i) through (iii), X may claim a section 45Y credit
based on the electricity produced by X and sold to Z
during the taxable year.
(B) Example 2. Electricity produced by the tax-
payer at a qualified facility sold, consumed, or stored
by the taxpayer during the taxable year. X owns a
qualified facility equipped with a metering device
that is owned and operated by an unrelated person,
Y. The metering device meets the requirements of
paragraphs (a)(5)(i) through (iii). Because the qual-
ified facility is equipped with a metering device that
is owned and operated by an unrelated person and
that meets the requirements of paragraphs (a)(5)(i)
through (iii), X may sell electricity produced at the
qualified facility during the taxable year to a related
or unrelated person. X may also consume the elec-
tricity produced at the qualified facility during the
taxable year onsite. Additionally, X may store the
electricity produced at the qualified facility during
the taxable year in EST owned by X. In any of these
three situations, X may claim a section 45Y credit for
the taxable year for the kWh of electricity produced
at the qualified facility and sold, consumed, or stored
by X during the taxable year.
(6) Qualified facility. The term qual-
ified facility for purposes of the section

August 5, 2024 390 Bulletin No. 2024–32
45Y credit has the meaning provided in
§1.45Y-2(a).
(7) Related person—(i) In general. For
purposes of the section 45Y credit, the
term related person means a person that is
related to another person if such persons
would be treated as a single employer
under the regulations in this chapter under
section 52(b) of the Code.
(ii) Member of a consolidated group. In
the case of a corporation that is a mem-
ber of a consolidated group (as defined
in §1.1502-1(h)), such member will be
treated as selling electricity to an unre-
lated person if such electricity is sold to
an unrelated person by another member of
such group.
(8) Secretary. The term Secretary
means the Secretary of the Treasury or her
delegate.
(9) Section 45Y credit. The term sec-
tion 45Y credit means the clean electricity
production credit determined under sec-
tion 45Y of the Code and the section 45Y
regulations.
(10) Section 45Y regulations. The term
section 45Y regulations means this section
and §§ 1.45Y–2 through 1.45Y-5.
(11) Unrelated person. For purposes of
section 45Y(a), the term unrelated person
means a person who is not a related person
as defined in section 45Y(g)(4) and para-
graph (a)(7) of this section. In the case of
sales of electricity to an individual con-
sumer, such sales will be treated as sales
to an unrelated party for purposes of the
section 45Y credit. For example, assume
Taxpayer X produces electricity at a qual-
ified facility and sells it to Consumer Y.
Consumer Y is an individual consumer
and is not subject to aggregation under the
regulations prescribed under section 52(b).
Therefore, Consumer Y is not treated as a
single employer with Taxpayer X under
section 52(b), and a sale to Consumer Y
is treated as a sale to an unrelated person.
The result is the same if Consumer Y is an
individual consumer who is a member of
a cooperative or Indian tribe that owns or
controls, directly or indirectly, Taxpayer
X. The result is also the same if Consumer
Y is an individual consumer who is a res-
ident of a State or municipality that owns
or controls, directly or indirectly, Tax-
payer X.
(b) Credit amount—(1) In general.
For purposes of section 38 of the Code,
the section 45Y credit for any taxable year
is an amount equal to the product of the
kWh of electricity that is produced at a
qualified facility and sold by the taxpayer
to an unrelated person during the taxable
year, multiplied by the applicable amount
with respect to such qualified facility. In
the case of a qualified facility equipped
with a metering device that is owned and
operated by an unrelated person, the sec-
tion 45Y credit for any taxable year is an
amount equal to the product of the kWh
of electricity that is produced at a quali-
fied facility and sold, consumed, or stored
by the taxpayer during the taxable year,
multiplied by the applicable amount with
respect to such qualified facility. Only one
section 45Y credit can be claimed for each
kWh of electricity produced by the tax-
payer at a qualified facility.
(2) Applicable amount—(i) In general.
The term applicable amount means the
base amount described in paragraph (b)
(2)(ii) of this section or the alternative
amount described in paragraph (b)(2)(iii)
of this section. The applicable amount is
subject to the inflation adjustment as pro-
vided in section 45Y(c)(1) and paragraph
(b)(3) of this section. The applicable
amount may also be increased as provided
in section 45Y(g)(7) and paragraph (b)(4)
of this section in the case of a qualified
facility that is located in an energy com-
munity.
(ii) Base amount. In the case of any
qualified facility that does not satisfy the
requirements provided in section 45Y(a)
(2)(B), the term base amount means 0.3
cents.
(iii) Alternative amount. In the case of
any qualified facility that satisfies the pre-
vailing wage and apprenticeship require-
ments provided in section 45Y(a)(2)(B),
the term alternative amount means 1.5
cents.
(3) Inflation adjustment—(i) In gen-
eral. In the case of a calendar year begin-
ning after 2024, the base amount and the
alternative amount will each be adjusted
by multiplying such amount by the infla-
tion adjustment factor for the calendar
year in which the sale, consumption, or
storage of the electricity occurs. If the
base amount as adjusted under this para-
graph (b)(3)(i) is not a multiple of 0.05
cent, such amount will be rounded to
the nearest multiple of 0.05 cent. If the
alternative amount as adjusted under this
paragraph (b)(3)(i) is not a multiple of 0.1
cent, such amount will be rounded to the
nearest multiple of 0.1 cent.
(ii) Annual computation. The inflation
adjustment factor for each calendar year
will be published in the Federal Regis-
ter not later than April 1 of that calendar
year. The base amount and the alternative
amount, as adjusted under paragraph (b)
(3)(i) of this section, will also be pub-
lished in the Federal Register not later
than April 1 of each calendar year.
(iii) Inflation adjustment factor. The
term inflation adjustment factor means,
with respect to a calendar year, a frac-
tion—
(A) The numerator of which is the GDP
implicit price deflator for the preceding
calendar year, and
(B) The denominator of which is the
GDP implicit price deflator for the calen-
dar year 1992.
(iv) GDP implicit price deflator. The
term GDP implicit price deflator means
the most recent revision of the implicit
price deflator for the gross domestic prod-
uct as computed and published by the
Department of Commerce before March
15 of the calendar year.
(4) Energy communities increase in
credit. In the case of any qualified facil-
ity that is located in an energy commu-
nity (as defined in section 45(b)(11)(B)),
for purposes of determining the amount
of the section 45Y credit with respect to
any electricity produced by the taxpayer
at such facility during the taxable year, the
applicable amount will be increased by an
amount equal to 10 percent of the appli-
cable amount. The 10 percent increase
under this paragraph (b)(4) applies after
the inflation adjustment under paragraph
(b)(3) of this section.
(5) Domestic content bonus credit
amount. In the case of any qualified facil-
ity that satisfies the requirements of sec-
tion 45Y(g)(11)(B)(i) (domestic content
requirement), for purposes of determining
the amount of the section 45Y credit with
respect to any electricity produced by the
taxpayer at such facility during the taxable
year, the amount of the credit otherwise
determined under this paragraph (b), with-
out application of paragraph (b)(4) of this
section (related to energy communities), is
increased by 10 percent.

Bulletin No. 2024–32 391 August 5, 2024
(c) Credit phase-out—(1) In general.
The amount of the section 45Y credit for
any qualified facility, the construction of
which begins during a calendar year pro-
vided in section 45Y(d)(2) and described
in paragraph (c)(2) of this section, is equal
to the product of—
(i) The amount of the credit deter-
mined under section 45Y(a) and described
in paragraph (b) of this section, without
regard to section 45Y(d) and this para-
graph (c), multiplied by
(ii) The phase-out percentage provided
under section 45Y(d)(2) and described in
paragraph (c)(2) of this section.
(2) Phase-out percentage. The phase-
out percentage described in this paragraph
(c)(2) is equal to—
(i) For a facility the construction of
which begins during the first calendar
year following the applicable year, 100
percent,
(ii) For a facility the construction of
which begins during the second calendar
year following the applicable year, 75 per-
cent,
(iii) For a facility the construction of
which begins during the third calendar
year following the applicable year, 50 per-
cent, and
(iv) For a facility the construction of
which begins during any calendar year
subsequent to the calendar year described
in paragraph (c)(2)(iii) of this section, 0
percent.
(3) Applicable year. For purposes of
this paragraph (c), the term applicable
year means the later of—
(i) The calendar year in which the Sec-
retary makes the determination that the
annual greenhouse gas emissions from
the production of electricity in the United
States are equal to or less than 25 percent
of the annual greenhouse gas emissions
from the production of electricity in the
United States for calendar year 2022, or
(ii) 2032.
(4) Phase-out data. For purposes of
paragraph (c)(3)(i) of this section, the
annual greenhouse gas emissions from
the production of electricity in the United
States for any calendar year must be
assessed separately using both of the fol-
lowing data sources:
(i) The U.S. Energy Information
Administration’s Electric Power Annual,
summing the annual carbon dioxide emis-
sions data from conventional power plants
and combined heat and power plants and
the Monthly Energy Review annual car-
bon dioxide emissions from the combus-
tion of biomass to produce electricity in
the Electric Power Sector; and
(ii) The U.S. Environmental Protection
Agency (EPA) Inventory of U.S. Green-
house Gas Emissions and Sinks (GHGI)
annual electric power-related carbon diox-
ide, methane, and nitrous oxide emissions
data including carbon dioxide emissions
from the combustion of biomass to pro-
duce electricity.
(5) Determination of phase-out. For
purposes of paragraph (c)(3)(i) of this
section, the Secretary will determine that
the annual greenhouse gas emissions from
the production of electricity in the United
States are equal to or less than 25 percent
of the annual greenhouse gas emissions
from the production of electricity in the
United States for calendar year 2022 only
if, the annual greenhouse gas emissions
from the production of electricity in the
United States, as determined separately
under both of the data sources described
in paragraph (c)(4) of this section, are
each equal to or less than 25 percent of
the annual greenhouse gas emissions
from the production of electricity in the
United States for calendar year 2022. If a
data source described in paragraph (c)(4)
of this section becomes unavailable (for
example, it is no longer published or does
not provide the specified data), the Secre-
tary must designate a similar data source
to replace the unavailable data source.
(d) Requirements for CHP property—
(1) In general. To be eligible for the sec-
tion 45Y credit, a CHP property must
produce at least 20 percent of its total use-
ful energy in the form of useful thermal
energy that is not used to produce elec-
trical or mechanical power (or combina-
tion thereof), and at least 20 percent of its
total useful energy in the form of electri-
cal or mechanical power (or combination
thereof). The energy efficiency percentage
of CHP property must exceed 60 percent.
These percentages are determined on a
British thermal unit (Btu) basis.
(2) Energy efficiency percentage. The
energy efficiency percentage of a CHP
property is the fraction the numerator of
which is the total useful electrical, ther-
mal, and mechanical power produced
by the system at normal operating rates,
and expected to be consumed in its nor-
mal application, and the denominator of
which is the lower heating value of the
fuel sources for the system.
(3) Special rule for calculating elec-
tricity produced by CHP property—(i) In
general. For purposes of section 45Y(a)
and paragraph (b) of this section, the kWh
of electricity produced by a taxpayer at a
qualified facility includes any production
in the form of useful thermal energy by
any CHP property within such facility,
and the amount of greenhouse gases emit-
ted into the atmosphere by such facility
in the production of such useful thermal
energy is included for purposes of deter-
mining the greenhouse gas emissions rate
for such facility.
(ii) Conversion from Btu to kWh—(A)
In general. For purposes of section 45Y(g)
(2)(A)(i) and this paragraph (d)(3), the
amount of kWh of electricity produced in
the form of useful thermal energy is equal
to the quotient of the total useful thermal
energy produced by the CHP property
within the qualified facility, divided by the
heat rate for such facility.
(B) Heat rate. For purposes of this
paragraph (d)(3), the term heat rate means
the amount of energy used by the qualified
facility to generate 1 kWh of electricity,
expressed as Btus per net kWh generated.
In calculating the heat rate of a qualified
facility that includes CHP property that
uses combustion, a taxpayer must use the
annual average heat rate, defined as the
total annual fuel consumption of the CHP
property (in Btus, using the lower heat-
ing value of the fuel) during the taxable
year for which the section 45Y credit is
claimed, divided by the annual net elec-
tricity generation (in kWh) of the CHP
property during such taxable year.
(e) Applicability date. This section
applies to qualified facilities placed in ser-
vice after December 31, 2024, and during
a taxable year ending on or after [DATE
OF PUBLICATION OF THE FINAL
REGULATIONS IN THE FEDERAL
REGISTER].
§1.45Y-2 Qualified facility for purposes
of section 45Y.
(a) Qualified facility. For purposes of
the section 45Y credit, the term qualified

August 5, 2024 392 Bulletin No. 2024–32
facility means a facility owned by the tax-
payer that meets the following require-
ments:
(1) The facility is used for the genera-
tion of electricity,
(2) The facility is placed in service
after December 31, 2024, and
(3) The facility has a greenhouse gas
emissions rate of not greater than zero
(as determined under rules provided in
§1.45Y-5).
(b) Property included in qualified facil-
ity—(1) In general. A qualified facility
includes a unit of qualified facility (as
defined in paragraph (b)(2) of this section)
that meets the requirements of paragraph
(b)(2) of this section. A qualified facility
also includes qualified property owned
by the taxpayer that is an integral part (as
defined in paragraph (b)(3) of this section)
of the qualified facility. Any component
of property that meets the requirements
of this paragraph (b) is part of a qualified
facility regardless of where such compo-
nent of property is located. A qualified
facility generally does not include equip-
ment that is an addition or modification to
an existing qualified facility. However, see
§ 1.45Y-4(c) for rules regarding the expan-
sion of a facility or incremental produc-
tion and §1.45Y-4(d) for rules regarding a
retrofitted qualified facility (80/20 Rule).
(2) Unit of qualified facility—(i) In
general. For purposes of the section
45Y credit, the unit of qualified facil-
ity includes all functionally interdepen-
dent components of property (as defined
in paragraph (b)(2)(ii)) of this section)
owned by the taxpayer that are operated
together and that can operate apart from
other property to produce electricity. No
provision of this section, §1.45Y-1, or
§1.45Y-4 through 1.45Y-5 uses the term
unit in respect of a qualified facility with
any meaning other than that provided in
this paragraph (b)(2)(i).
(ii) Functionally interdependent. Com-
ponents of property are functionally inter-
dependent if the placing in service of each
of the components is dependent upon the
placing in service of each of the other
components to produce electricity.
(3) Integral part—(i) In general. For
purposes of the section 45Y credit, a com-
ponent of property owned by a taxpayer is
an integral part of a qualified facility if it
is used directly in the intended function of
the qualified facility and is essential to the
completeness of such function. Property
that is an integral part of a qualified facil-
ity is part of the qualified facility.
(ii) Power conditioning and transfer
equipment. Power conditioning equipment
and transfer equipment are integral parts
of a qualified facility. Power conditioning
equipment includes equipment that mod-
ifies the characteristics of electricity into
a form suitable for use, transmission, or
distribution. Parts related to the function-
ing or protection of power conditioning
equipment are also treated as power con-
ditioning equipment and include, but are
not limited to, switches, circuit breakers,
arrestors, and hardware and software used
to monitor, operate, and protect power
conditioning equipment. Transfer equip-
ment includes components of property
that allow for the aggregation of electric-
ity generated by a qualified facility and
components of property that alter voltage
to permit electricity to be transferred to a
transmission or distribution line. Transfer
equipment does not include transmission
or distribution lines. Examples of trans-
fer equipment include, but are not limited
to, wires, cables, and combiner boxes
that conduct electricity. Parts related to
the functioning or protection of trans-
fer equipment are also treated as transfer
equipment and may include items such
as current transformers used for meter-
ing, electrical interrupters (such as circuit
breakers, fuses, and other switches), and
hardware and software used to monitor,
operate, and protect transfer equipment.
(iii) Roads. Roads that are an inte-
gral part of a qualified facility are those
roads integral to the intended function of
the qualified facility such as onsite roads
that are used to operate and maintain the
qualified facility. Roads used primarily for
access to the site, or roads used primarily
for employee or visitor vehicles, are not
integral to the intended function of the
qualified facility and thus are not an inte-
gral part of a qualified facility.
(iv) Fences. Fencing is not an integral
part of a qualified facility because it is not
integral to the intended function of the
qualified facility.
(v) Buildings. Generally, buildings
are not integral parts of a qualified facil-
ity because they are not integral to the
intended function of the qualified facility.
However, the following structures are not
treated as buildings for this purpose:
(A) A structure that is essentially an
item of machinery or equipment; and
(B) A structure that houses components
of property that are integral to the intended
function of a qualified facility if the use
of the structure is so closely related to the
use of the housed components of property
therein that the structure clearly can be
expected to be replaced if the components
of property it initially houses are replaced.
(vi) Shared integral property. Multiple
qualified facilities (whether owned by one
or more taxpayers), including qualified
facilities with respect to which a taxpayer
has claimed a credit under section 48E or
another Federal income tax credit, may
include shared property that may be con-
sidered an integral part of each qualified
facility. In addition, a component of prop-
erty that is shared by a qualified facility
(as defined in section 45Y(b)) (45Y Qual-
ified Facility) and a qualified facility (as
defined by section 48E(b)(3)) (48E Qual-
ified Facility) that is an integral part of
both qualified facilities will not affect the
eligibility of the 45Y Qualified Facility for
the section 45Y credit or the 48E Quali-
fied Facility for the section 48E credit.
(vii) Examples. This paragraph (b)(3)
(vii) provides examples illustrating the
rules of paragraphs (b)(3)(i) through (vi)
of this section.
(A) Example 1. Co-located qualified facilities
owned by the same taxpayer that share integral
property. X constructs a solar farm (Solar Qualified
Facility) and nearby also constructs a wind facil-
ity (Wind Qualified Facility) that are each a quali-
fied facility (as defined in §1.45Y-2(a)). The Solar
Qualified Facility and Wind Qualified Facility each
connect to a transformer that steps up the electricity
produced by each qualified facility to electrical grid
voltage before it is transmitted to the electrical grid
through an intertie. The fact that the Solar Qualified
Facility and Wind Qualified Facility share property
that is integral to both does not impact the ability of
X to claim a section 45Y credit for both qualified
facilities.
(B) Example 2. Co-located qualified facilities
owned by different taxpayers that share integral
property. X constructs a solar farm (Solar Qualified
Facility), and nearby Y constructs a wind facility
(Wind Qualified Facility) that are each a qualified
facility (as defined in §1.45Y-2(a)). X’s Solar Qual-
ified Facility and Y’s Wind Qualified Facility each
connect to a transformer that steps up the electricity
produced by both qualified facilities to electrical grid
voltage before it is transmitted to the electrical grid
through an intertie. The fact that the Solar Qualified
Facility and Wind Qualified Facility share property
that is integral to both does not impact the ability of

Bulletin No. 2024–32 393 August 5, 2024
X or Y to claim a section 45Y credit for the electric-
ity produced by their respective qualified facilities.
(C) Example 3. Co-located qualified facility and
Energy Storage Technology owned by the same tax-
payer that share integral property. X constructs a
wind facility that is a qualified facility (as defined
in §1.45Y-2(a)) (Wind Qualified Facility) that is
co-located with an EST (as defined in §1.48E-2(g))
(Energy Storage). The Wind Qualified Facility and
Energy Storage share transfer equipment that is inte-
gral to both. The fact that the Wind Qualified Facility
and Energy Storage share property that is integral to
both does not impact the ability of X to claim a sec-
tion 45Y credit for the electricity produced by the
Wind Qualified Facility or to claim a section 48E
credit for the Energy Storage.
(D) Example 4. Co-located wind qualified
facility and Energy Storage Technology owned by
different taxpayers that share integral property. X
constructs a solar farm that is a qualified facility
(as defined in §1.45Y-2(a)) (Solar Qualified Facil-
ity) that is co-located with an EST (as defined in
§1.48E-2(g)) (Energy Storage) owned by Y. The
Wind Qualified Facility and Energy Storage share
transfer equipment that is integral to both. The fact
that the Wind Qualified Facility and Energy Storage
share property that is integral to both does not impact
the ability of X to claim a section 45Y credit for the
electricity produced by the Wind Qualified Facility
or the ability of Y to claim a section 48E credit for
the Energy Storage.
(c) Coordination with other credits—(1)
In general. The term qualified facility (as
defined in section 45Y(b)) does not include
any facility for which a credit determined
under section 45, 45J, 45Q, 45U, 48, 48A,
or 48E is allowed under section 38 of the
Code for the taxable year or any prior tax-
able year. A taxpayer that directly owns
a qualified facility (as defined in section
45Y(b)) that is eligible for both a section
45Y credit and another Federal income tax
credit is eligible for the section 45Y credit
only if the other Federal income tax credit
was not allowed with respect to the qual-
ified facility. Nothing in this paragraph
(c) precludes a taxpayer from claiming a
section 45Y credit with respect to a qual-
ified facility (as defined in section 45Y(b))
that is co-located with another facility for
which a credit determined under section 45,
45J, 45Q, 45U, 48, 48A, or 48E is allowed
under section 38 for the taxable year or any
prior taxable year.
(2) Allowed. For purposes of paragraph
(c)(1) of this section, the term allowed
only includes credits that taxpayers have
claimed on a Federal income tax return or
Federal return, as appropriate, and that the
Internal Revenue Service (IRS) has not
challenged in terms of the taxpayer’s eli-
gibility.
(3) Examples. This paragraph (c)(3)
provides examples illustrating the rules of
paragraph (c) of this section.
(i) Example 1. Taxpayer claims a section 45Y
credit on a solar farm and section 48E credit on
co-located EST. X owns a solar farm that is a qual-
ifying facility (as defined in §1.45Y-2(a)) (Solar
Qualified Facility), and X owns a co-located EST
(as defined in §1.48E-2(g)) (Energy Storage). The
Energy Storage is not part of the Solar Qualified
Facility, and, therefore, X may claim the section 45Y
credit based on the kWh of electricity produced by
the Solar Qualified Facility, and X may also claim
the section 48E credit based on its qualified invest-
ment in the Energy Storage.
(ii) Example 2. Different taxpayers claim section
45Y credit for a solar farm and a section 48E credit
for co-located Energy Storage Technology. X owns a
solar farm that is a qualifying facility (as defined in
§1.45Y-2(a)) (Solar Qualified Facility), and Y owns a
co-located EST (as defined in §1.48E-2(g)) (Energy
Storage). The Energy Storage is not part of the Solar
Qualified Facility, and therefore, X may claim the
section 45Y credit based on the kWh of electricity
produced by the Solar Qualified Facility, and Y may
claim the section 48E credit based on its qualified
investment in the Energy Storage.
(iii) Example 3. Taxpayer claiming a section 45Y
credit; another credit is not allowed to the Taxpayer.
X owns a wind facility that satisfies the requirements
of a qualified facility (as defined in §1.45Y-2(a)) as
well as the requirements of a qualified facility (as
defined in §1.48E-2(a)). X claims a section 45Y
credit with respect to the wind facility. While a credit
may be available with regard to the wind facility
under section 48E, because X has claimed a section
45Y credit with respect to the wind facility, a section
48E credit is not allowed.
(iv) Example 4. Interaction of section 45Y and
section 45Q credits. X owns a qualified facility (as
defined in §1.45Y-2(a)) (45Y Facility) that includes
carbon capture equipment, which is functionally
interdependent to the production of electricity by the
45Y Facility. X used the carbon capture equipment
to capture and utilize (as described in section 45Q(f)
(5)) qualified carbon dioxide and claimed a section
45Q credit in a prior taxable year. As a result, X can-
not claim a credit for its 45Y Facility because a qual-
ified facility does not include a facility for which a
credit determined under section 45Q is allowed.
(d) Applicability date. This section
applies to qualified facilities placed in ser-
vice after December 31, 2024, and during
a taxable year ending on or after [DATE
OF PUBLICATION OF THE FINAL
REGULATIONS IN THE FEDERAL
REGISTER].
§1.45Y-3 [Reserved]
§1.45Y-4 Rules of general application.
(a) Only production in the United States
taken into account. Consumption, sales,
or storage are taken into account for pur-
poses of the section 45Y credit only with
respect to electricity the production of
which is within the United States (within
the meaning of section 638(1) of the
Code), or a United States territory, which
for purposes of section 45Y and the sec-
tion 45Y regulations has the meaning of
the term a possession of the United States
(within the meaning of section 638(2)).
(b) Production attributable to the tax-
payer—(1) In general. In the case of a
qualified facility in which more than one
person has an ownership share (and the
arrangement is not treated as a partnership
for Federal tax purposes) production from
the qualified facility is allocated among
such persons in proportion to their respec-
tive ownership shares in the gross sales
from such qualified facility. The respec-
tive owners each determine their respec-
tive section 45Y credit under section
45Y(a) and based on their respective own-
ership shares in the gross sales from such
qualified facility during the taxable year.
(2) Example of gross sales. A, B and
C, all calendar year taxpayers, each own
an interest in Facility, which is a quali-
fied facility (as defined in §1.45Y-2(a)). A
owns 45 percent, B owns 35 percent, and
C owns 20 percent, and each are allocated
gross sales from Facility in proportion to
their ownership interest. Facility produced
1000 kWh of electricity during the taxable
year. A, B, and C will each determine
their respective section 45Y credit under
section 45Y(a) and §1.45Y-1(b) based
on their allocable share of the gross sales
from the 1000 kWh of electricity pro-
duced at Facility during the taxable year.
(3) Section 761(a) election. If a qual-
ified facility is owned through an unin-
corporated organization that has made a
valid election under section 761(a) of the
Code, each member’s undivided own-
ership share in the qualified facility will
be treated as a separate qualified facility
owned by such member.
(c) Expansion of facility; Incremental
production—(1) In general. Solely for
purposes of this paragraph (c), the term
qualified facility includes either a new
unit or an addition of capacity placed in
service after December 31, 2024, in con-
nection with a facility described in section
45Y(b)(1)(A) (without regard to clause (ii)
of such paragraph), which was placed in
service before January 1, 2025, but only to

August 5, 2024 394 Bulletin No. 2024–32
the extent of the increased amount of elec-
tricity produced at the facility by reason
of such new unit or addition of capacity.
A new unit or an addition of capacity that
meets the requirements of this paragraph
(c) will be treated as a separate qualified
facility. For purposes of this paragraph (c),
a new addition or an addition of capacity
requires the addition or replacement of
components of property, including any
new or replacement integral property
added to a facility necessary to increase
capacity. If applicable for purposes of this
paragraph (c), taxpayers must use modi-
fied or amended facility operating licenses
or the International Standard Organization
(ISO) conditions to measure the maximum
electrical generating output of a facility
to determine its nameplate capacity. For
purposes of assessing the One-Megawatt
Exception provided in section 45Y(a)(2)
(B)(i), the capacity for a new unit or an
addition of capacity is the sum of the
nameplate capacity of the added qualified
facility and the nameplate capacity of the
facility to which the qualified facility was
added.
(2) Special rule for restarted facilities.
Solely for purposes of this paragraph (c),
a facility that is decommissioned or in the
process of decommissioning and restarts
can be considered to have increased capac-
ity if the following conditions are met:
(i) The existing facility must have
ceased operations;
(ii) The existing facility must have a
shutdown period of at least one calendar
year during which it is without a valid
operating license from its respective
Federal regulatory authority (that is, the
Federal Energy Regulatory Commission
(FERC) or the Nuclear Regulatory Com-
mission (NRC); and
(iii) The increased capacity of the
restarted facility must have a new, rein-
stated, or renewed operating license issued
by either FERC or NRC.
(3) Computation of increased amount
of electricity produced. To determine the
increased amount of electricity produced
by a facility by reason of a new unit or
an addition of capacity, a taxpayer must
multiply the amount of electricity that the
facility produces during a taxable year
after the new unit or addition of capacity is
placed in service by a fraction, the numer-
ator of which is the added nameplate
capacity that results from the new unit or
addition of capacity, and the denominator
of which is the total nameplate capacity of
the facility with the new unit or addition
of capacity added.
(4) Examples. This paragraph (c)(4)
provides examples illustrating the rules of
paragraph (c) of this section.
(i) Example 1. New Unit. X owns a hydropower
facility (Facility H) that was originally placed in
service in 2020, with a nameplate capacity of 600
megawatts. During taxable years 2020 through 2024,
X claimed a section 45 credit for the electricity pro-
duced by Facility H. On July 1, 2025, X places in
service components of property comprising a new
unit that results in Facility H having an increased
nameplate capacity of 900 megawatts in 2025. For
purposes of paragraph (c) of this section, this new
unit will be treated as a separate facility (Facility J).
X may claim a section 45Y credit during the 10-year
credit period starting on July 1, 2025, based on the
increased amount of electricity generated as a result of
the new unit, which is determined by multiplying the
electricity that Facility H produces by one-third (equal
to the 300-megawatt increase in nameplate capacity
that results from the addition of Facility J divided by
the 900 megawatt nameplate capacity of Facility H
with Facility J). Even though X claimed a section 45
credit for the existing capacity of Facility H in taxable
years 2020 through 2024, X can claim a section 45Y
credit for the production of electricity associated with
Facility J. X may also continue to claim the section 45
credit through taxable year 2030 for electricity gener-
ated by Facility H (excluding the incremental electric-
ity generation related to Facility J).
(ii) Example 2. Addition of Capacity. Y owns
a nuclear facility (Facility N) that was originally
placed in service on January 1, 2000, with a name-
plate capacity of 800 megawatts. Y claimed a sec-
tion 45U credit in taxable years 2024 and 2025 for
the electricity generated by Facility N. On January
15, 2026, Y removed components of property with
a nameplate capacity of 200 megawatts and placed
in service components of property with a name-
plate capacity of 400 megawatts. For purposes of
this paragraph (c), Facility N’s addition of capacity
is treated as a new separate qualified facility placed
in service on January 15, 2026 (Facility P). Y may
claim a section 45Y credit during the 10-year credit
period starting on January 15, 2026, based on the
increased amount of electricity produced at Facil-
ity N that is attributable to the addition of capacity
(Facility P), which is determined by multiplying the
electricity that Facility N produces by 1/5 (equal to
the 200-megawatt increase in nameplate capacity
divided by Facility N’s new total nameplate capac-
ity of 1,000 megawatts). Even though Y claimed a
section 45U credit in taxable years 2024 and 2025
for the existing capacity of Facility N, Y can claim
a section 45Y credit for the production of electric-
ity associated with Facility P. Y may also continue
to claim the section 45U credit through taxable year
2032 for electricity generated by Facility N (exclud-
ing the incremental electricity generation related to
Facility P).
(d) Retrofit of an existing facility (80/20
Rule)—(1) In general. For purposes of
section 45Y(b)(1)(B), a facility may qual-
ify as originally placed in service even
if it contains some used components of
property within the unit of qualified facil-
ity, provided the fair market value of the
used components of the unit of qualified
facility is not more than 20 percent of the
total value of the unit of qualified facility
(that is, the cost of the new components of
property plus the fair market value of the
used components of property within the
unit of qualified facility) (80/20 Rule). If
a facility satisfies the requirements of the
80/20 Rule, then the date on which such
qualified facility is considered originally
placed in service for purposes of section
45Y(b)(1)(B) is the date on which the
new components of property of the unit of
qualified facility are placed in service.
(2) Cost of new components of prop-
erty. For purposes of this 80/20 Rule, the
cost of new components of the unit of
qualified facility includes all costs prop-
erly included in the depreciable basis of
the new components of property of the
unit of qualified facility.
(3) Examples. The following examples
illustrate the rules of this paragraph (d).
(i) Example 1. Retrofitted facility that meets the
80/20 Rule. A owns an existing wind facility. On
February 1, 2026, A replaces used components of
the wind facility with new components at a cost of
$2 million. The fair market value of the remaining
original components of the wind facility is $400,000,
which is not more than 20 percent of the retrofitted
wind facility’s total fair market value of $2.4 million
(the cost of the new components ($2 million) + the
fair market value of the remaining original compo-
nents ($400,000)). Thus, the retrofitted wind facility
will be considered newly placed in service for pur-
poses of section 45Y, and the section 45Y credit is
allowable for electricity produced by A at the wind
qualified facility and sold, consumed, or stored,
during the 10-year period beginning on February 1,
2026, assuming all the other requirements of section
45Y are met.
(ii) Example 2. Retrofit of an existing facility
that meets the 80/20 Rule. Facility Z, a facility that
was originally placed in service on January 1, 2026,
was not a qualified facility (as described in §1.45Y-
2(a)) when it was placed in service because it did not
meet the greenhouse gas emissions rate requirements
(as determined under rules provided in §1.45Y-5).
On January 1, 2027, Facility Z was retrofitted and
now meets the requirements to be a qualified facility
under §1.45Y-2(a). After the retrofit, the cost of the
new property included in Facility Z is greater than
80 percent of Facility Z’s total fair market value.
Because Facility Z meets the 80/20 Rule, Facility
Z is deemed to be originally placed in service on
January 1, 2027. Therefore, a section 45Y credit is
allowable for electricity produced by Facility Z and
sold, consumed, or stored during the 10-year period

Bulletin No. 2024–32 395 August 5, 2024
beginning on January 1, 2027, assuming all the other
requirements of section 45Y are met.
(iii) Example 3. Retrofitted nuclear facility that
satisfied the 80/20 Rule. T owns a nuclear facility
(Facility N) that was originally placed in service
on March 1, 1982, and was decommissioned on
September 20, 2010. T replaces used components
of property at Facility N with new components at a
cost of $200 million, and then places Facility N in
service on July 15, 2026. The fair market value of
the remaining original components of the Facility N,
after being decommissioned and prior to restart, is
$30 million, which is not more than 20 percent of
Facility N’s total fair market value of $230 million
(the cost of the new components ($200 million) +
the fair market value of the remaining original com-
ponents ($30 million)). Thus, Facility N will be con-
sidered newly placed in service on July 15, 2026, for
purposes of section 45Y, and T will be able to claim a
section 45Y credit based on the electricity generated
at Facility N, assuming all the other requirements of
section 45Y are met.
(iv) Example 4. Capital improvements to an
existing qualified facility that do not satisfy the 80/20
Rule. X owns an existing facility, Facility C, that was
originally placed in service on January 1, 2023. X
makes capital improvements to Facility C that are
placed in service on June 1, 2026. The cost of the
capital improvements is $500,000 and the fair mar-
ket value of Facility C after the improvements is $2
million. The value of the old components of prop-
erty is $1,500,000 out of $2.0 million, or 75 percent
of the total fair market value of Facility C after the
improvements. Because the fair market value of the
new property included in Facility C is less than 80
percent of Facility C’s total fair market value, Facil-
ity C does not meet the 80/20 Rule. Facility C will
not be considered a qualified facility (as defined in
§1.45Y-2(a)) eligible for the section 45Y credit.
(e) Applicability date. This section
applies to qualified facilities placed in ser-
vice after December 31, 2024, and during
a taxable year ending on or after [DATE
OF PUBLICATION OF THE FINAL
REGULATIONS IN THE FEDERAL
REGISTER].
§1.45Y-5 Greenhouse gas emissions
rates for qualified facilities under
section 45Y.
(a) In general. This section provides
rules and definitions for determining
emissions rates for purposes of section
45Y. Section 1.45Y-5(b)(4) provides a
definition for a facility that produces elec-
tricity through combustion or gasification
and §1.45Y-5(b)(7) defines a facility that
does not produce electricity through com-
bustion or gasification. Section 1.45Y-5(c)
through (e) provide rules for determin-
ing the greenhouse gas emissions rates
for facilities for purposes of section 45Y.
Section 1.45Y-5(f) provides rules for the
annual publication of emissions rates.
Section 1.45Y-5(g) provides rules related
to provisional emissions rates. Section
§1.45Y-5(h) provides rules regarding reli-
ance on the annual publication of emis-
sions rates and provisional emissions
rates. Finally, §1.45Y-5(i) provides rules
regarding substantiation requirements.
(b) Definitions. The following defini-
tions apply for purposes of this section.
(1) CO
2
e per kWh. The term CO
2
e per
kWh means with respect to any green-
house gas, the equivalent carbon dioxide
(as determined based on global warming
potential) per kWh of electricity produced.
The 100-year time horizon global warm-
ing potentials (GWP-100) from the Inter-
governmental Panel on Climate Change’s
Fifth Assessment Report (AR5) must be
used to convert emissions to equivalent
carbon dioxide emissions. For purposes
of this definition, the GWP-100 from
AR5 (as shown in Table 1) excludes cli-
mate-carbon feedbacks. Table 1 provides
GWP-100 amounts for certain greenhouse
gases applicable to this section.
Table 1 to paragraph (b)(1): 100
Year Global Warming Potentials for
Greenhouse Gases
Greenhouse GasGWP
CO
2
1
CH
4
28
N
2
O265
SF
6
23,500
HydrofluorocarbonsVaries by gas
PerfluorocarbonsVaries by gas
(2) Combustion. The term combustion
means a rapid exothermic chemical reac-
tion, specifically the oxidation of a fuel,
which liberates energy including heat and
light.
(3) Gasification. The term gasifica-
tion means a thermochemical process that
converts carbon-containing materials into
syngas, a gaseous mixture that is com-
posed primarily of carbon monoxide, car-
bon dioxide, and hydrogen.
(4) Facility that produces electricity
through combustion or gasification. The
term facility that produces electricity
through combustion or gasification (C&G
Facility) means a facility that produces
electricity through combustion or uses an
input energy source to produce electricity,
if the input energy source was produced
through a fundamental transformation, or
multiple transformations, of one energy
source into another using combustion or
gasification.
(5) Greenhouse gas emissions rate.
Consistent with section 45Y(b)(2)(A),
the term greenhouse gas emissions rate
means the amount of greenhouse gases
emitted into the atmosphere by a facility
in the production of electricity, expressed
as grams of CO
2
e per kWh.
(6) Greenhouse gases emitted into the
atmosphere by a facility in the produc-
tion of electricity. For purposes of section
45Y(b)(2)(A), for both C&G and Non-
C&G Facilities, the term greenhouse gases
emitted into the atmosphere by a facility in
the production of electricity means emis-
sions from a facility that directly occur
from the process that transforms the input
energy source into electricity. This defini-
tion excludes the following:
(i) Emissions from electricity produc-
tion by back-up generators that are pri-
marily used in maintaining critical sys-
tems in case of a power system outage or
for supporting restart of a generator after
an outage.
(ii) Emissions from routine opera-
tional and maintenance activities that are
integral to the production of electricity,
including, but not limited to, emissions
from internal combustion vehicles used
to access and perform maintenance on
remote electricity generating facilities
or emissions occurring from heating and
cooling control rooms or dispatch centers.
(iii) Emissions from a step-up trans-
former that conditions the electricity into
a form suitable for productive use or sale.
(iv) Emissions that occur before com-
mercial operations commence or after
commercial operations terminate, includ-
ing, but not limited to, on-site emissions
occurring from construction or manufac-
turing of the facility itself, emissions from
the off-site manufacturing of facility com-
ponents, or emissions occurring due to sit-
ing or decommissioning.
(v) Emissions from infrastructure asso-
ciated with the facility, including, but not
limited to, emissions from road construc-
tion for feedstock production.

August 5, 2024 396 Bulletin No. 2024–32
(vi) Emissions from the distribution of
electricity to consumers.
(7) Non-C&G Facility. The term Non-
C&G Facility means a facility that pro-
duces electricity and is not described in
§1.45Y-5(b)(4).
(8) Fuel. The term fuel means mate-
rial directly used to produce electricity
or energy inputs that are used to produce
electricity.
(9) Feedstock. The term feedstock
means any raw material used in a process
for electricity generation or to produce an
intermediate product or finished fuel used
for electricity generation.
(c) Non-C&G Facilities—(1) Deter-
mining a greenhouse gas emissions rate
for Non-C&G Facilities. Greenhouse gas
emissions rates for Non-C&G Facilities
must be determined under this paragraph
(c) and paragraph (e) of this section.
(i) Excluded emissions. With respect
to Non-C&G Facilities only, greenhouse
gases emitted into the atmosphere by a
facility in the production of electricity
excludes emissions of greenhouse gases
that are not directly produced by the
fundamental transformation of the input
energy source into electricity, including,
but not limited to, the following:
(A) Emissions from hydropower reser-
voirs due to anoxic conditions;
(B) Ebullitive, diffuse, and degassing
emissions from hydropower operations;
(C) Emissions of non-condensable
gases from underground reservoirs during
geothermal operations; and
(D) Emissions occurring due to activ-
ities and operations occurring off-site,
including but not limited to, the produc-
tion and transportation of fuels used by the
facility, or land use change from siting or
changes in demand.
(ii) Emissions assessment process.
Subject to §1.45Y-5(b)(6) and (c)(1), a
greenhouse gas emissions rate for a Non-
C&G Facility must be determined through
a technical and engineering assessment
of the fundamental energy transforma-
tion into electricity. This assessment must
consider all input and output energy carri-
ers and chemical reactions or mechanical
processes taking place at the facility in the
production of electricity.
(iii) Example of greenhouse gas emis-
sions rate determination for a Non-C&G
Facility.
(A) Facts. A facility uses solar photovoltaic
technologies to convert light directly into electricity
through use of the photovoltaic effect. This is a phys-
ical phenomenon in which certain semiconducting
materials upon exposure to light, absorb the light and
transform the energy contained in the light directly
into an electric current. There are many materials
that may be used to generate electricity through this
method, including crystalline silicon, amorphous
silicon, cadmium telluride, copper indium gallium
diselenide, perovskites, quantum dots, and car-
bon-based materials known as organic photovoltaics.
The smallest unit of photovoltaic materials is a cell.
Multiple cells are typically assembled into a panel
or module and electrically connected. Multiple mod-
ules or panels are generally connected to comprise a
solar system or installation. Solar photovoltaic tech-
nologies produce direct current electricity that can be
used as is or, more typically, can be fed into inverters
to transform it into alternating current. Solar panels
can be ground mounted at a fixed angle or can be
mounted with tracking systems that move the panels
to track the location of the sun over the course of
the day and season in order to maximize electricity
production. Solar panels may also be mounted on
buildings (for example, on roofs), or solar photovol-
taic materials can be integrated into other building
components such as roofing tiles.
(B) Analysis. For solar photovoltaic technolo-
gies, the fundamental transformation of input energy
(solar electromagnetic radiation) into electricity
using the photovoltaic effect involves no mechanical
energy or chemical reactions. Academic studies on
the lifecycle greenhouse gas emissions from solar
photovoltaic power indicate that there is a small but
non-zero amount of emissions associated with the
operational phase of these technologies. However,
these emissions exclusively occur due to ongoing
maintenance (for example, the washing of solar
panels), preventative maintenance (for example, the
periodic replacement of electrical equipment such as
inverters), and a minimal amount of project manage-
ment (for example, inverter standby mode at night).
These emissions do not occur directly due to the
production of electricity. Therefore, consistent with
§1.45Y-5(c)(1)(ii), the greenhouse gas emissions rate
for facilities that produce electricity by solar photo-
voltaic properties is not greater than zero.
(2) Non-C&G Facilities with a green-
house gas emissions rate that is not
greater than zero. The following types
or categories of facilities are Non-C&G
Facilities with a greenhouse gas emissions
rate that is not greater than zero:
(i) Wind (including small wind proper-
ties);
(ii) Hydropower (including retro-
fits that add electricity production to
non-powered dams, conduit hydropower,
hydropower using new impoundments,
and hydropower using diversions such as
a penstock or channel);
(iii) Marine and hydrokinetic;
(iv) Solar (including photovoltaic and
concentrated solar power);
(v) Geothermal (including flash and
binary plants);
(vi) Nuclear fission;
(vii) Nuclear fusion; and
(viii) Waste energy recovery prop-
erty that derives energy from a source
described in paragraphs (c)(2)(i) through
(vii) of this section.
(d) C&G Facilities—(1) Determining
a greenhouse gas emissions rate for C&G
Facilities. Greenhouse gas emissions rates
for C&G Facilities must be determined by
a lifecycle analysis (LCA) that complies
with this paragraph (d) and paragraph (e)
of this section. The greenhouse gas emis-
sions rate for a C&G Facility equals the
net rate of greenhouse gases emitted into
the atmosphere by such facility (taking
into account lifecycle greenhouse gas
emissions, as described in section 211(o)
(1)(H) of the Clean Air Act (42 U.S.C.
7545(o)(1)(H))) in the production of elec-
tricity, expressed as grams of CO
2
e per
kWh.
(2) LCA requirements. For purposes of
this paragraph (d), an LCA must comply
with the following requirements:
(i) Starting boundary. The starting
boundary of the LCA for an LCA involv-
ing generation-derived feedstocks (such
as biogenic feedstocks) is feedstock gen-
eration. The starting boundary of the LCA
for an LCA involving extraction-derived
feedstocks (such as fossil fuel feedstocks)
is feedstock extraction. The starting
boundaries include the processes neces-
sary to produce and collect or extract the
raw materials used to produce electricity
from combustion or gasification technolo-
gies, including those used as energy inputs
to electricity production. This includes the
emissions effects of relevant land man-
agement activities or changes related to
or associated with feedstock production.
The starting conditions are the material
and energy flows, including associated
direct and indirect greenhouse gas emis-
sions, of the processes associated with the
extraction or production of raw feedstock
materials or fuel.
(ii) Ending boundary. The ending
boundary of the LCA for electricity that
is transmitted to the grid or electricity that
is used on-site is the meter at the point of
production of the C&G Facility. The use
of such electricity generated by the C&G
Facility (and what other types of energy

Bulletin No. 2024–32 397 August 5, 2024
sources it displaces), including emissions
from transmission and distribution, are
outside of the LCA boundary.
(iii) Baseline. The LCA must be based
on a future anticipated baseline, which
projects future status quo in the absence
of the availability of the sections 45Y and
48E credits (taking into account antic-
ipated changes in technology, policies,
practices, and environmental and other
socioeconomic conditions).
(iv) Offsets and offsetting activities.
Offsets and offsetting activities that are
unrelated to the production of electricity
by the C&G Facility, including the pro-
duction and distribution of any input fuel,
may not be taken into account in the LCA.
(v) Principles for included emissions.
The LCA must take into account direct
emissions, significant indirect emissions
in the United States or other countries,
emissions associated with market-medi-
ated changes in related commodity mar-
kets, emissions associated with feedstock
generation or extraction, emissions conse-
quences of increased production of feed-
stocks, emissions at all stages of fuel and
feedstock production and distribution, and
emissions associated with distribution,
delivery, and use of feedstocks to and by a
C&G Facility.
(A) Direct emissions. For purposes of
paragraph this paragraph (d)(2)(v), direct
emissions include, but are not limited to:
(1) Emissions from feedstock genera-
tion, production, and extraction (includ-
ing emissions from feedstock and fuel
harvesting and extraction and direct land
use change and management, including
emissions from fertilizers, and changes in
carbon stocks);
(2) Emissions from feedstock and fuel
transport (including emissions from trans-
porting the raw or processed feedstock to
the fuel processing facility);
(3) Emissions from transporting and
distributing fuels to electricity production
facility;
(4) Emissions from handling, process-
ing, upgrading, and/or storing feedstocks,
fuels and intermediate products (includ-
ing emissions from on/offsite storage and
preparation/pre-treatment for use (for
example, torrefaction or pelletization) and
emissions from process additives); and
(5) Emissions from combustion and
gasification at the electricity generating
facility (including emissions from the
combustion and/or gasification process
and emission from gasification or com-
bustion additives).
(B) Significant indirect emissions.
For purposes of this paragraph (d)(2)(v),
examples of significant indirect emissions
include, but are not limited to, emissions
from indirect land use and land use change
and induced emissions associated with the
increased use of the feedstock for energy
production.
(vi) Principles for excluded emissions.
The LCA must not take into account the
following types of emissions:
(A) Emissions from facility construc-
tion, siting or decommissioning (includ-
ing on-site emissions occurring from con-
struction or manufacturing of the facility
itself);
(B) Emissions from facility mainte-
nance (including emissions from the on
and offsite construction or maintenance of
the facility; emissions from vehicles used
to access and perform maintenance on
electricity generating facilities; emissions
from back-up generators that do not pro-
vide additional firm power and are used
in maintaining critical systems in case of
a power system outage or for supporting
restart of a generator after an outage; and
emissions occurring from heating and
cooling control rooms or dispatch cen-
ters);
(C) Emissions from infrastructure asso-
ciated with the facility (including emis-
sions from road construction for feedstock
production and emissions from onsite
backup or emergency generators used in
an emergency or unplanned outage); and
(D) Emissions from the distribution of
electricity to consumers.
(vii) Alternative fates and avoided
emissions. The LCA may consider alter-
native fates and account for avoided emis-
sions.
(e) Carbon capture and sequestration.
For purposes of paragraphs (c) and (d) of
this section, a greenhouse gas emissions
rate for a Non-C&G Facility or C&G
Facility must exclude any qualified car-
bon dioxide (as defined in section 45Y(c)
(3)) that is produced in such facility’s
production of electricity, captured by the
taxpayer, and pursuant to any regulations
established under section 45Q(f)(2), dis-
posed of by the taxpayer in secure geo-
logical storage, or utilized by the taxpayer
in a manner described in section 45Q(f)
(5) and any regulations established under
such section.
(f) Annual publication of emissions
rates—(1) In general. As required by sec-
tion 45Y(b)(2)(C)(i), the Secretary will
annually publish a table that sets forth the
greenhouse gas emissions rates for types
or categories of facilities (Annual Table),
which a taxpayer must use for purposes of
section 45Y. Except as provided in para-
graph (h) of this section, a taxpayer that
owns a facility that is described in the
Annual Table on the first day of the tax-
payer’s taxable year in which the section
45Y credit or section 48E credit is deter-
mined with respect to such facility must
use the Annual Table as of such date to
determine an emissions rate for such facil-
ity for such taxable year.
(2) Publication of analysis required
for changes to the Annual Table. In
connection with the publication of the
Annual Table, the Secretary must pub-
lish an accompanying expert analysis that
addresses any types or categories of facil-
ities added or removed from the Annual
Table since its last publication. Types or
categories of facilities will be added or
removed from the Annual Table consistent
with, for Non-C&G Facilities, a technical
assessment of the fundamental energy
transformation into electricity as provided
in paragraph (c)(1)(ii) of this section, and,
for C&G Facilities, an LCA that complies
with paragraphs (d) and (e) of this section.
Such expert analysis must be prepared by
one or more of the National Laboratories,
in consultation with other agency experts
as appropriate, and must address whether
the addition or removal of types or cate-
gories of facilities from the Annual Table
complies with section 45Y(b)(2)(A) and
(B) of the Internal Revenue Code and this
section.
(g) Provisional emissions rates—(1) In
general. In the case of any facility that is
of a type or category for which an emis-
sions rate has not been established by the
Secretary under this paragraph (g), a tax-
payer that owns such facility may file a
petition with the Secretary for the determi-
nation of the emissions rate with respect to
such facility (Provisional Emissions Rate
or PER). A PER must be determined and
obtained under the rules of this section.

August 5, 2024 398 Bulletin No. 2024–32
(2) Rate not established. An emissions
rate has not been established by the Sec-
retary for a facility for purposes of sec-
tion 45Y(b)(2)(C)(ii) if such facility is
not described in the Annual Table. If a
taxpayer’s request for an emissions value
pursuant to paragraph (g)(5) of this sec-
tion is pending at the time such facility is
or becomes described in the Annual Table,
the taxpayer’s request for an emissions
value will be automatically denied.
(3) Process for filing a PER petition.
To file a PER petition with the Secretary,
a taxpayer must submit a PER petition
by attaching it to the taxpayer’s Federal
income tax return or Federal return, as
appropriate, for the first taxable year in
which the taxpayer claims the section 45Y
credit with respect to the facility to which
the PER petition applies. The PER peti-
tion must contain an emissions value, and,
if applicable, the associated letter from
DOE. An emissions value may be obtained
from the Department of Energy (DOE) or
by using an LCA model in accordance
with paragraph (g)(6) of this section. An
emission value obtained from DOE will be
based on an analytical assessment of the
emissions rate associated with the facility,
performed by one or more National Labo-
ratories, in consultation with other agency
experts as appropriate, consistent with
this section. A taxpayer must retain in its
books and records a copy of the applica-
tion and correspondence to and from DOE
including a copy of the taxpayer’s request
to DOE for an emissions value, including
any information provided by the taxpayer
to DOE pursuant to the emissions value
request process provided in paragraph (g)
(5) of this section. Alternatively, an emis-
sions value can be determined by the tax-
payer for a facility using the most recent
version of an LCA model, as of the time
the PER petition is filed, that has been
designated by the Secretary for such use
under paragraph (g)(6) of this section. If
an emissions value is determined using
the most recent version of the model or
models, the taxpayer is required to pro-
vide to the IRS information to support its
determination in the form and manner pre-
scribed in IRS forms or instructions or in
publications or guidance published in the
Internal Revenue Bulletin. See §601.601
of this chapter. A taxpayer may not request
an emissions value from DOE for a facil-
ity for which an emissions value can be
determined by using the most recent ver-
sion of an LCA model or models that have
been designated by the Secretary for such
use under paragraph (g)(6) of this section.
(4) PER determination. Upon the IRS’s
acceptance of the taxpayer’s Federal
income tax return or Federal return, as
appropriate, containing a PER petition, the
emissions value of the facility specified on
such petition will be deemed accepted. A
taxpayer may rely upon an emissions value
provided by DOE for purposes of claim-
ing a section 45Y credit, provided that any
information, representations, or other data
provided to DOE in support of the request
for an emissions value are accurate. If
applicable, a taxpayer may rely upon an
emissions value determined for a facility
using the most recent version of the spe-
cific LCA model or models that, as of the
time the PER petition is filed, have been
designated by the Secretary for such use
under paragraph (g)(6) of this section,
provided that any information, represen-
tations, or other data used to obtain such
emissions value are accurate. The IRS’s
deemed acceptance of an emissions value
is the Secretary’s determination of the
PER. However, the taxpayer must still
comply with all applicable requirements
for the section 45Y credit and any infor-
mation, representations, or other data sup-
porting an emissions value are subject to
later examination by the IRS.
(5) Emissions value request process.
An applicant that submits a request for
an emissions value must follow the pro-
cedures specified by DOE to request and
obtain such emissions value. Emissions
values will be determined consistent with
the rules provided in this section. An appli-
cant may request an emissions value from
DOE only after a front-end engineering
and design (FEED) study or similar indi-
cation of project maturity, as determined
by DOE, such as completion of a project
specification and cost estimation sufficient
to inform a final investment decision for
the facility. DOE may decline to review
applications that are not responsive,
including those applications that relate to
a facility described in the Annual Table
(consistent with paragraph (g)(2) of this
section) or a facility for which an emis-
sions value can be determined by an LCA
model designated under paragraph (g)(6)
of this section (consistent with paragraph
(g)(3) of this section), or applications that
are incomplete. DOE will publish guid-
ance and procedures that applicants must
follow to request and obtain an emissions
value from DOE. DOE’s guidance and
procedures will include a process for,
under limited circumstances, requesting
a revision to DOE’s initial assessment of
an emissions value based on revised tech-
nical information or facility design and
operation.
(6) LCA model for determining an
emissions value for C&G Facilities. The
Secretary may designate one or more
LCA models for determining an emis-
sions value for C&G Facilities that are not
described in the Annual Table. The Sec-
retary may only designate a model under
this paragraph (g)(6) if the model com-
plies with section 45Y(b)(2)(B) and para-
graphs (d) and (e) of this section. The Sec-
retary may revoke the designation of an
LCA model or models. In connection with
the designation or revocation of a desig-
nation of an LCA model or models, the
Secretary is required to publish an accom-
panying expert analysis of the model that
is prepared by one or more of the National
Laboratories, in consultation with other
agency experts as appropriate, and such
analysis must address the model’s com-
pliance with section 45Y(b)(2)(B) of the
Internal Revenue Code and paragraphs (d)
and (e) of this section.
(7) Effect of PER. A taxpayer may use a
PER determined by the Secretary to deter-
mine eligibility for the section 45Y credit
for the facility to which the PER applies,
provided all other requirements of section
45Y are met. The Secretary’s PER deter-
mination is not an examination or inspec-
tion of books of account for purposes of
section 7605(b) of the Code and does not
preclude or impede the IRS (under section
7605(b) or any administrative provisions
adopted by the IRS) from later examining
a return or inspecting books or records
with respect to any taxable year for which
the section 45Y credit is claimed. Further,
a PER determination does not signify that
the IRS has determined that the require-
ments of section 45Y have been satisfied
for any taxable year.
(h) Reliance on Annual Table or Pro-
visional Emissions Rate. Taxpayers may
rely on the Annual Table in effect as of

Bulletin No. 2024–32 399 August 5, 2024
the date a facility began construction or
the provisional emissions rate determined
by the Secretary for the taxpayer’s facil-
ity under paragraph (g)(4) of this section
to determine the facility’s greenhouse gas
emissions rate for any taxable year that is
within the 10-year period described in sec-
tion 45Y(b)(1)(B), provided that the facil-
ity continues to operate as a type of facil-
ity that is described in the Annual Table or
the facility’s emissions value request, as
applicable, for the entire taxable year.
(i) Substantiation—(1) In general.
A taxpayer must maintain in its books
and records documentation regarding
the design, operation, and, if applica-
ble, feedstock or fuel source used by the
facility that establishes that such facility
had a greenhouse gas emissions rate, as
determined under this section, that is not
greater than zero for the taxable year.
(2) Sufficient substantiation. Documen-
tation sufficient to substantiate that a facil-
ity had a greenhouse gas emissions rate,
as determined under this section, that is
not greater than zero for the taxable year
includes documentation or a report pre-
pared by an unrelated party that verifies
that a facility had such an emissions rate.
A facility described in paragraph (c)(2) of
this section can maintain sufficient docu-
mentation to demonstrate a greenhouse gas
emissions rate that is not greater than zero
for the taxable year by showing that it is
the type of facility described in paragraph
(c)(2) of this section. The Secretary may
determine that other types of facilities can
sufficiently substantiate a greenhouse gas
emissions rate, as determined under this
section, that is not greater than zero with
certain documentation and will describe
such facilities and documentation in IRS
forms or instructions or in publications or
guidance published in the Internal Revenue
Bulletin. See §601.601 of this chapter.
(j) Applicability date. This section
applies to qualified facilities placed in ser-
vice after December 31, 2024, and during
a taxable year ending on or after [the date
of publication of the final regulations in
the Federal Register].
Par. 4. Sections 1.48E-0 through
1.48E-5 are added to read as follows:
Sec.
* * * * *
§1.48E-0 Table of contents.
§1.48E-1 Clean electricity investment
credit.
§1.48E-2 Qualified investments in qual-
ified facilities and EST for purposes of
section 48E.
§1.48E-3 [Reserved]
§1.48E-4 Rules of general application.
§1.48E-5 Greenhouse gas emissions rates
for qualified facilities under section 48E.
* * * * *
§1.48E-0 Table of contents.
This section lists the captions con-
tained in §§1.48E-1 through 1.48E-5.
§1.48E-1 Clean electricity investment
credit.
(a) Overview.
(1) In general.
(2) Code.
(3) EST.
(4) kWh.
(5) Qualified facility.
(6) Qualified investment with respect
to a qualified facility.
(7) Qualified investment with respect
to EST.
(8) Secretary.
(9) Section 48E credit.
(10) Section 48E regulations.
(b) Credit amount.
(1) In general.
(2) Applicable percentage.
(3) Base rate.
(4) Alternative rate.
(5) Energy communities increase in
credit rate.
(i) In general.
(ii) Applicable credit rate increase.
(6) Domestic content increase in credit
rate.
(i) In general.
(ii) Applicable credit rate increase.
(c) Credit phase-out.
(1) In general.
(2) Phase-out percentage.
(3) Applicable year.
(d) Applicability date.
§1.48E-2 Qualified investments
in qualified facilities and EST for
purposes of section 48E.
(a) Qualified facility.
(b) Property included in qualified facil-
ity.
(1) In general.
(2) Unit of qualified facility.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(i) In general.
(ii) Power conditioning and transfer
equipment.
(iii) Roads.
(iv) Fences.
(v) Buildings.
(vi) Shared integral property.
(vii) Examples.
(c) Coordination with other credits.
(1) In general.
(2) Allowed.
(3) Examples.
(d) Qualified investment with respect
to a qualified facility.
(e) Qualified property.
(1) In general.
(2) Location of qualified property.
(f) Definitions related to requirements
for qualified property.
(1) Tangible personal property.
(2) Other tangible property.
(3) Construction, reconstruction, or
erection of qualified property.
(4) Acquisition of qualified property.
(5) Original use of qualified property.
(i) In general.
(ii) Retrofitted qualified facility.
(6) Depreciation allowable.
(i) In general.
(ii) Exclusions from allowable.
(7) Placed in service.
(i) In general.
(ii) Qualified facility subject to §1.48-4
election to treat lessee as purchaser.
(8) Claim.
(g) EST.
(1) Property included in EST.
(2) Unit of EST.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(4) Qualified investment with respect
to EST.
(5) Placed in service.
(i) In general.
(ii) EST subject to §1.48-4 election to
treat lessee as purchaser.
(6) Types of EST.
(i) Electrical energy storage property.
(ii) Thermal energy storage property.

August 5, 2024 400 Bulletin No. 2024–32
(iii) Hydrogen energy storage property.
(7) Modification of EST.
(8) Claim.
(h) Applicability date.
§1.48E-3 [Reserved]
§1.48E-4 Rules of general application.
(a) Rules for certain lower-output qual-
ified facilities to include qualified inter-
connection costs in the basis of associated
qualified facility.
(1) In general.
(2) Qualified interconnection property.
(3) Five-Megawatt Limitation.
(i) In general.
(ii) Nameplate capacity for purposes of
the Five-Megawatt Limitation.
(4) Interconnection agreement.
(5) Utility.
(6) Reduction to amounts chargeable to
capital account.
(7) Examples.
(b) Expansion of facility; Incremental
production.
(1) In general.
(2) Special rule for restarted facilities.
(3) Computation of qualified invest-
ment for a new unit or an addition of
capacity.
(i) New unit.
(ii) Addition of capacity.
(4) Examples.
(c) Retrofit of an existing facility
(80/20 Rule).
(1) In general.
(2) Expenditures taken into account.
(3) Cost of new components.
(4) New costs.
(5) Excluded costs.
(6) Examples.
(d) Special rules regarding ownership.
(1) Qualified investment with respect
to a qualified facility or EST.
(2) Multiple owners.
(3) Section 761(a) election.
(4) Related taxpayers.
(i) Definition.
(ii) Related taxpayer rule.
(5) Examples.
(e) Coordination rule for section 42
credits and section 48E credits.
(f) Recapture.
(1) In general.
(2) Recapture event.
(i) In general.
(ii) Changes to the Annual Table.
(iii) Yearly determination.
(iv) Carryback and carryforward
adjustments.
(3) Recapture amount.
(i) In general.
(ii) Applicable recapture percentage.
(4) Recapture period.
(5) Increase in tax for recapture.
(g) Cross references.
(h) Applicability date.
§1.48E-5 Greenhouse gas emissions
rates for qualified facilities under
section 48E.
(a) In general.
(b) Definitions.
(c) Non-C&G Facilities.
(d) C&G Facilities.
(e) Carbon capture and sequestration.
(f) Annual publication of emissions
rates.
(g) Provisional emissions rates.
(1) In general.
(2) Rate not established.
(3) Process for filing a PER petition.
(4) PER determination.
(5) Emissions value request process.
(6) LCA model for determining an
emissions value for C&G Facilities.
(7) Effect of PER.
(h) Determining anticipated green-
house gas emissions rate.
(1) In general.
(2) Examples of objective indicia.
(i) Reliance on Annual Table or Provi-
sional Emissions Rate.
(j) Substantiation.
(1) In general.
(2) Sufficient substantiation.
(k) Applicability date.
§1.48E-1 Clean electricity investment
credit
(a) Overview—(1) In general. For
purposes of section 46 of the Code, the
section 48E credit is determined under
section 48E of the Code and the section
48E regulations (as defined in paragraph
(a)(10) of this section). This paragraph (a)
provides definitions of terms that, unless
otherwise specified, apply for purposes of
section 48E, the section 48E regulations,
and any provision of the Code or this
chapter that expressly refers to any pro-
vision of section 48E or the section 48E
regulations. Paragraph (b) of this section
provides rules for determining the amount
of the section 48E credit for any taxable
year. Paragraph (c) of this section pro-
vides rules regarding the phase-out of the
section 48E credit. See §1.48E–2 for rules
relating to qualified investments in quali-
fied facilities and energy storage technol-
ogy (EST) for purposes of the section 48E
credit. See §1.48E–4 for rules of general
application for the section 48E credit. See
§1.48E–5 for rules to determine green-
house gas emissions rates for qualified
facilities under section 48E.
(2) Code. The term Code means the
Internal Revenue Code.
(3) EST. The term EST for purposes of
the section 48E credit means energy stor-
age technology as defined in §1.48E-2(g).
(4) kWh. The term kWh means kilowatt
hours.
(5) Qualified facility. The term qual-
ified facility for purposes of the section
48E credit has the meaning provided in
§1.48E-2(a).
(6) Qualified investment with respect
to a qualified facility. The term qualified
investment with respect to a qualified facil-
ity for purposes of the section 48E credit
has the meaning provided in §1.48E-2(d).
(7) Qualified investment with respect to
EST. The term qualified investment with
respect to EST for purposes of the section
48E credit has the meaning provided in
§1.48E-2(g)(4).
(8) Secretary. The term Secretary
means the Secretary of the Treasury or her
delegate.
(9) Section 48E credit. The term sec-
tion 48E credit means the clean electricity
investment credit determined under sec-
tion 48E of the Code and the section 48E
regulations.
(10) Section 48E regulations. The term
section 48E regulations means this section
and §§ 1.48E–2 through 1.48E-5.
(b) Credit amount—(1) In general. For
purposes of section 46 of the Code, the
section 48E credit for any taxable year is
an amount equal to the applicable percent-
age of the qualified investment for such
taxable year with respect to any qualified
facility and any EST.
(2) Applicable percentage. The term
applicable percentage means the base
rate described in paragraph (b)(3) of this

Bulletin No. 2024–32 401 August 5, 2024
section or the alternative rate described
in paragraph (b)(4) of this section. The
applicable percentage may be increased
as provided in section 48E(a)(3)(A) and
paragraph (b)(5) of this section in the case
of a qualified facility that is located in an
energy community. Similarly, the applica-
ble percentage may be increased as pro-
vided in section 48E(a)(3)(B) and para-
graph (b)(6) of this section in the case of a
qualified facility that satisfies the domes-
tic content requirements.
(3) Base rate. In the case of any qual-
ified facility or EST that does not satisfy
the requirements provided in section
48E(a)(2)(A)(ii) or (B)(ii), the term base
rate means 6 percent.
(4) Alternative rate. In the case of any
qualified facility or EST that satisfies
the prevailing wage and apprenticeship
requirements provided in section 48E(a)
(2)(A)(ii) or (B)(ii), the term alternative
rate means 30 percent.
(5) Energy communities increase in
credit rate—(i) In general. In the case
of any qualified facility or EST that is
placed in service within an energy com-
munity (as defined in section 45(b)(11)
(B)), the applicable percentage under
section 48E(a)(2) and paragraph (b)(2)
of this section will be increased by the
applicable credit rate increase described
in section 48E(a)(3)(A)(ii) and paragraph
(b)(5)(ii) of this section.
(ii) Applicable credit rate increase.
In the case of any qualified investment
with respect to a qualified facility or EST
to which the base rate is applicable, the
applicable credit rate increase is 2 percent-
age points, and with respect to any quali-
fied investment with respect to a qualified
facility or EST to which the alternative
rate is applicable, the applicable credit
rate increase is 10 percentage points.
(6) Domestic content increase in credit
rate—(i) In general. In the case of any
qualified facility or EST that satisfies
the requirements of section 45(b)(9)(B)
(domestic content requirement), the appli-
cable percentage under section 48E(a)(2)
and paragraph (b)(2) of this section will
be increased by the applicable credit rate
increase described in paragraph (b)(6)(ii)
of this section.
(ii) Applicable credit rate increase. In
the case of any qualified investment with
respect to a qualified facility or EST to
which the base rate is applicable, 2 per-
centage points, and with respect to any
qualified investment with respect to a
qualified facility or EST to which the
alternative rate is applicable, 10 percent-
age points.
(c) Credit phase-out—(1) In general.
The amount of the credit as determined
under section 48E(a) and paragraph (b)
of this section for any qualified facility
or EST, the construction of which begins
during a calendar year described in sec-
tion 48E(e)(2) and paragraph (c)(2) of this
section is equal to the product of—
(i) The amount of the credit determined
under section 48E(a) and paragraph (b)
of this section without regard to section
48E(e) and paragraph (c) of this section,
multiplied by
(ii) The phase-out percentage under
section 48E(e)(2) and paragraph (c)(2) of
this section.
(2) Phase-out percentage. The phase-
out percentage under this paragraph (c)(2)
is equal to—
(i) For any qualified investment with
respect to any qualified facility or EST the
construction of which begins during the
first calendar year following the applica-
ble year, 100 percent,
(ii) For any qualified investment with
respect to any qualified facility or EST the
construction of which begins during the
second calendar year following the appli-
cable year, 75 percent,
(iii) For any qualified investment with
respect to any qualified facility or EST the
construction of which begins during the
third calendar year following the applica-
ble year, 50 percent, and
(iv) For any qualified investment with
respect to any qualified facility or EST the
construction of which begins during any
calendar year subsequent to the calendar
year described in paragraph (c)(2)(iii) of
this section, 0 percent.
(3) Applicable year. For purposes
of this paragraph (c), the term applica-
ble year has the same meaning provided
under §1.45Y-1(c)(3).
(d) Applicability date. This section
applies to qualified facilities and ESTs
placed in service after December 31,
2024, and during a taxable year ending on
or after [DATE OF PUBLICATION OF
THE FINAL REGULATIONS IN THE
FEDERAL REGISTER].
§1.48E-2 Qualified investments
in qualified facilities and EST for
purposes of section 48E.
(a) Qualified facility. For purposes of
the section 48E credit, the term qualified
facility means a facility that meets all the
following requirements:
(1) The facility is used for the genera-
tion of electricity;
(2) The facility is placed in service by
the taxpayer after December 31, 2024; and
(3) The facility has a greenhouse gas
emissions rate of not greater than zero
(as determined under rules provided in
§1.45Y-5).
(b) Property included in qualified facil-
ity—(1) In general. A qualified facility
includes a unit of qualified facility (as
defined in paragraph (b)(2) of this sec-
tion). A qualified facility also includes
components of property owned by the tax-
payer that are an integral part (as defined
in paragraph (b)(3) of this section) of the
qualified facility. Any component of prop-
erty that meets the requirements of this
paragraph (b) is part of a qualified facil-
ity regardless of where such component
of property is located. A qualified facility
does not include any electrical transmis-
sion equipment, such as transmission lines
and towers, or any equipment beyond the
electrical transmission stage. A qualified
facility also generally does not include
equipment that is an addition or modi-
fication to an existing qualified facility.
However, see §1.48E-4(b) regarding the
expansion of a facility or incremental pro-
duction and §1.48E-4(c) for rules regard-
ing a retrofitted qualified facility (80/20
Rule).
(2) Unit of qualified facility—(i) In
general. For purposes of the section
48E credit, the unit of qualified facil-
ity includes all functionally interdepen-
dent components of property (as defined
in paragraph (b)(2)(ii) of this section)
owned by the taxpayer that are operated
together and that can operate apart from
other property to produce electricity. No
provision of this section, §1.48E-1, or
§1.48E-4 through 1.48E-5 uses the term
unit in respect of a qualified facility with
any meaning other than that provided in
this paragraph (b)(2)(i).
(ii) Functionally interdependent. Com-
ponents of property are functionally inter-

August 5, 2024 402 Bulletin No. 2024–32
dependent if the placing in service of each
of the components is dependent upon the
placing in service of each of the other
components to produce electricity.
(3) Integral part—(i) In general. For
purposes of the section 48E credit, a com-
ponent of property owned by a taxpayer
is an integral part of a qualified facility if
it is used directly in the intended function
of the qualified facility and is essential to
the completeness of such function. Prop-
erty that is an integral part of a qualified
facility is part of the qualified facility. A
taxpayer may not claim the section 48E
credit for any property that is an integral
part of the taxpayer’s qualified facility that
is not owned by the taxpayer.
(ii) Power conditioning and transfer
equipment. Power conditioning equip-
ment and transfer equipment are integral
parts of a qualified facility. Power con-
ditioning equipment includes equipment
that modifies the characteristics of elec-
tricity into a form suitable for use, trans-
mission, or distribution. Parts related to
the functioning or protection of power
conditioning equipment are also treated
as power conditioning equipment and
include, but are not limited to, switches,
circuit breakers, arrestors, and hardware
and software used to monitor, operate,
and protect power conditioning equip-
ment. Transfer equipment includes com-
ponents of property that allow for the
aggregation of electricity generated by
a qualified facility and components of
property that alter voltage to permit elec-
tricity to be transferred to a transmission
or distribution line. Transfer equipment
does not include transmission or dis-
tribution lines. Examples of transfer
equipment include, but are not limited
to, wires, cables, and combiner boxes
that conduct electricity. Parts related to
the functioning or protection of transfer
equipment are also treated as transfer
equipment and may include items such
as current transformers used for meter-
ing, electrical interrupters (such as cir-
cuit breakers, fuses, and other switches),
and hardware and software used to mon-
itor, operate, and protect transfer equip-
ment.
(iii) Roads. Roads that are an inte-
gral part of a qualified facility are those
roads integral to the intended function of
the qualified facility such as onsite roads
that are used to operate and maintain the
qualified facility. Roads used primarily for
access to the site, or roads used primarily
for employee or visitor vehicles, are not
integral to the intended function of the
qualified facility, and thus are not an inte-
gral part of a qualified facility.
(iv) Fences. Fencing is not an integral
part of a qualified facility because it is not
integral to intended function of the quali-
fied facility.
(v) Buildings. Generally, buildings
are not integral parts of a qualified facil-
ity because they are not integral to the
intended function of the qualified facility.
However, the following structures are not
treated as buildings for this purpose:
(A) A structure that is essentially an
item of machinery or equipment; and
(B) A structure that houses components
of property that is integral to the intended
function of the qualified facility if the use
of the structure is so closely related to the
use of the housed components of property
therein that the structure clearly can be
expected to be replaced if the components
of property it initially houses are replaced.
(vi) Shared integral property. Multi-
ple qualified facilities (whether owned by
one or more taxpayers), including quali-
fied facilities with respect to which a tax-
payer has claimed a credit under section
48E or another Federal income tax credit,
may include shared property that may be
considered an integral part of each qual-
ified facility so long as the cost basis for
the shared property is properly allocated
to each qualified facility and the taxpayer
only claims a section 48E credit with
respect to the portion of the cost basis
properly allocable to a qualified facility
for which the taxpayer is claiming a sec-
tion 48E credit. The total cost basis of
such shared property divided among the
qualified facilities may not exceed 100
percent of the cost of such shared prop-
erty. In addition, a component of prop-
erty that is shared by a qualified facility
(as defined by section 48E(b)(3)) (48E
Qualified Facility) and a qualified facil-
ity (as defined in section 45Y(b)) (45Y
Qualified Facility) that is an integral part
of both qualified facilities will not affect
the eligibility of the 48E Qualified Facility
to claim a section 48E credit or the 45Y
Qualified Facility to claim the section 45Y
credit.
(vii) Examples. This paragraph (b)(3)
(vii) provides examples illustrating the
rules of this paragraph (b)(3).
(A) Example 1. Co-located qualified facilities
owned by the same taxpayer that share integral
property. X constructs a solar farm (Solar Qualified
Facility) and nearby also constructs a wind facil-
ity (Wind Qualified Facility) that are each a quali-
fied facility (as defined in §1.48E-2(a)). The Solar
Qualified Facility and Wind Qualified Facility each
connect to a transformer that steps up the electricity
produced by each qualified facilities to electrical grid
voltage before it is transmitted to the electrical grid
through an intertie. X assigns 50% of the cost of the
shared transformer to the Solar Qualified Facility and
the Wind Qualified Facility, respectively. The fact
that the Solar Qualified Facility and Wind Qualified
Facility share property that is integral to both does
not impact the ability of X to claim a section 48E
credit for both qualified facilities. When X places
the qualified facilities in service, 50% of the cost of
the transformer is included in X’s basis in each of
the qualified facilities for purposes of computing the
section 48E credit.
(B) Example 2. Co-located qualified facilities
owned by different taxpayers that share integral
property. X constructs a solar farm (Solar Qualified
Facility), and nearby Y constructs a wind facility
(Wind Qualified Facility) that are each a qualified
facility (as defined in §1.48E-2(a)). The Solar Qual-
ified Facility and the Wind Qualified Facility both
connect to a transformer that steps up the electric-
ity produced by both qualified facilities to electrical
grid voltage before it is transmitted to the electrical
grid through an intertie. X and Y each pay 50% of
the cost of the transformer. The fact that the Solar
Qualified Facility and Wind Qualified Facility share
property that is integral to both does not impact the
ability of X or Y to claim a section 48E credit for
their respective qualified facilities. When X and Y
place their respective qualified facilities in service,
50% of the cost of the transformer is included in X’s
and Y’s basis in their respective qualified facilities
for purposes of computing the section 48E credit.
(C) Example 3. Co-located qualified facility
and Energy Storage Technology owned by the same
taxpayer. X constructs a wind qualified facility (as
defined in §1.48E-2(a)) (Wind Qualified Facility)
that is co-located with an EST (as defined in §1.48E-
2(g)) (Energy Storage). The Wind Qualified Facility
and Energy Storage share transfer equipment that is
integral to both. X assigns 50% of the cost of the
shared transfer equipment to the Wind Qualified
Facility and 50% of the cost to the Energy Storage.
The fact that the Wind Qualified Facility and Energy
Storage share property that is integral to both does
not impact the ability of X to claim a section 48E
credit for the Wind Qualified Facility and the Energy
Storage. X may include 50% of the cost of the trans-
fer equipment in its basis to determine a section 48E
credit for the Wind Qualified Facility and the Energy
Storage.
(D) Example 4. Co-located qualified facility
and Energy Storage Technology owned by dif-
ferent taxpayers. X constructs a solar farm that
is a qualified facility (as defined in §1.48E-2(a))
(Solar Qualified Facility) and is co-located with
an EST (as defined in §1.48E-2(g)) (Energy Stor-

Bulletin No. 2024–32 403 August 5, 2024
age) owned by Y. The Solar Qualified Facility and
Energy Storage share transfer equipment that is
integral to both. X and Y each incur 50% of the
cost of the transfer equipment. The fact that the
Solar Qualified Facility and Energy Storage share
property that is integral to both does not impact the
ability of X to claim a section 48E credit for the
Solar Qualified Facility or Y to claim a section 48E
credit for the Energy Storage. When X and Y place
in service the Solar Qualified Facility and Energy
Storage, for purposes of computing the section 48E
credit, 50% of the cost of the transfer equipment is
included in X’s basis in the Solar Qualified Facility
and 50% of the cost is included in Y’s basis in the
Energy Storage.
(c) Coordination with other credits—
(1) In general. The term qualified facility
(as defined in section 48E(b)(3)) and para-
graph (a) of this section does not include
any facility for which a credit determined
under section 45, 45J, 45Q, 45U, 45Y,
48, or 48A is allowed under section 38
of the Code for the taxable year or any
prior taxable year. A taxpayer that directly
owns a qualified facility (as defined in
section 48E(b)(3)) that is eligible for both
a section 48E credit and another Federal
income tax credit is eligible for the sec-
tion 48E credit only if the other Federal
income tax credit was not allowed with
respect to the qualified facility. Nothing
in this paragraph (c) precludes a taxpayer
from claiming a section 48E credit with
respect to a qualified facility (as defined in
section 48E(b)(3)) that is co-located with
another facility for which a credit deter-
mined under section 45, 45J, 45Q, 45U,
45Y, 48, or 48A is allowed under section
38 of the Code for the taxable year or any
prior taxable year.
(2) Allowed. For purposes of paragraph
(c)(1) of this section, the term allowed
only includes credits that taxpayers have
claimed on a Federal income tax return or
Federal return, as appropriate, and that the
Internal Revenue Service (IRS) has not
challenged in terms of the taxpayer’s eli-
gibility.
(3) Examples. This paragraph (c)(3)
provides examples illustrating the rules
provided in this paragraph (c).
(i) Example 1. Taxpayer claims a section 45Y
credit on a solar farm and section 48E credit on
co-located Energy Storage Technology. X owns a
solar farm that is a qualifying facility (as defined in
§1.45Y-2(a)) (45Y Solar Qualified Facility), and a
co-located EST (as defined in §1.48E-2(g)) (Energy
Storage). The Energy Storage is not part of the 45Y
Solar Qualified Facility, and therefore X may claim
the section 45Y credit based on the kWh of electric-
ity produced by the 45Y Solar Qualified Facility, and
X may also claim the section 48E credit based on its
qualified investment in the Energy Storage.
(ii) Example 2. Different taxpayers claim sec-
tion 45Y credit for a solar farm and a co-located
Energy Storage Technology. X owns a solar farm
that is a qualifying facility (as defined in §1.45Y-
2(a)) (45Y Solar Qualified Facility), and Y owns
a co-located EST (as defined in §1.48E-2(g))
(Energy Storage). The Energy Storage is not part
of the 45Y Solar Qualified Facility, and therefore,
X may claim the section 45Y credit based on the
kWh of electricity produced by the 45Y Solar
Qualified Facility, and Y may claim the section
48E credit based on its qualified investment in the
Energy Storage.
(iii) Example 3. Taxpayer claiming a section 48E
credit; another credit is not allowed. X owns a wind
facility that satisfies the requirements of a qualified
facility (as defined in §1.48E-2(a)) under section 48E
as well as the requirements of a qualified facility (as
defined in §1.45Y-2(a)) under section 45Y. X claims
a section 48E credit with respect to the wind facility.
While a credit may be available with regard to the
wind facility under section 45Y, because X claimed a
section 48E credit with respect to the wind facility, a
section 45Y credit is not allowed.
(d) Qualified investment with respect
to a qualified facility. For purposes of the
section 48E credit, the qualified invest-
ment with respect to any qualified facility
for any taxable year is the sum of the fol-
lowing—
(1) The basis of any qualified prop-
erty (as defined in paragraph (e)(1) of this
section) placed in service by the taxpayer
during such taxable year that is part of a
qualified facility (as defined in paragraph
(a) of this section); and
(2) The amount of any expenditures
paid or incurred by the taxpayer for qual-
ified interconnection property (as defined
in §1.48E-4(a)(2)).
(e) Qualified property—(1) In general.
For purposes of this paragraph (e), the
term qualified property means property
that meets all the following requirements:
(i) The property is tangible personal
property (as defined in paragraph (f)(1)
of this section) or other tangible property
(not including a building or its structural
components) (as defined in paragraph (f)
(2) of this section), but only if such other
tangible property is used as an integral
part of the qualified facility;
(ii) Depreciation (or amortization in
lieu of depreciation) is allowable (as
defined paragraph (f)(6) of this section)
with respect to the property; and
(iii) Either—
(A) The construction, reconstruction,
or erection of the property is completed
by the taxpayer (as defined in paragraph
(f)(3) of this section); or
(B) The taxpayer acquires the property
(as defined in paragraph (f)(4) of this sec-
tion) if the original use of the property (as
defined paragraph (f)(5) of this section)
commences with the taxpayer.
(2) Location of qualified property. Any
component of a qualified property that
meets the requirements of paragraph (e)
of this section is part of a qualified facil-
ity regardless of where such component of
property is located.
(f) Definitions related to requirements
for qualified property. For purposes of
section 48E and paragraph (b) of this sec-
tion, the definitions of this paragraph (f)
apply:
(1) Tangible personal property. The
term tangible personal property means any
tangible property except land and improve-
ments thereto, such as buildings or other
inherently permanent structures (includ-
ing items that are structural components of
such buildings or structures). Tangible per-
sonal property includes all property (other
than structural components) that is con-
tained in or attached to a building. Further,
all property that is in the nature of machin-
ery (other than structural components of
a building or other inherently permanent
structure) is considered tangible personal
property even though located outside a
building. Local law is not controlling for
purposes of determining whether property
is or is not tangible property or tangible
personal property. Thus, tangible property
may be personal property for purposes of
the energy credit even though under local
law the property is considered a fixture and
therefore real property.
(2) Other tangible property. The term
other tangible property means tangible
property other than tangible personal
property (not including a building and its
structural components), that is used as an
integral part of furnishing electricity by a
person engaged in a trade or business of
furnishing any such service.
(3) Construction, reconstruction, or
erection of qualified property. The term
construction, reconstruction, or erection
of qualified property means work per-
formed to construct, reconstruct, or erect
qualified property either by the taxpayer
or for the taxpayer in accordance with the
taxpayer’s specifications.

August 5, 2024 404 Bulletin No. 2024–32
(4) Acquisition of qualified property.
The term acquisition of qualified property
means a transaction by which a taxpayer
obtains rights and obligations with respect
to qualified property including—
(i) Title to the qualified property under
the law of the jurisdiction in which the
qualified property is placed in service,
unless the qualified property is possessed
or controlled by the taxpayer as a lessee,
and
(ii) Physical possession or control of
the qualified property.
(5) Original use of qualified prop-
erty—(i) In general. The term original use
of qualified property means the first use to
which the unit of qualified property is put,
whether or not such use is by the taxpayer.
(ii) Retrofitted qualified facility. A ret-
rofitted qualified facility acquired by the
taxpayer will not be treated as being put
to original use by the taxpayer unless the
rules in §1.48E–4(c) regarding retrofitted
qualified facilities (80/20 Rule) apply. The
question of whether a qualified facility
meets the 80/20 Rule is a facts and cir-
cumstances determination.
(6) Depreciation allowable—(i) In gen-
eral. For purposes of applying paragraph
(b) of this section, depreciation (or amor-
tization in lieu of depreciation) is allow-
able with respect to qualified property (as
defined in paragraph (e) of this section)
if such property is of a character subject
to the allowance for depreciation under
section 167 of the Code and the basis or
cost of such property is recovered using a
method of depreciation (for example, the
straight line method), which includes any
additional first year depreciation deduc-
tion method of depreciation (for example,
under section 168(k) of the Code). Fur-
ther, if an adjustment with respect to the
Federal income tax or Federal return, as
appropriate, for such taxable year requires
the basis or cost of such qualified prop-
erty to be recovered using a method of
depreciation, depreciation is allowable to
the taxpayer with respect to the qualified
property.
(ii) Exclusions from allowable. For
purposes of paragraph (b) of this section,
depreciation is not allowable with respect
to a qualified facility if the basis or cost
of such qualified facility is not recovered
through a method of depreciation but,
instead, such basis or cost is recovered
through a deduction of the full basis or
cost of the qualified facility in one taxable
year (for example, under section 179 of
the Code).
(7) Placed in service—(i) In general.
A qualified facility is considered placed in
service in the earlier of:
(A) The taxable year in which, under
the taxpayer’s depreciation practice, the
period for depreciation with respect to
such qualified facility begins; or
(B) The taxable year in which the
qualified facility is placed in a condition
or state of readiness and availability to
produce electricity, whether in a trade or
business or in the production of income.
A qualified facility in a condition or state
of readiness and availability to produce
electricity includes, but is not limited to,
components of property that are acquired
and set aside during the taxable year for
use as replacements for a particular quali-
fied facility (or facilities) in order to avoid
operational time loss and equipment that
is acquired for a specifically assigned
function and is operational but is undergo-
ing testing to eliminate any defects. How-
ever, components of property acquired to
be used in the construction of a qualified
facility are not considered in a condition
or state of readiness and availability for a
specifically assigned function.
(ii) Qualified facility subject to §1.48-4
election to treat lessee as purchaser. Not-
withstanding paragraph (f)(7)(i) of this
section, a qualified facility with respect to
which an election is made under section
50(d)(5) of the Code and §1.48-4 to treat
the lessee as having purchased such quali-
fied facility is considered placed in service
by the lessor in the taxable year in which
possession is transferred to such lessee.
(8) Claim. With respect to a section
48E credit determined with respect to a
qualified facility of a taxpayer, the term
claim means filing a completed Form
3468, Investment Credit, or any successor
form(s), with the taxpayer’s timely filed
(including extensions) Federal income tax
return or Federal return, as appropriate,
for the taxable year in which the qualified
facility is placed in service, and includes
making an election under section 6417 or
6418 of the Code and corresponding reg-
ulations with respect to such section 48E
credit and made on the taxpayer’s filed
return.
(g) EST—(1) Property included in EST.
An EST includes a unit of energy storage
technology (unit of EST) (as defined in
paragraph (g)(2) of this section) that meets
the requirements of paragraph (g)(2)(ii) of
this section. An EST also includes prop-
erty owned by the taxpayer that is an inte-
gral part (as defined in paragraph (g)(3)
of this section) of the EST. An EST does
not include equipment that is an addition
or modification to an existing EST. For
purposes of the section 48E credit, EST
includes electrical energy storage property
(as described in paragraph (g)(6)(i) of this
section), thermal energy storage property
(as described in paragraph (g)(6)(ii) of
this section), and hydrogen energy storage
property (as described in paragraph (g)(6)
(iii) of this section).
(2) Unit of EST—(i) In general. For
purposes of the section 48E credit, a unit
of EST includes all functionally inter-
dependent components of property (as
defined in paragraph (g)(2)(ii) of this
section) owned by the taxpayer that are
operated together and that can operate
apart from other property to perform
the intended function of the EST. No
provision of this section, §1.48E-1, or
§1.48E-4 through 1.48E-5 uses the term
unit in respect of an EST with any mean-
ing other than that provided in this para-
graph (g)(2)(i).
(ii) Functionally interdependent. Com-
ponents of property are functionally inter-
dependent if the placing in service of each
of the components is dependent upon the
placing in service of each of the other
components to perform the intended func-
tion of the EST.
(3) Integral part. For purposes of the
section 48E credit, property owned by
a taxpayer is an integral part of an EST
owned by the same taxpayer if it is used
directly in the intended function of the
EST and is essential to the completeness
of such function. Property that is an inte-
gral part of an EST is part of an EST. A
taxpayer may not claim the section 48E
credit for any property that is an integral
part of the taxpayer’s EST that is not
owned by the taxpayer.
(4) Qualified investment with respect
to EST. The qualified investment with
respect to any EST for any taxable year is
the basis of any EST placed in service by
the taxpayer during such taxable year.

Bulletin No. 2024–32 405 August 5, 2024
(5) Placed in service—(i) In general.
An EST is considered placed in service in
the earlier of:
(A) The taxable year in which, under
the taxpayer’s depreciation practice, the
period for depreciation with respect to
such EST begins; or
(B) The taxable year in which the EST
is placed in a condition or state of read-
iness and availability for the intended
function of the EST, whether in a trade or
business or in the production of income.
An EST in a condition or state of readi-
ness and availability for its intended func-
tion includes, but is not limited to, com-
ponents of property that are acquired and
set aside during the taxable year for use
as replacements for a particular EST (or
ESTs) in order to avoid operational time
loss and equipment that is acquired for a
specifically assigned function and is oper-
ational but is undergoing testing to elimi-
nate any defects. However, components of
property acquired to be used in the con-
struction of an EST are not considered in
a condition or state of readiness and avail-
ability for a specifically assigned function.
(ii) EST subject to §1.48-4 election to
treat lessee as purchaser. Notwithstand-
ing paragraph (g)(5)(i) of this section,
EST with respect to which an election is
made under section 50(d)(5) of the Code
and §1.48-4 to treat the lessee as having
purchased such EST is considered placed
in service by the lessor in the taxable year
in which possession is transferred to such
lessee.
(6) Types of EST—(i) Electrical energy
storage property. Electrical energy stor-
age property is property (other than prop-
erty primarily used in the transportation
of goods or individuals and not for the
production of electricity) that receives,
stores, and delivers energy for conversion
to electricity, and has a nameplate capac-
ity of not less than 5 kWh. For example,
subject to the exclusion for property pri-
marily used in the transportation of goods
or individuals, electrical energy storage
property includes but is not limited to
rechargeable electrochemical batteries of
all types (such as lithium-ion, vanadium
redox flow, sodium sulfur, and lead-acid);
ultracapacitors; physical storage such as
pumped storage hydropower, compressed
air storage, flywheels; and reversible fuel
cells.
(ii) Thermal energy storage property.
Thermal energy storage property is prop-
erty comprising a system that is directly
connected to a heating, ventilation, or air
conditioning (HVAC) system; removes
heat from, or adds heat to, a storage
medium for subsequent use; and provides
energy for the heating or cooling of the
interior of a residential or commercial
building. Thermal energy storage prop-
erty includes equipment and materials,
and parts related to the functioning of
such equipment, to store thermal energy
for later use to heat or cool, or to provide
hot water for use in heating a residential or
commercial building. It does not include
a swimming pool, combined heat and
power system property (as defined in sec-
tion 45Y(g)(2)), or a building or its struc-
tural components. For example, thermal
energy storage includes, but is not limited
to, thermal ice storage systems that use
electricity to run a refrigeration cycle to
produce ice that is later connected to the
HVAC system as an exchange medium
for air conditioning a building, heat pump
systems that store thermal energy in an
underground tank or borehole field to be
extracted for later use for heating and/
or cooling, and electric furnaces that use
electricity to heat bricks to high tempera-
tures and later use this stored energy to
heat a building through the HVAC system.
(iii) Hydrogen energy storage property.
Hydrogen energy storage property is prop-
erty (other than property primarily used in
the transportation of goods or individuals
and not for the production of electricity)
that stores hydrogen and has a nameplate
capacity of not less than 5 kWh, equiva-
lent to 0.127 kg of hydrogen or 52.7 stan-
dard cubic feet (scf) of hydrogen. Hydro-
gen energy storage property must store
hydrogen that is solely used as energy
and not for other purposes such as for the
production of end products such as fertil-
izer. For example, hydrogen energy stor-
age property includes, but is not limited
to, a hydrogen compressor and associated
storage tank and an underground storage
facility and associated compressors.
(7) Modification of EST. With respect
to an electrical energy storage property or
a hydrogen energy storage property , mod-
ified as set forth in this paragraph (g)(7),
such property will be treated as an electri-
cal energy storage property (as described
in paragraph (g)(6)(i) of this section) or
a hydrogen energy storage property (as
described in paragraph (g)(6)(iii) of this
section), except that the basis of any exist-
ing electrical energy storage property or
hydrogen energy storage property prior to
such modification is not taken into account
for purposes of this paragraph (g)(7) and
section 48E. This paragraph (g)(7) applies
to any electrical energy storage property
and hydrogen energy storage property that
either:
(i) Was placed in service before August
16, 2022, and would be described in sec-
tion 48(c)(6)(A)(i), except that such prop-
erty had a capacity of less than 5 kWh and
is modified in a manner that such property
(after such modification) has a nameplate
capacity of not less than 5 kWh; or
(ii) Is described in section 48(c)(6)(A)
(i) and is modified in a manner that such
property (after such modification) has an
increase in nameplate capacity of not less
than 5 kWh.
(8) Claim. With respect to a section
48E credit determined with respect to an
EST of a taxpayer, the term claim means
filing a completed Form 3468, Investment
Credit, or any successor form(s), with the
taxpayer’s timely filed (including exten-
sions) Federal income tax return or Fed-
eral return, as appropriate, for the taxable
year in which the EST is placed in service,
and includes making an election under
section 6417 or 6418 of the Code and
corresponding regulations with respect to
such section 48E credit and made on the
taxpayer’s filed return.
(h) Applicability date. This section
applies to qualified facilities and EST
placed in service after December 31,
2024, and during a taxable year ending on
or after [DATE OF PUBLICATION OF
THE FINAL REGULATIONS IN THE
FEDERAL REGISTER].
§1.48E-3 [Reserved]
§1.48E-4 Rules of general application.
(a) Rules for certain lower-output
qualified facilities to include qualified
interconnection costs in the basis of asso-
ciated qualified facility—(1) In general.
For purposes of determining the section
48E credit, the qualified investment with
respect to a qualified facility (as defined

August 5, 2024 406 Bulletin No. 2024–32
in §1.48E-2(a)) includes amounts paid
or incurred by the taxpayer for quali-
fied interconnection property (as defined
in paragraph (a)(2) of this section), in
connection with a qualified facility (as
defined in §1.48E–2(a)) that has a max-
imum net output of not greater than 5
MW (as measured in alternating current)
as described in paragraph (a)(3) of this
section (Five-Megawatt Limitation). The
qualified interconnection property must
provide for the transmission or distribu-
tion of the electricity produced by a qual-
ified facility and must be properly charge-
able to the capital account of the taxpayer
as reduced by paragraph (a)(6) of this sec-
tion.
(2) Qualified interconnection property.
For purposes of this paragraph (a), the
term qualified interconnection property
means, with respect to a qualified facil-
ity, any tangible property that is part of
an addition, modification, or upgrade to a
transmission or distribution system that is
required at or beyond the point at which
the qualified facility interconnects to such
transmission or distribution system in
order to accommodate such interconnec-
tion; is either constructed, reconstructed,
or erected by the taxpayer (as defined in
§1.48E–2(f)(3)), or for which the cost
with respect to the construction, recon-
struction, or erection of such property is
paid or incurred by such taxpayer; and the
original use (as defined in §1.48E–2(f)(5))
of which, pursuant to an interconnection
agreement (as defined in paragraph (a)(4)
of this section), commences with a util-
ity (as defined in paragraph (a)(5) of this
section). Qualified interconnection prop-
erty is not part of a qualified facility. As a
result, qualified interconnection property
is not taken into account in determining
whether a qualified facility satisfies the
requirements for the increase in credit
rate for energy communities provided in
section 48E(a)(3)(A) or for the increase in
credit rate for domestic content referenced
in section 48E(a)(3)(B) (by reference to
rules similar to the rules of section 48(a)
(12)).
(3) Five-Megawatt Limitation—(i) In
general. For purposes of this paragraph
(a), the Five-Megawatt Limitation is mea-
sured at the level of the qualified facility
in accordance with section 48E(b)(1)(B).
The maximum net output of a qualified
facility is measured only by nameplate
generating capacity of the unit of qualified
facility, which does not include the name-
plate capacity of any integral property, at
the time the qualified facility is placed in
service. The nameplate generating capac-
ity of the unit of qualified facility is mea-
sured independently from any other qual-
ified facilities that share the same integral
property.
(ii) Nameplate capacity for purposes of
the Five-Megawatt Limitation. The deter-
mination of whether a qualified facility
has a maximum net output of not greater
than 5 MW (as measured in alternating
current) is based on the nameplate capac-
ity of the unit of qualified facility. The
nameplate capacity for purposes of the
Five-Megawatt Limitation is the maxi-
mum electrical generating output in mega-
watts that the unit of qualified facility is
capable of producing on a steady state
basis and during continuous operation
under standard conditions, as measured by
the manufacturer and consistent with the
definition of nameplate capacity provided
in 40 CFR 96.202. If applicable, taxpay-
ers should use the International Standard
Organization (ISO) conditions to measure
the maximum electrical generating output
of a unit of qualified facility.
(4) Interconnection agreement. For
purposes of this paragraph (a), the term
interconnection agreement means an
agreement with a utility for the purposes
of interconnecting the qualified facility
owned by such taxpayer to the transmis-
sion or distribution system of the utility.
(5) Utility. For purposes of this para-
graph (a), the term utility means the owner
or operator of an electrical transmission or
distribution system that is subject to the
regulatory authority of a State or political
subdivision thereof, any agency or instru-
mentality of the United States, a public
service or public utility commission or
other similar body of any State or politi-
cal subdivision thereof, or the governing
or ratemaking body of an electric cooper-
ative.
(6) Reduction to amounts chargeable
to capital account. For purposes of this
paragraph (a), in the case of expenses paid
or incurred for qualified interconnection
property (as defined in paragraph (a)(2) of
this section), amounts otherwise charge-
able to capital account with respect to such
expenses must be reduced under rules
similar to the rules of section 50(c) of the
Code, specifically the rules under section
50(c)(3). In addition, the taxpayer must
pay or incur the interconnection prop-
erty costs; therefore, any reimbursement,
including by a utility, must be accounted
for by reducing the taxpayer’s expenditure
to determine eligible costs.
(7) Examples. This paragraph (a)(7)
provides examples illustrating the rules of
this paragraph (a).
(i) Example 1. Application of Five-Megawatt
Limitation to an interconnection agreement for qual-
ified facilities owned by taxpayer. X places in service
two solar qualified facilities (48E Facilities) each
with a maximum net output of 5 MW (as measured
in alternating current). The two 48E Facilities each
have their own inverter, which is integral property to
each facility, and share a step-up transformer, which
is integral property to both facilities. As part of the
development of the 48E Facilities, interconnec-
tion costs are required by the utility to modify and
upgrade the transmission system at or beyond the
common intertie to the utility’s transmission system
to accommodate the interconnection. X has an inter-
connection agreement with the utility that allows for
a maximum output of 10 MW (as measured in alter-
nating current). The interconnection agreement pro-
vides the total cost of the qualified interconnection
property. X may include the costs paid or incurred by
X, respectively, for qualified interconnection prop-
erty subject to the terms of the interconnection agree-
ment, to calculate X’s section 48E credit for each of
the 48E Facilities because each qualified facility has
a maximum net output of not greater than 5 MW.
(ii) Example 2. Application of Five-Megawatt
Limitation to an interconnection agreement for
qualified facilities owned by separate taxpayers.
X places in service a solar farm that is a qualified
facility (as defined in §1.48E-2(a)) (Solar Qualified
Facility) with a maximum net output of 5 MW (as
measured in alternating current). The Solar Quali-
fied Facility includes an inverter, which is integral
property. Y places in service a wind facility (as
defined in §1.48E-2(a)) (Wind Qualified Facility),
with a maximum net output of 5 MW (as measured
in alternating current). The Solar Qualified Facil-
ity and the Wind Qualified Facility share a step-up
transformer, which is integral to both facilities.
As part of the development of the Solar Qualified
Facility and Wind Qualified Facility, interconnec-
tion costs are required by the utility to modify and
upgrade the transmission system at or beyond the
common intertie to the utility’s transmission system
to accommodate the interconnection. X and Y are
party to the same interconnection agreement with
the utility that allows for a maximum output of
10 MW (as measured in alternating current). The
interconnection agreement provides the total cost
of the qualified interconnection property. X and Y
may include the costs paid or incurred by X and
Y, respectively, for qualified interconnection prop-
erty subject to the terms of the interconnection
agreement, to calculate their respective section 48E
credits for the Solar Qualified Facility and the Wind

Bulletin No. 2024–32 407 August 5, 2024
Qualified Facility because each has a maximum net
output of not greater than 5 MW.
(b) Expansion of facility; Incremental
production—(1) In general. Solely for
purposes of this paragraph (b), the term
qualified facility includes either a new
unit or an addition of capacity placed in
service after December 31, 2024, in con-
nection with a facility described in section
48E(b)(3)(A) (without regard to clause (ii)
of such paragraph), which was placed in
service before January 1, 2025, but only to
the extent of the increased amount of elec-
tricity produced at the facility by reason
of such new unit or addition of capacity.
A new unit or an addition of capacity that
meets the requirements of this paragraph
(b) will be treated as a separate qualified
facility. For purposes of this paragraph
(b), a new unit or an addition of capacity
requires the addition or replacement of
qualified property (as defined in §1.48E-
2(e)), including any new or replacement
integral property added to a facility nec-
essary to increase capacity. If applicable
for purposes of this paragraph (b), taxpay-
ers must use modified or amended facil-
ity operating licenses or the International
Standard Organization (ISO) conditions to
measure the maximum electrical generat-
ing output of a facility to determine name-
plate capacity. For purposes of assessing
the One-Megawatt Exception in section
48E(a)(2)(A)(ii)(I), the capacity for a new
unit or an addition of capacity is the sum
of the nameplate capacity of the added
qualified facility and the nameplate capac-
ity of the facility to which the qualified
facility was added.
(2) Special rule for restarted facilities.
Solely for purposes of this paragraph (b),
a facility that is decommissioned or in the
process of decommissioning and restarts
can be considered to have increased capac-
ity if the following conditions are met:
(i) The existing facility must have
ceased operations;
(ii) The existing facility must have a
shutdown period of at least one calendar
year during which it is without a valid
operating license from its respective
Federal regulatory authority (that is, the
Federal Energy Regulatory Commission
(FERC) or the Nuclear Regulatory Com-
mission (NRC)); and
(iii) The increased capacity of the
restarted facility must have a new, rein-
stated, or renewed operating license issued
by either FERC or NRC.
(3) Computation of qualified invest-
ment for a new unit or an addition of
capacity—(i) New unit. For purposes
of this paragraph (b), the term new unit
means components of property including
any new or replacement integral property
added to a facility necessary to increase
the capacity of the facility but do not
replace the existing capacity of the facil-
ity. The taxpayer’s qualified investment in
the new unit during the taxable year that
results in an increase in capacity is eligible
for the section 48E credit.
(ii) Addition of capacity. For pur-
poses of this paragraph (b), the term
addition of capacity means compo-
nents of property, including any new or
replacement integral property added to a
facility necessary to increase the capac-
ity of the facility by replacing, in whole
or in part, the existing capacity of the
facility. To determine a taxpayer’s qual-
ified investment during the taxable year
that resulted in an increased capacity
of a facility by reason of an addition of
capacity (not described in paragraph (b)
(3)(i) of this section), a taxpayer must
multiply its total qualified investment
during the taxable year with respect to
the facility, by a fraction, the numera-
tor of which is the increase in nameplate
capacity that results from the addition of
capacity, and the denominator of which
is the total nameplate capacity associ-
ated with the components of property
that result in the addition of capacity.
(4) Examples. This paragraph (b)(4)
provides examples illustrating the rules of
this paragraph (b).
(i) Example 1. New Unit. X owns a hydropower
facility (Facility H) that was originally placed in
service in 2020, with a nameplate capacity of 600
megawatts. During taxable years 2020 through 2024,
X claimed a section 45 credit for the electricity pro-
duced by Facility H. On July 1, 2025, X places in
service components of property comprising a new
unit that results in Facility H having an increased
nameplate capacity of 900 megawatts in 2025. For
purposes of this paragraph (b), this new unit will be
treated as a separate facility (Facility J). X deter-
mines the amount of its section 48E credit based on
the amount of its qualified investment in Facility J.
Even though X claimed a section 45 credit for the
existing electricity capacity of Facility H in taxable
years 2020 through 2024, X can claim a section 48E
credit for its qualified investment in Facility J. X may
also continue to claim the section 45 credit through
taxable year 2030 for electricity generated by Facil-
ity H (excluding the incremental electricity genera-
tion related to Facility J).
(ii) Example 2. Addition of Capacity. Y owns
a nuclear facility (Facility N) that was originally
placed in service on January 1, 2000, with a name-
plate capacity of 800 megawatts. Y claimed a sec-
tion 45U credit in taxable years 2024 and 2025 for
the electricity generated by Facility N. On January
15, 2026, Y removed components of property with
a nameplate capacity of 200 megawatts and placed
in service components of property with a nameplate
capacity of 300 megawatts at Facility N. For pur-
poses of this paragraph (b), Facility N’s addition of
capacity is treated as a new separate qualified facil-
ity placed in service on January 15, 2026 (Facility
P). Y determines the amount of its section 48E credit
based on the amount of its qualified investment in
Facility P, which is determined by multiplying Y’s
qualified investment with respect to the addition of
capacity by one-third (equal to the 100-megawatt
increase in nameplate capacity divided by the 300
megawatt nameplate capacity associated with the
new components of property that result in the addi-
tion of capacity). Even though Y claimed a section
45U credit in taxable years 2024 and 2025 for the
existing capacity of Facility N, Y can claim a sec-
tion 48E credit for its investment in the addition of
capacity associated with Facility P. Y may also con-
tinue to claim the section 45U credit through tax-
able year 2032 for electricity generated by Facility
N (excluding the incremental electricity generation
related to Facility P).
(c) Retrofit of an existing facility (80/20
Rule)—(1) In general. For purposes of
section 48E(b)(3)(A)(ii), a retrofitted
qualified facility may qualify as originally
placed in service even if it contains some
used components of property within the
unit of qualified facility, provided that the
fair market value of the used components
of the unit of qualified facility is not more
than 20 percent of the total value of the
unit of qualified facility (that is, the cost of
the new components of property plus the
value of the used components of property
within the unit of qualified facility) (80/20
Rule).
(2) Expenditures taken into account.
Notwithstanding the rule provided in
paragraph (c)(1) of this section, only
expenditures paid or incurred that relate to
the new components of the unit of quali-
fied facility are taken into account for pur-
poses of computing the credit determined
under section 48E with respect to the qual-
ified facility.
(3) Cost of new components. For pur-
poses of this 80/20 Rule, the cost of new
components of the unit of qualified facility
includes all costs properly included in the
depreciable basis of the new components
of the unit of qualified facility.

August 5, 2024 408 Bulletin No. 2024–32
(4) New costs. If the taxpayer satisfies
the 80/20 Rule with regard to the unit of
qualified facility and the taxpayer pays or
incurs new costs for property that is an
integral part of the qualified facility (as
defined in §1.48E-2(a)), the taxpayer may
include these new costs paid or incurred
for property that is an integral part of the
qualified facility in the basis of the qual-
ified facility for purposes of the section
48E credit.
(5) Excluded costs. Costs incurred for
new components of property added to used
components of a unit of qualified facility
may not be taken into account for pur-
poses of the section 48E credit unless the
taxpayer satisfies the 80/20 Rule by plac-
ing in service a unit of qualified facility
for which the fair market value of the used
components of property is not more than
20 percent of the total value of the unit of
qualified facility taking into account the
cost of the new components of property
plus the value of the used components of
property.
(6) Examples. The following examples
illustrate the rules of this paragraph (c).
(i) Example 1. Retrofitted facility that satisfies
the 80/20 Rule. A owns an existing wind facility. On
February 1, 2026, A replaces used components of
the wind facility with new components at a cost of
$2 million. The fair market value of the remaining
original components of the wind facility is $400,000,
which is not more than 20 percent of the retrofitted
facility’s total fair market value of $2.4 million (the
cost of the new components ($2 million) + the fair
market value of the remaining original components
($400,000)). Thus, the retrofitted wind facility will
be considered newly placed in service for purposes
of section 48E, assuming all the other requirements
of section 48E are met, and A will be able to claim
a section 48E credit based on its investment in 2026
($2 million).
(ii) Example 2. Retrofit of an existing facility that
meets the 80/20 Rule. Facility Z, a facility that was
originally placed in service on January 1, 2026, was
not a qualified facility (as defined in §1.48E-2(a))
when it was placed in service because it did not meet
the greenhouse gas emission rate requirements (as
determined under rules provided in §1.48E-5). On
January 1, 2027, Facility Z was retrofitted and now
meets the requirements to be a qualified facility (as
defined in §1.48E-2(a)). After the retrofit, the cost
of the new property included in Facility Z is greater
than 80 percent of Facility Z’s total fair market value.
Because Facility Z meets the 80/20 Rule, Facility Z
is deemed to be originally placed in service on Jan-
uary 1, 2027. Assuming all the other requirements
of section 48E are met, Z may claim a section 48E
credit based on its investment in the new components
used to retrofit the existing facility in 2027.
(iii) Example 3. Retrofitted nuclear facility that
satisfied the 80/20 Rule. T owns a nuclear facility
(Facility N) that was originally placed in service
on March 1, 1982, and was decommissioned on
September 20, 2010. T replaces used components
of property at Facility N with new components at a
cost of $200 million, and then places in Facility N
in service on July 15, 2026. The fair market value
of the remaining original components of Facility N,
after being decommissioned and prior to restart, is
$30 million, which is not more than 20 percent of
Facility N’s total fair market value of $230 million
(the cost of the new components ($200 million) +
the fair market value of the remaining original com-
ponents ($30 million)). Thus, assuming all the other
requirements of section 48E are met, Facility N will
be considered newly placed in service on July 15,
2026, for purposes of section 48E, and T will be able
to claim a section 48E credit based on its investment
in the new components ($200 million).
(iv) Example 4. Capital improvements to an
existing qualified facility that do not satisfy the 80/20
Rule. X owns an existing facility, Facility C, that was
originally placed in service on January 1, 2023. X
makes capital improvements to Facility C that are
placed in service on June 6, 2026. The cost of the
capital improvements total $500,000 and the fair
market value of Facility C after the improvements
is $2 million. The fair market value of the old com-
ponents of Facility C is $1,500,000 or 75 percent of
the total fair market value of the Facility C after the
improvements. Because the fair market value of the
new property included in Facility C is less than 80
percent of Facility C’s total fair market value, Facil-
ity C does not meet the 80/20 Rule. Facility C will
not be considered a qualified facility (as defined in
§1.48E-2(a)) eligible for the section 48E credit.
(d) Special rules regarding owner-
ship—(1) Qualified investment with
respect to a qualified facility or EST. For
purposes of this paragraph (d), a taxpayer
that owns a qualified investment with
respect to a qualified facility or EST is
eligible for the section 48E credit only to
the extent of the taxpayer’s eligible invest-
ment in the qualified facility or EST. In the
case of multiple taxpayers holding direct
ownership through their qualified invest-
ments in a single qualified facility or EST
(and such arrangement is not treated as a
partnership for Federal income tax pur-
poses), each taxpayer determines its eli-
gible investment based on its fractional
ownership interest in the qualified facility
or EST.
(2) Multiple owners. A taxpayer must
directly own at least a fractional inter-
est in the entire unit of qualified facility
(as defined in §1.48E-2(b)(2)) or unit of
EST (as defined in §1.48E-2(g)(2)) for a
section 48E credit to be determined with
respect to such taxpayer’s interest. No
section 48E credit may be determined
with respect to a taxpayer’s ownership
of one or more separate components of a
qualified facility or an EST if the compo-
nents do not constitute a unit of qualified
facility (as defined in §1.48E-2(b)(2)) or
unit of EST (as defined in §1.48E-2(g)
(2)). However, the use of property owned
by one taxpayer that is an integral part
of a qualified facility or EST owned by
another taxpayer will not prevent a section
48E credit from being determined with
respect to the second taxpayer’s qualified
investment in a qualified facility or EST.
See §1.48E-2(b)(3)(vi) for rules regarding
shared integral property.
(3) Section 761(a) election. If a qual-
ified facility or EST is owned through
an unincorporated organization that has
made a valid election under section 761(a)
of the Code, each member’s undivided
ownership share in the qualified facility or
EST will be treated as a separate qualified
facility or EST owned by such member.
(4) Related taxpayers—(i) Definition.
For purposes of the section 48E credit,
the term related taxpayers means mem-
bers of a group of trades or businesses that
are under common control (as defined in
§1.52–1(b)).
(ii) Related taxpayer rule. For purposes
of the section 48E credit, related taxpayers
are treated as one taxpayer in determining
whether a taxpayer has made an invest-
ment in a qualified facility or EST with
respect to which a section 48E credit may
be determined.
(5) Examples. The following examples
illustrate the rules in this paragraph (d).
In each example, X and Y are unrelated
taxpayers.
(i) Example 1. Fractional ownership required
to satisfy section 48E. X and Y each own a direct
fractional ownership interest in an entire qualified
facility (as defined in §1.48E-2(a)) and as a result,
a section 48E credit may be determined with respect
to X’s and Y’s qualified investment in their fractional
ownership interests in the qualified facility.
(ii) Example 2. Ownership of separate compo-
nents of property that are part of a qualified facility.
X and Y each own separate components of a quali-
fied facility, which taken together would constitute a
unit of qualified facility but taken separately would
not constitute a unit of qualified facility. X owns
component A and Y owns component B. No section
48E credit may be determined with respect to either
component A or component B because X and Y each
owns a separate component of a qualified facility
that does not constitute a unit of qualified facility (as
defined in §1.48E–2(b)(2)).
(iii) Example 3. Separate ownership of property
that is an integral part of separate qualified facili-
ties. X owns a solar farm that is a qualified facility
(as defined in §1.48E-2(a)) (Solar Qualified Facility),

Bulletin No. 2024–32 409 August 5, 2024
which includes property that is an integral part of the
Solar Qualified Facility, specifically a transformer in
which the electricity is stepped up to electrical grid
voltage before being transmitted to the electrical grid
through an intertie. Y owns a wind facility that is a
qualified facility (as defined in §1.48E-2(a)) (Wind
Qualified Facility) that connects to X’s transformer.
Because Y does not hold an ownership interest in
the transformer, Y may compute its section 48E
credit for the Wind Qualified Facility, but it may not
include any costs relating to the transformer in its
section 48E credit base.
(e) Coordination rule for section 42
credits and section 48E credits. As pro-
vided under section 50(c)(3)(C) of the
Code, in the case of a taxpayer deter-
mining eligible basis for purposes of
calculating a credit under section 42 of
the Code (section 42 credit), a taxpayer
is not required to reduce its basis in a
qualified facility or EST by the amount
of the section 48E credit determined
with respect to the taxpayer’s quali-
fied investment with respect to such
qualified facility or EST. The qualified
investment with respect to a qualified
facility or EST property may be used
to determine a section 48E credit and
may also be included in eligible basis to
determine a section 42 credit. See para-
graph (d) of this section for special rules
regarding ownership.
(f) Recapture—(1) In general. The
credit calculated under section 48E(a) and
§1.48E-1(b) is subject to general recapture
rules under section 50(a). Additionally,
section 48E(g) provides for recapture for
any qualified facility for which a taxpayer
claimed a section 48E credit that has a
greenhouse gas emissions rate (as deter-
mined under rules provided in §1.45Y-5)
of greater than 10 grams of CO
2
e per kWh
during the five-year period beginning on
the date such qualified facility is origi-
nally placed in service (five-year recap-
ture period).
(2) Recapture event—(i) In general.
Any event that results in a qualified facil-
ity having a greenhouse gas emissions
rate (as determined under rules provided
in §1.45Y-5) of greater than 10 grams of
CO
2
e per kWh during the five-year period
is a recapture event. If a qualified facility’s
greenhouse gas emissions rate exceeds 10
grams of CO
2
e per kWh, the section 48E
credit is subject to recapture.
(ii) Changes to the Annual Table. A
change to the greenhouse gas emissions
rate for a type or category of facility that is
published in the Annual Table (as defined
in 1.45Y-5(f)) after a facility is placed in
service does not result in a recapture event.
(iii) Yearly Determination. (A) In gen-
eral. A determination of whether a recap-
ture event occurred under paragraph (f)
(2) of this section must be made for each
taxable year (or portion thereof) occur-
ring within the five-year recapture period,
beginning with the taxable year ending
after the date the qualified facility is placed
in service. Thus, for each taxable year that
begins or ends within the five-year recap-
ture period, the taxpayer must determine,
for any qualified facility for which it has
claimed the section 48E credit, whether
such facility has maintained a greenhouse
gas emissions rate of not greater than 10
grams of CO
2
e per kWh.
(B) Annual Reporting Requirement.
A taxpayer that has claimed the section
48E credit amount under §1.48E-1(b)
or transferred a specified credit portion
under section 6418 of the Code is required
to provide to the IRS information on the
greenhouse gas emissions rate of the qual-
ified facility during the recapture period at
the time and in the form and manner pre-
scribed in IRS forms or instructions or in
publications or guidance published in the
Internal Revenue Bulletin. See §601.601
of this chapter.
(iv) Carryback and carryforward
adjustments. In the case of any recapture
event described in paragraph (f)(2) of
this section, the carrybacks and carryfor-
wards under section 39 of the Code must
be adjusted by reason of such recapture
event.
(3) Recapture Amount—(i) In general.
If a recapture event occurred as described
in paragraph (f)(2) of this section, the tax
under chapter 1 of the Code for the taxable
year in which the recapture event occurs is
increased by an amount equal to the appli-
cable recapture percentage multiplied by
the credit amount that was claimed by the
taxpayer under §1.48E-1(b).
(ii) Applicable recapture percentage. If
the recapture event occurs:
(A) Within one full year after the prop-
erty is placed in service, the recapture per-
centage is 100;
(B) Within one full year after the close
of the period described in paragraph (f)(3)
(ii)(A) of this section, the recapture per-
centage is 80;
(C) Within one full year after the close
of the period described in paragraph (f)(3)
(ii)(B) of this section, the recapture per-
centage is 60;
(D) Within one full year after the close
of the period described in paragraph (f)(3)
(ii)(C) of this section, the recapture per-
centage is 40;
(E) Within one full year after the close
of the period described in paragraph (f)(3)
(ii)(D) of this section, the recapture per-
centage is 20.
(4) Recapture period. The five-year
recapture period begins on the date the
qualified facility is placed in service and
ends on the date that is five full years after
the placed in service date. Each 365-day
period (366-day period in case of a leap
year) within the five-year recapture period
is a separate recapture year for recapture
purposes.
(5) Increase in tax for recapture. The
increase in tax under chapter 1 of the Code
for the recapture of the credit amount
claimed under section 48E(a) and §1.48E-
1(b) occurs in the year of the recapture event.
(g) Cross references. (1) To determine
applicable recapture rules, see section
50(a) of the Code.
(2) For rules regarding the credit eligi-
bility of property used outside the United
States, see section 50(b)(1) of the Code.
(3) For rules regarding the credit eligi-
bility of property used by certain tax-ex-
empt organizations, see section 50(b)(3)
of the Code. See section 6417(d)(2) of
the Code for an exception to this rule in
the case of an applicable entity making an
elective payment election.
(4) For application of the normalization
rules to the section 48E credit in the case
of certain regulated companies, including
rules regarding the election not to apply
the normalization rules to energy storage
technology (as defined in section 48(c)(6)
of the Code), see section 50(d)(2) of the
Code.
(5) For rules relating to certain leased
property, see section 50(d)(5) of the Code.
(h) Applicability date. This section
applies to qualified facilities and energy
storage technologies placed in service
after December 31, 2024, and during a
taxable year ending on or after [DATE OF
PUBLICATION OF THE FINAL REG-
ULATIONS IN THE FEDERAL REGIS-
TER].

August 5, 2024 410 Bulletin No. 2024–32
§1.48E-5 Greenhouse gas emissions
rates for qualified facilities under
section 48E.
(a) In general. Section 48E(b)(3)(B)(ii)
provides that rules similar to the rules of
section 45Y(b)(2) regarding greenhouse
emissions rates apply for purposes of sec-
tion 48E. Paragraphs (b) through (f) of
this section thus provide that the defini-
tions and rules regarding greenhouse gas
emission rate requirements (as determined
under rules provided in §1.45Y-5) apply
for purposes of section 48E and this sec-
tion. Paragraph (g) of this section provides
rules related to provisional emissions rates
for purposes of section 48E and this sec-
tion. Paragraph (h) of this section pro-
vides rules for determining an anticipated
greenhouse gas emissions rate. Paragraph
(i) of this section provides rules regard-
ing reliance on the annual publication of
emissions rates and provisional emissions
rates. Finally, paragraph (j) of this section
provides rules for substantiation.
(b) Definitions. The definitions pro-
vided in §1.45Y-5(b) apply for purposes
of section 48E and this section.
(c) Non-C&G Facilities. The rules pro-
vided in §1.45Y-5(c) apply for purposes
of determining greenhouse gas emissions
rates for Non-C&G Facilities for purposes
of section 48E and this section.
(d) C&G Facilities. The rules pro-
vided in §1.45Y-5(d) apply for purposes
of determining greenhouse gas emissions
rates for C&G Facilities for purposes of
section 48E and this section.
(e) Carbon capture and sequestration.
The rules provided in §1.45Y-5(e) regard-
ing carbon capture and sequestration
apply for purposes of section 48E and this
section.
(f) Annual publication of emissions
rates. The rules provided in §1.45Y-5(f)
regarding the annual publication of a table
(Annual Table) that sets forth the green-
house gas emissions rates for types or cat-
egories of facilities apply for purposes of
section 48E and this section.
(g) Provisional emissions rates—(1)
In general. In the case of any facility
for which an emissions rate has not been
established by the Secretary, a taxpayer
that owns such facility may file a petition
with the Secretary for determination of the
emissions rate with respect to such facil-
ity (Provisional Emissions Rate or PER).
A PER must be determined and obtained
under the rules of this section.
(2) Rate not established. An emissions
rate has not been established by the Sec-
retary for a facility for purposes of sec-
tions 45Y(b)(2)(C)(ii) and 48E(b)(3)(B)
(ii) if such facility is not described in the
Annual Table. If a taxpayer’s request for
an emissions value pursuant to paragraph
(g)(5) of this section is pending at the time
such facility is or becomes described in
the Annual Table, the taxpayer’s request
for an emissions value will be automati-
cally denied.
(3) Process for filing a PER petition.
To file a PER petition with the Secretary,
a taxpayer must submit a PER petition
by attaching it to the taxpayer’s Federal
income tax return or Federal return, as
appropriate, for the taxable year in which
the taxpayer claims the section 48E credit
with respect to the facility to which the
PER petition relates. The PER petition
must contain an emissions value and, if
applicable, the associated letter from DOE.
An emissions value may be obtained from
DOE or by using the designated lifecycle
analysis (LCA) model in accordance with
paragraph (g)(6) of this section. An emis-
sion value obtained from DOE will be
based on an analytical assessment of the
emissions rate associated with the facility
performed by one or more of the National
Laboratories, in consultation with other
agency experts as appropriate, consistent
with this section. A taxpayer must retain
in its books and records the application
and correspondence to and from DOE
including a copy of the taxpayer’s request
to DOE for an emissions value, including
any information provided by the taxpayer
to DOE pursuant to the emissions value
request process provided in paragraph
(g)(5) of this section. Alternatively, an
emissions value can be determined by
the taxpayer for a facility using the most
the recent version of an LCA model, as
of the time the PER petition is filed, that
has been designated by the Secretary for
such use under paragraph (g)(6) of this
section. If an emissions value is deter-
mined using the designated LCA model
under paragraph (g)(6) of this section, a
taxpayer is required to provide to the IRS
information to support its determination
in the form and manner prescribed in IRS
forms or instructions or in publications or
guidance published in the Internal Reve-
nue Bulletin. See §601.601 of this chapter.
A taxpayer may not request an emissions
value from DOE for a facility for which an
emissions value can be determined using
the most recent version of an LCA model
or models designated for such use under
paragraph (g)(6) of this section.
(4) PER determination. Upon the
IRS’s acceptance of the taxpayer’s return
to which a PER petition is attached, the
emissions value of the facility specified
on such petition is deemed accepted. A
taxpayer can rely upon an emissions value
provided by DOE for purposes of claim-
ing a section 48E credit, provided that any
information, representations, or other data
provided to DOE in support of the request
for an emissions value are accurate. If
applicable, a taxpayer may rely upon an
emissions value determined for a facility
using the LCA model designated under
paragraph (g)(6) of this section, provided
that any information, representations, or
other data used to obtain such emissions
value are accurate. The IRS’s deemed
acceptance of an emissions value is the
Secretary’s determination of the PER.
However, the taxpayer must also comply
with all applicable requirements for the
section 48E credit and any information,
representations, or other data supporting
an emissions value are subject to later
examination by the IRS.
(5) Emissions value request process.
An applicant that submits a request for
an emissions value must follow the pro-
cedures specified by DOE to request and
obtain such emissions value. Emissions
values will be determined consistent with
the rules provided in this section. An
applicant can request an emissions value
from DOE only after a front-end engineer-
ing and design (FEED) study or similar
indication of project maturity, as deter-
mined by DOE, such as the completion
of a project specification and cost estima-
tion sufficient to inform a final investment
decision for the facility. DOE may decline
to review applications that are not respon-
sive, including those applications that
relate to a facility described in the Annual
Table (consistent with paragraph (g)(2)
of this section) or a facility for which an
emissions value can be determined by
an LCA model under paragraph (g)(6) of

Bulletin No. 2024–32 411 August 5, 2024
this section (consistent with paragraph
(g)(3) of this section), or applications
that are incomplete. Applicants must fol-
low DOE’s guidance and procedures for
requesting and obtaining an emissions
value from DOE. DOE will publish this
guidance and procedures, including a
process for, under limited circumstances,
a revision to DOE’s initial assessment of
an emissions value on the basis of revised
technical information or facility design
and operation.
(6) LCA model for determining an
emissions value for C&G Facilities. The
rules provided in §1.45Y-5(g)(6) regard-
ing the designation of an LCA model or
models for determining an emissions
value for C&G Facilities apply for pur-
poses of section 48E and this section.
(7) Effect of PER. A taxpayer who files
for a PER must use a PER determined by
the Secretary to determine eligibility for
the section 48E credit, provided all other
requirements of section 48E are met. The
Secretary’s PER determination is not an
examination or inspection of books of
account for purposes of section 7605(b)
of the Code and does not preclude or
impede the IRS (under section 7605(b) or
any administrative provisions adopted by
the IRS) from later examining a return or
inspecting books or records with respect
to any taxable year for which the section
48E credit is claimed. Further, a PER
determination does not signify that the
IRS has determined that the requirements
of section 48E have been satisfied for any
taxable year.
(h) Determining anticipated green-
house gas emissions rate—(1) In gen-
eral. A facility’s anticipated greenhouse
gas emissions rate must be objectively
determined based on an examination of
all the facts and circumstances. Certain
Non-C&G Facilities, such as the facilities
described in §1.45Y-5(c)(2), may have an
anticipated greenhouse gas emissions rate
that is not greater than zero based on the
technology and practices they rely upon
to generate electricity. For facilities that
require the use of certain feedstocks or
carbon capture and sequestration, which
may vary, to generate electricity with a
greenhouse gas emissions rate that is not
greater than zero, objective indicia that
such facilities will operate with a green-
house gas emissions rate that is not greater
than zero for at least 10 years beginning
from the date the facility is placed in ser-
vice are required to establish that its antic-
ipated greenhouse gas emissions rate is
not greater than zero.
(2) Examples of objective indicia.
Examples of objective indicia that may
establish an anticipated greenhouse gas
emissions rate that is not greater than zero
include, but are not limited to, the follow-
ing:
(i) Co-location of the facility with a
fuel source (for example, an anaerobic
digester) for which the combination of
fuel, type of facility, and practice is rea-
sonably expected to result in a greenhouse
gas emissions rate that is not greater than
zero;
(ii) A 10-year contract to purchase
fuels for which the combination of fuel,
type of facility, and practice is reasonably
expected to result in a greenhouse gas
emissions rate that is not greater than zero;
(iii) A facility type that only accommo-
dates one type of fuel or a small range of
fuels for which the combination of fuel,
type of facility, and practice is reason-
ably expected to result in a greenhouse
gas emissions rate that is not greater than
zero; or
(iv) A 10-year contract for the capture,
disposal, or utilization of qualified carbon
dioxide from the facility for which the
combination of fuel, type of facility, and
practice is reasonably expected to result in
a greenhouse gas emissions rate that is not
greater than zero.
(i) Reliance on Annual Table or Pro-
visional Emissions Rate. Taxpayers may
rely on the Annual Table in effect as of
the date a facility began construction or
the provisional emissions rate determined
by the Secretary for the taxpayer’s facil-
ity under paragraph (g)(4) of this section
to determine the facility’s greenhouse gas
emissions rate, provided that the facility
continues to operate as a type of facility
that is described in the Annual Table or
the facility’s emissions value request, as
applicable, for the entire taxable year.
(j) Substantiation—(1) In general. A
taxpayer must maintain in its books and
records documentation regarding the
design and operation of a facility that
establishes that such facility had an antic-
ipated greenhouse gas emissions rate
that is not greater than zero in the year in
which the section 48E credit is determined
and operated with a greenhouse gas emis-
sions rate that is not greater than 10 grams
of CO
2
e per kWh during each year of the
recapture period that applies for purposes
of section 48E(g).
(2) Sufficient substantiation. Docu-
mentation sufficient to substantiate that a
facility had a greenhouse gas emissions
rate, as determined under this section,
not greater than 10 grams of CO
2
e per
kWh during each year of the recapture
period that applies for purposes of sec-
tion 48E(g) includes documentation or
a report prepared by an unrelated party
that verifies the facility’s actual emissions
rate. A facility described in §1.45Y-5(c)(2)
can maintain sufficient documentation to
demonstrate a greenhouse gas emissions
rate that is not greater than 10 grams of
CO
2
e per kWh during each year of the
recapture period that applies for purposes
of section 48E(g) by showing that it is the
type of facility described in §1.45Y-5(c)
(2). The Secretary may determine that
other types of facilities can sufficiently
substantiate a greenhouse gas emissions
rate, as determined under this section, that
is not greater than 10 grams of CO
2
e per
kWh during each year of the recapture
period that applies for purposes of section
48E(g) with certain documentation and
will describe such facilities and documen-
tation in IRS forms or instructions or in
publications or guidance published in the
Internal Revenue Bulletin. See §601.601
of this chapter.
(k) Applicability date. This section
applies to qualified facilities placed in ser-
vice after December 31, 2024, and during
a taxable year ending on or after [DATE
OF PUBLICATION OF THE FINAL
REGULATIONS IN THE FEDERAL
REGISTER].
Douglas W. O’Donnell,
Deputy Commissioner.
(Filed by the Office of the Federal Register May 29,
2024, 8:45 a.m., and published in the issue of the
Federal Register for June 03, 2024, 89 FR 47792)

Bulletin No. 2024–32 i August 5, 2024
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

August 5, 2024 ii Bulletin No. 2024–32
Numerical Finding List
1
Bulletin 2024–32
Announcements:
2024-26, 2024-27 I.R.B. 14
2024-27, 2024-27 I.R.B. 14
2024-28, 2024-28 I.R.B. 39
2024-29, 2024-29 I.R.B. 71
Notices:
2024-47, 2024-27 I.R.B. 1
2024-52, 2024-27 I.R.B. 2
2024-53, 2024-27 I.R.B. 4
2024-54, 2024-28 I.R.B. 24
2024-55, 2024-28 I.R.B. 31
2024-56, 2024-29 I.R.B. 64
2024-57, 2024-29 I.R.B. 67
2024-58, 2024-30 I.R.B. 120
2024-59, 2024-32 I.R.B. 348
Proposed Regulations:
REG-124593-23, 2024-28 I.R.B. 40
REG-109032-23, 2024-31 I.R.B. 332
REG-120137-19, 2024-31 I.R.B. 336
REG-119283-23, 2024-32 I.R.B. 351
Revenue Procedures:
2024-26, 2024-27 I.R.B. 7
2024-29, 2024-30 I.R.B. 121
2024-30, 2024-30 I.R.B. 183
2024-27, 2024-31 I.R.B. 300
2024-28, 2024-31 I.R.B. 326
Revenue Rulings:
2024-13, 2024-28 I.R.B. 18
2024-14, 2024-28 I.R.B. 18
2024-15, 2024-32 I.R.B. 340
Treasury Decisions:
10002, 2024-29 I.R.B. 56
9999, 2024-30 I.R.B. 72
10000, 2024-31 I.R.B. 185
10003, 2024-32 I.R.B. 342
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin
2024–52, dated December 30, 2024.

Bulletin No. 2024–32 iii August 5, 2024
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2024–32
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin
2024–52, dated December 30, 2024.

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