IRS opens round two of the Qualifying Advanced Energy Project Credit Program (Section 48C) with up to $6 billion in credit allocations


The U.S. Department of Treasury, Internal Revenue Service (“IRS”), and U.S. Department of Energy (“DOE”) recently announced a second round of investment tax credit allocations for the Section 48C(e) Qualifying Advanced Energy Project Credit Program (“48C”), together with related guidance. The Inflation Reduction Act of 2022 (“IRA”) provided $10 billion in funding for the 48C program, which supports investments in facilities and projects in the U.S. that involve clean energy products and reduce greenhouse gas emissions at industrial facilities. 

The IRS, based on DOE’s recommendation, may allocate 48C investment tax credits to a taxpayer for qualified investments in an advanced energy project. In March 2024, the IRS allocated approximately $4 billion of 48C credits for over 100 projects across 35 states in the first round of IRA allocations. Clean energy manufacturing and recycling projects received approximately 67% of first round allocations.  $6 billion of credits are available in round two, of which approximately $2.5 billion must be allocated to projects located in certain “energy communities.” Energy communities include certain census tracts (or adjoining tracts) with closed coal mines or retired coal-fired power plants. 

The 48C credit has a base amount of 6% of the amount of qualified investments; the credit rate increases to a maximum of 30% if prevailing wage and apprenticeship requirements are met. In addition to offsetting federal tax liability, 48C credits are transferable and eligible for sale to an unrelated third party. 48C credits are also eligible for direct pay for certain tax-exempt organizations.

The allocation of 48C investment tax credits is administered under a competitive, discretionary program with a multi-step application process:

  • Taxpayers must first submit a concept paper via the 48C program’s online application portal by June 21, 2024 at 5 p.m. EST.
  • The DOE then evaluates concept papers and, on a rolling basis, will send a letter to the taxpayer encouraging or discouraging submission of a full application for the project. Note that a letter of discouragement does not preclude a taxpayer from filing a full 48C application.
  • To be considered for a 48C allocation, the taxpayer must submit a full application via the online application portal no later than 50 days after the DOE opens the portal for applications in Summer 2024 (specific date to be determined).
  • The DOE will review submitted applications and transmit allocation recommendations to the IRS for final consideration.
  • The IRS will make all round two allocation decisions no later than January 15, 2025.

48C Qualification:

  • Qualifying projects for the 48C program may be focused in the advanced manufacturing, energy, and automotive sectors and include investments in facilities that manufacture products such as, but not limited to:
    • Clean vehicles or EVs and components
    • Renewable energy production components
    • Fuel cells and energy storage systems
    • Electric grid modernization equipment or components
    • Materials such as low-carbon cement, low-carbon iron and steel, low-carbon chemicals, and other lower carbon intensity materials
  • Other manufacturing sectors may benefit from a separate industrial decarbonization qualification.
  • Equipment manufactured and deployed to enable the production of other greenhouse gas-reducing and qualifying advance energy property may be eligible.

Projects that generate renewable energy, including solar farms or wind farms, are not eligible for 48C credits.  Other credits, such as the Section 48 Energy Investment Tax Credit and Section 45 Renewable Energy Production Tax Credit, may apply to clean energy development projects.


  • The timeline for round two of 48C funding is condensed as compared to the first round. Applicants must submit concept papers via the 48C program’s online application portal by June 21, 2024 at 5 p.m. EST, which is 30 days from the opening of round two.
  • The DOE has identified certain priority areas for round two funding based on analytical criteria, including an assessment of current and anticipated supply chain gaps in areas eligible under 48C. While applicants are not required to meet one of the priority areas, the DOE will consider whether a project addresses a priority area when evaluating clean energy manufacturing and recycling projects. Round two priority funding areas include, but are not limited to:
    • Clean hydrogen production equipment manufacturing
    • Electric grid component manufacturing
    • Electric heat pump manufacturing
    • Electric vehicles and component manufacturing
    • Solar energy equipment manufacturing
    • Wind energy equipment manufacturing
  • Round two guidance provides clarification on potential project eligibility for certain categories and expands qualifying projects to include “deployment” projects that would not otherwise qualify under the industrial decarbonziation qualification. It is expected that qualification clarification and expansion will result in a highly competitive application round.

Please reach out to Corey Levin ( or your Honigman attorney if you would like to learn more about 48C or other IRA programs, credit transferability/monetization, or if you have clients for which 48C may apply. Honigman can provide advisory assistance including program eligibility analysis, energy community qualification, application logistics, and drafting support or review of proposed concept papers.

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