The Biden administration on Tuesday announced final rules that codify the prevailing wage and apprenticeship requirements clean energy project managers must meet to receive increased tax credits.
By meeting the Treasury Department’s labor requirements, developers can earn five times the baseline credit amount under the 2022 climate reconciliation law. The eligible credits include the renewable electricity production, clean electricity investment, and clean hydrogen production credits.
While a version of these requirements was already in effect, Special Presidential Envoy for Climate John Podesta said on a call with reporters the final guidance “will give clarity and certainty to developers and the workers they employ that clean energy jobs will be good jobs.”
The prevailing wage requirement would apply to any laborer or mechanic employed as part of the project, including any contractor or subcontractor. Prevailing wages for an area are determined by the Labor Department under the 1931 law known as the Davis-Bacon Act.
The apprenticeship requirement would require apprentices to work a certain percentage of overall labor hours on a project. However, the final rule would still allow a project to be eligible for increased tax credits if there is a “good faith” but ultimately unsuccessful effort to fill apprenticeship slots.
Treasury Secretary Janet L. Yellen said the final rules would help support the administration’s strategy to back “people in places where potential exists, but opportunity hasn’t.” Yellen pointed to a Treasury Department analysis from March showing clean energy investments have disproportionately gone to counties with higher unemployment rates and lower college graduation rates since the 2022 law was signed.
Sean McGarvey, president of North America’s Building Trades Unions, said the rules will help ensure the clean and renewable energy projects provide “middle-class family sustaining wages,” noting that until recent years many clean energy projects have paid less than similar jobs in the fossil fuel sector.
“Our experience has been for the last 100 years that [the fossil fuel industry pays] top wages and fringe benefits, and in the renewable industries that have burgeoned over the last several decades, that has not been the case,” McGarvey said. “With these new rules in place, there will be huge increases for many, many people that are existing in this industry right now, and the opportunities for hundreds of thousands of people to join this industry.”
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