The U.S. Department of the Treasury and the Internal Revenue Service (IRS) have proposed rules and guidelines under the Inflation Reduction Act (IRA) to harmonize sustainable energy and employment opportunities and solidify commitment to the “Investing in America” agenda.

In August 2022, when the Act was introduced, it proposed $369.75 billion in energy security and climate change programs over the next ten years.

These new measures focus on prevailing wage and apprenticeship requirements and have been a part of federal contracts for over a century, now being extended to clean energy tax incentives for the first time.

The IRA primarily aims to ensure that upcoming clean energy jobs are not only well-paying but also diverse and fair.

By establishing these wage and apprenticeship prerequisites, the government aims to guarantee fair payment for those involved in constructing, altering, or fixing qualified facilities.

The regulations also have an impact on clean energy tax incentives. If individuals adhere to the stipulated wage and apprenticeship criteria, they can increase their tax credits or deductions by up to five times.

One key feature of the new rules is the emphasis on clarity. By outlining proposed guidelines and correction mechanisms from the IRS, the government aims to simplify compliance.

Collaborating with the U.S. Department of Labor, the Treasury Department’s guidance aims to realign the relationship between clean energy investments and the workforce, creating conditions for both to flourish.

Qualified project labor agreements meeting specific criteria are also introduced to facilitate compliance. This is expected to not only promote their integration into the clean energy sector but also strengthen the framework for fair job creation.

Janet L. Yellen, Treasury Secretary, reaffirms the administration’s commitment, stating, “The Inflation Reduction Act is driving historic investments in clean energy across the nation, and this announcement ensures a skilled workforce ready for these jobs.”

The prevailing wage and apprenticeship requirements of the IRA are expected to enhance credit and deduction opportunities and encourage equitable work practices while supporting the country’s shift towards cleaner and more sustainable energy sources.

A report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie said the overall solar installations across all market segments in the United States will likely triple in size, increasing from 129 GW to 336 GW in the next five years.