On September 19, 2024, the U.S. Department of the Treasury and the IRS released proposed regulations under Section 30C of the Internal Revenue Code aimed at incorporating changes driven by the Inflation Reduction Act (IRA). In this post, we’ll examine the valuable role the 30C credit plays in electrifying the transportation sector, notable updates from September's proposed guidance and why Basis is focused on supporting the transfer of EV charging credits.

At Basis Climate, we are excited about the market impact resulting from expanded availability of Section 30C credits for electric vehicle (EV) charging infrastructure. 

The lack of publicly accessible EV charging stations is slowing adoption of electric vehicles, especially in urban environments where owners may lack at home charging. A recent study, the McKinsey Mobility Consumer Pulse 2024, found that just 9% of respondents considered current EV charging infrastructure to be sufficient. Without a comprehensive, reliable and accessible network of charging stations, EVs will not be adopted at scale. 

Private investment is the fastest route to scaling charging networks, reaching underserved areas, and encouraging more consumers to choose EVs. Deploying private charging stations nationally benefits investors through long-term revenue from charging services, heavy-duty EV fleet deployment, all the while reducing national emissions and boosting energy security. 

Accordingly, we at Basis are dedicated to streamlining monetization of these credits to facilitate more private investment in EV charging infrastructure, aiming to eliminate obstacles to decarbonizing transportation and advancing the clean energy economy. The 30C regulations from September only further support this effort.

Section 30C, known as the Alternative Fuel Vehicle Refueling Property Credit, has undergone substantial modifications due to the IRA. The updated terms generally allow for a credit covering 30% of the costs associated with alternative fuel refueling property, with a placed into service deadline of December 31, 2032.

The refueling property is required to meet four criteria to qualify for 30C.

The proposed regulations—open for public comment until November 18, 2024—clarify important provisions, including defining "single item of property" as well as the various storage and recharging equipment that qualify for the credit.

Section 30C credits were previously capped on a per-location basis. The new regulations shift this cap to a "per single item" basis, which is  particularly relevant for recharging ports and fuel dispensers. As an example, if a charger has two charging ports, the $100,000 limit actually applies separately to each port.

Additionally, the regulations specify that the property covered by the credit must be functionally interdependent, meaning each component is essential for the overall operation of the refueling or recharging property.

The new 30C regulations also introduce provisions for alternative fuel storage and electrical energy storage property. In order to qualify for either category, the storage property must be located at the site where vehicles are recharged or refueled.

In the new guidance, prevailing wage and apprenticeship requirements remain critical factors in achieving the 30% credit (five times the base credit amount of 6%). These considerations are essential for projects involving multiple items of property constructed on contiguous land.

Under the proposed regulations, a taxpayer with multiple 30C properties may find them viewed as a single 30C project if they are built and operated on a contiguous piece of land, solely owned by the taxpayer, placed in service in the same tax year and when one or more of the following is true: the properties have environmental or regulatory permits in common; the properties utilize a single master construction contract; the construction of the properties is financed by the same loan agreement.

Section 30C tax credits are a critical component of the capital stack for EV charging infrastructure projects. They can spur the private investment necessary to address concerns around accessibility and reliability of charging stations shared by existing and potential EV owners alike and to accelerate the decarbonization of the U.S. transportation system.

Basis Climate looks forward to partnering with developers of EV charging projects exploring tax credit transfers as part of their financial strategy.