Comments on Section 45Y and 48E Credits for Combined Heat and Power

The RTC submitted comments in response to Notice 2022-49 recommending that Treasury and the IRS recognize combined heat and power (CHP) systems using zero-carbon electricity as eligible zero emissions facilities for the Sec. 45Y production tax credit (PTC) and the Sec. 48E investment tax credit (ITC). The comments request guidance to establish a method for calculating energy efficiency for non-combustible CHP systems such as thermal batteries. They also request guidance to clarify that the full basis of CHP property is eligible for the Sec. 48E ITC, consistent with the treatment of useful thermal energy under Sec. 45Y. Allowing full tax credits for zero-emissions CHP systems would incentivize investments in clean energy technology that can provide carbon-neutral electricity while also displacing carbon-intensive heating systems.