Southwest's Energy Communities Can Seize the Opportunity for Clean Power Transition

New Tax Credit Adders Provide Incentives for Clean Energy Projects in Underserved Communities

Introduction: The Southwest region of the United States has a unique chance to accelerate the transition from fossil fuels to clean power. With the introduction of new tax credit adders, clean energy sources like wind and solar are becoming more affordable than ever before. This presents a significant opportunity for historically underserved communities that have long relied on extracting and burning fossil fuels for their workforce. State administrations and utility commissions must act swiftly to ensure that the transition to clean economies happens without delay. Body:

Tax Credits Boost Clean Energy Feasibility

Tax credits provided by the Inflation Reduction Act are making clean energy projects more feasible than ever. The Energy Community Tax Credit Bonus aims to revitalize the economies of coal-powered communities by offering a 10 percent bonus on top of Production Tax Credits and Investment Tax Credits for clean energy projects. To access the bonus, communities must meet specific criteria, such as being affected by hazardous pollutants, experiencing coal mine closures, or having a high unemployment rate in the fossil fuels sector. These tax credits, when combined, can provide up to 3.05 ¢/kWh or up to 50 percent of the project cost for clean energy projects located in energy communities. This significant discount should be leveraged by utilities and project developers to mitigate the worst impacts of the climate crisis. The energy community bonus places a strong emphasis on workforce development and employment in clean energy projects, providing an opportunity for Colorado and New Mexico to support a transition from fossil fuels to clean energy.

The West's Readiness for Clean Energy

Energy communities in Colorado and New Mexico, as shown on the map, are well-positioned to take advantage of federal tax credits and transition away from dirty energy. These communities, predominantly characterized by lower median household incomes, will benefit from the diversification of their economies through clean energy projects. Analysis by the National Renewable Energy Laboratory reveals that both states have among the highest technical potential for renewable electricity in the country. The readiness of Colorado and New Mexico for clean energy is evident. Renewable development in these states will not only bolster the economies of energy communities but also contribute to a fossil fuel-free energy system.

Case Study: The Four Corners Plant

Taking a closer look at the Four Corners coal plant in northwest New Mexico, we can see how the Energy Community tax credit bonus could accelerate its retirement, leading to numerous environmental and economic benefits for the surrounding Navajo community. The Four Corners plant, known for its high pollution levels, emits 11 million tons of CO2 annually, along with toxic air pollutants that pose severe health risks. The plant is situated on Navajo Nation land, and its coal mine contributes to methane leaks and toxic pollution in the San Juan river. Retiring the plant early would not only prevent further harm to the community but also save customers millions of dollars. With the Energy Community tax credit, the retirement of Four Corners could pave the way for new renewable energy development, providing stable jobs for the transitioning workforce in the Navajo Nation.

Clean Energy for Economic Development

Clean energy development has the potential to spur economic growth in communities that need it the most. The federal tax credit adders create a strong incentive to locate projects in overburdened communities, creating local jobs and revitalizing the economy. There is no reason to delay the transition to clean energy in the West. States like Colorado and New Mexico should seize this opportunity and fully utilize the new federal clean energy tax credits. Conclusion: The Southwest region, with its energy communities, has a golden opportunity to embrace clean power and leave behind the harmful effects of fossil fuels. The introduction of new tax credit adders makes clean energy more affordable than ever before. By taking advantage of these incentives, states like Colorado and New Mexico can revitalize their economies, provide employment opportunities, and contribute to a cleaner, more sustainable future. The time for action is now, and the Southwest must lead the way in the transition to clean energy.