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How the Inflation Reduction Act is Encouraging Apprenticeships

How the Inflation Reduction Act is Encouraging Apprenticeships

Regarded as two of the largest clean energy investments in the history of the United States, the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) have paved the way for new jobs in clean energy and energy efficiency. In fact, initial third-party estimates have found that the IRA is projected to support over a million jobs in the energy and related manufacturing sectors over the next decade (Princeton). These job opportunities have also generated massive demand for expanded workforce training and certification pathways, including apprenticeships. Let’s look at the IRA apprenticeship requirements and review how registered apprenticeship programs typically work.

The Inflation Reduction Act includes provisions where clean energy tax credit or deduction amounts are substantially increased if certain labor practice requirements are met. These increased incentives are available to employers that pay their workers prevailing wages and hire registered apprentices on qualifying energy projects in construction, alteration, and/or repair projects – which can include energy efficiency measures as well as wind, solar, geothermal, carbon sequestration, and electric vehicle charging station projects.

With the passage of the Inflation Reduction Act, the federal government is for the first time providing the clean energy and energy efficiency sectors with long-term support and a stable business environment by extending these tax credits for a full decade. In the past, Congress let similar tax credits expire after only a few years or renewed them at the last minute, leading to boom-bust cycles. The IRA is a major step forward in ensuring that government spending creates good jobs for workers.

IRA Apprenticeship Requirements

The Inflation Reduction Act provides taxpayers with strong incentives to meet high labor standards as they are developing projects. To receive increased credit and deduction amounts, employers must meet certain requirements:

  • Percent of total hours: Employers must hire a sufficient proportion of workers who are enrolled in registered apprenticeship programs. Under this requirement, employers must ensure that qualified apprentices account for at least 10% of the labor hours spent on project construction or repairs. This minimum threshold is rising to 12.5% for projects starting in 2023 and to 15% from 2024-on.
  • Apprentice-to-journey-worker ratio: Employers must comply with federal or state requirements for apprentice-to-journey worker ratios. Every contractor or subcontractor who employs four or more people in the construction, alteration, or repair of a qualified facility must ensure at least one of those employees is a qualified apprentice.
  • Exemptions: If an employer does not meet apprenticeship requirements, they may still be eligible for an additional credit under certain circumstances. For example, they may pay a fine or demonstrate that, despite making a good faith effort to request qualified apprentices from registered apprenticeship programs, their request went unanswered or was denied.

The IRA apprenticeship requirements apply to the following:

In addition to these tax credit incentives, new IRA/IIJA grant programs specifically for Energy Auditor Training and clean energy employment are also contributing to the surge in demand for quality apprenticeship programs. Learn more about the value of registered apprenticeship programs.

Who is considered a “qualified apprentice?”

A qualified apprentice is a person employed by any taxpayer or contractor who is participating in a registered apprenticeship program that meets IRA requirements. The IRS and Treasury Department will be providing additional clarification in their forthcoming guidance.

How do interactions with an apprenticeship program typically work? 

Taxpayers and/or contractors interested in employing apprentices can take one of two approaches to hiring apprentices: first, they can sponsor their own registered apprenticeship program by working with either DOL’s Office of Apprenticeship or their state’s apprenticeship agency (if they are in a state that has one). The advantage of this approach is that companies can just hire their own “qualified apprentices” from within their own program.  

There are also “group registered apprenticeship programs” that place apprentices with multiple employers. Companies that are interested in hiring apprentices without having to stand up their own program can reach out to existing group apprenticeship programs to request a dispatch of apprentices. The registered apprenticeship program receiving the request can approve, deny, or not respond to it at all. The IRS and Treasury Department are currently developing guidance that will provide more clarity on how this process will work. Registered apprenticeship programs can be located using the DOL Office of Apprenticeship’s partner finder tool as well as through state apprenticeship agency websites

How Everblue training fits into the IRA Apprenticeship Requirements

Everblue stands ready to help individuals and employers alike meet their training and certification needs. We provide Solar Training and Energy Auditor Certification courses online and in person at our weatherization training center locations nationwide. We are also actively exploring other opportunities to get involved in the apprenticeship process. In fact, our solar training courses were recently approved for teaching through the state of Virginia’s Solar Technician Apprenticeship Program! To learn more about Everblue’s wide range of courses, call us at 800-460-2575.

About Lesley Baulding

Lesley has been passionately advocating for and working with green building and renewable energy since 2009. She has experience with LEED certification, home energy auditing, blower door testing, solar energy, and more. She holds many certifications, including LEED Green Associate and NABCEP Certification. Her work has won numerous awards over the past decade.