“Large, multi-purpose expenditures” are projects undertaken for numerous business reasons: they are expected to reduce emissions while also impacting other important metrics such as production quality, shipping time, or costs. To create incentives for emissions reductions that would not have otherwise occurred, these expenditures (opex or capex) will be adjusted based on the level of carbon benefit expected from the project.
This table shows how such expenditures are weighted based on groups of technologies:
Capital/Lease/Service Cost Eligibility for VCA
| Project Qualification | Expected Carbon Benefit | Weighted Eligibility towards VCA Spend |
Tier 1 | Equipment intended solely for carbon capture | High (51-100% improvement) | 100% of project cost |
Tier 2 | Energy-generating assets that use a renewable source (e.g. solar panel) | High (51-100% improvement) | 100% of project cost |
Tier 3 | Equipment that transforms energy with ultra high efficiency or electrifies existing fossil fuel-powered equipment (e.g. heat pump, LED lights, electric ovens, EVs) | Medium (11-50% improvement) | 50% of project cost |
Tier 4 | Efficient upgrades to energy-consuming equipment (e.g. HVAC, tote washer, die cut machinery, production line equipment) | Low (under 10% improvement) | 25% of project cost |
– | All other projects | None | 0% of project cost |
The weighted percentage for each tier may be applied to the total project cost or the annual depreciation expense, whichever amount is submitted for certification. See this page for more info.
This approach mirrors how many clean energy tax incentives work: groups of technologies are eligible for varying levels of incentive based on their expected outcome for carbon emissions.