We advised Enchem as seller on the tax credit transfer transaction

Davis Polk advised Enchem Co., Ltd. on a tax credit transfer transaction under which Enchem sold advanced manufacturing production tax credits (AMPC) under Section 45X of the Internal Revenue Code. Crux, a sustainable finance technology company which has established a platform for managing renewable energy and transferable tax credits, served as the platform facilitator.

Section 45X tax credits, introduced in the U.S. Inflation Reduction Act, aim to promote manufacturing of key components that are used in clean energy technologies and that play a role in the reduction of greenhouse gas emissions.

Enchem is a leading producer of electrolytes for electric vehicles and energy storage systems, with production facilities in regions including the United States, Korea, China and Europe. The tax credit is based on the electrolytes produced at Enchem’s plant in Georgia, which have been recognized by the Internal Revenue Service as an “electrode active material” eligible for the AMPC credit.

The Davis Polk energy, power and infrastructure team included partner David J. Penna, counsel Kailash Gupta and associate Julia Y. Chen. Partner Ethan R. Goldman and associate Carter Ballentine Allison provided tax advice. Members of the Davis Polk team are all based in the New York and Washington DC offices.

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