Inflation Reduction Act: A Historic Energy Bill

The Inflation Reduction Act of 2022

After decades of hard work and advocacy by climate activists, the United States passed the most meaningful climate legislation in US history on Friday. The Inflation Reduction Act of 2022 (IRA) includes landmark climate action investment which could reduce US carbon emissions by 6.3 billion tons in the next decade, significantly closing the gap between current emissions and the 2030 goals outlined in the Paris Agreement. It is by no means a perfect bill, and we will continue to push for climate justice and an end to new fossil fuel projects, but the IRA will provide a good foundation. For a detailed, nonpartisan, realistic view of the bill’s climate implications, we recommend this analysis from the REPEAT Project.

“The proposed clean energy tax policies and incentives in the Inflation Reduction Act will help New England and the rest of America reduce energy costs while creating clean tech manufacturing and installation jobs,” said ReVision co-founder Phil Coupe. “Other key benefits of this legislation include reduced air pollution, greater energy independence, and infrastructure resilience in the face of worsening natural disasters.”

The bill’s provisions should spur hundreds of thousands of viable, well-paying jobs within the clean energy and solar industries. Initial research has estimated the IRA will create over 9 million jobs in the next decade, both indirectly and directly. We will also see expansion of training and apprenticeship programs, such as ReVision’s own Electrical Apprenticeship Program, which will grow access to clean energy jobs for those with the greatest barriers to training and job opportunities.

Progress for Environmental Justice

Much of the IRA’s $369 billion dedicated to “Energy Security and Climate Change” will provide opportunities to make the clean energy transition accessible and inclusive. It includes direct rebates to low-and-moderate-income households for air source heat pumps and other energy efficient electric appliances. New grants will provide funds for disadvantaged communities to improve climate resiliency, clean up air pollution, and decrease carbon emissions, and other funds will go towards retrofitting affordable housing to improve energy efficiency. The bill also includes funds to help tribal communities transition to clean energy systems. It will be critical for businesses, organizations, and local governments to deploy these funds to serve vulnerable communities.

The bill will expand access to solar energy, providing additional incentives for solar projects located in low-income communities. Nonprofits and municipalities will be able to take advantage of the ‘direct pay’ benefit, allowing them to receive the tax credit amount as a check. The USDA Rural Energy grants (REAP) will increase from 25% to 50% of the total project costs, greatly expanding solar access for rural businesses. (Former REAP Grant recipients include Solar Champions like Shawnee Peak, Andy’s Agway, and McDougal Orchards).

What the IRA Means for ReVision Customers

The bill brings overwhelmingly good news to the solar industry with a myriad of incentives and credits for electrifying homes and businesses. We’ll touch on just a few highlights here:

The Solar Tax Credit (renamed to the Renewable Clean Energy Tax Credit) will get a 10-year extension of 30%, followed by a step-down to 26% in 2033. That means customers installing solar this year will now receive the full 30% when they file their 2022 taxes! Starting in 2023, there will also be a tax credit available for stand-alone battery storage, opening up options to use storage more flexibly. Commercial solar will also receive a tax credit extension to 30%.

There will be additional credits for clean energy technologies such as Heat Pumps, Heat Pump Water Heaters, insulation, and window and door upgrades, as well as credits for energy audits and electric panel upgrades.

Now’s the time to buy that electric vehicle you’ve been eyeing! There is now a $7,500 tax credit for passenger vehicles, and the tax credit for EV Chargers has been extended to 2032 for both residential and commercial.

We Will Keep Fighting

The IRA passed the Senate because of concessions made to the fossil fuel industry, so it will be crucial to continue advocating for comprehensive climate justice and an end to oil and gas infrastructure. This bill provides important momentum for the climate, but in order to achieve the clean and just future we know is possible we will need to stand up for our vulnerable communities, in our region and across our country.

To learn more about the climate impacts of the IRA, we recommend:

What Could The Climate Bill Do For Environmental Justice 

REPEAT Project Analysis

Rhodium Group Analysis

Electric Explainer: Rewiring America

Listen: Volts Podcast

Original Source: https://www.revisionenergy.com/blogs/ira-2022/