The inflation reduction law of 2022
After decades of hard work and advocacy by climate activists, the United States on Friday passed the most significant climate legislation in US history. The Inflation Reduction Act of 2022 (IRA) includes historic investments in climate action that could reduce U.S. carbon emissions by 6.3 billion tons over the next decade, dramatically reducing the gap between current emissions and the 2030 targets set out in the Paris Agreement. This 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, non-partisan and realistic view of the bill’s climate implications, we recommend this analysis of the REPEAT project.
“The clean energy tax policies and incentives proposed in the Cut Inflation Act will help New England and the rest of America reduce energy costs while creating jobs in manufacturing and l clean tech facility,” 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 are expected to spur hundreds of thousands of viable, well-paying jobs in the clean energy and solar energy industries. Early research estimated that the IRA will create over 9 million jobs over the next decade, both indirectly and directly. We will also see the expansion of training and apprenticeship programs, such as ReVision’s Own Electricity Apprenticeship Programwhich will increase access to clean energy jobs for those who face the greatest barriers to training and employment 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 middle-income households for air-source heat pumps and other energy-efficient electrical appliances. New grants will provide funds to disadvantaged communities to improve climate resilience, clean up air pollution and reduce carbon emissions, and other funds will go to refurbishing affordable housing to improve energy efficiency. The bill also includes funds to help tribal communities transition to clean energy systems. It will be essential 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. Non-profit organizations and municipalities will be able to take advantage of the “direct payment” advantage, allowing them to receive the amount of the tax credit in the form of a check. USDA’s Rural Energy Grants (REAP) will increase from 25% to 50% of total project costs, dramatically expanding access to solar energy for rural businesses. (Past REAP grantees include solar champions like Shawnee Peak, Andy’s Agwayand McDougal Orchards).
What the IRA Means for ReVision Clients
The bill brings great news to the solar industry with a myriad of incentives and credits for electrifying homes and businesses. We will only cover a few highlights here:
The Solar Tax Credit (renamed Tax Credit for Clean Renewable Energies) will benefit from a 10 year extension of 30%, followed by a drop to 26% in 2033. This means customers who install solar this year will now receive the full 30% when they file their 2022 taxes! From 2023, a tax credit will also be available for stand-alone battery storage, opening up options to use storage more flexibly. Commercial solar will also benefit from an extension of the tax credit to 30%.
There will be additional credits for clean energy technologies such as Heat pumps, Heat pump water heaterinsulation and upgrading of windows and doors, as well as credits for energy audits and upgrading of electrical panels.
It’s time to buy the electric vehicle you want! There is now a $7,500 tax credit for passenger vehiclesand the EV charger tax credit has been extended to 2032 for residences and businesses.
We will keep on fighting
The IRA passed the Senate due to concessions made to the fossil fuel industry, so it will be crucial to continue advocating for global climate justice and an end to oil and gas infrastructure. This bill provides an important climate boost, but 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 the country.
To learn more about the climate impacts of the IRA, we recommend:
What the climate bill could do for environmental justice
Electrical Explanation: Rewiring America