The $739 billion Inflation Reduction Act, a historic bill to decrease the debt and fund the next decade’s clean energy infrastructure and production in the U.S.
U.S. Congress passed a historic climate bill to fund the next decade’s clean energy infrastructure and production. The $739 billion Inflation Reduction Act of 2022 will invest $369 billion into bolstering American energy security and innovation.
This landmark proposal is expected to cut carbon emissions by 40% by 2030 from 2005 levels – a significant improvement compared to the current policy and just short of the 50% overall goal of the Paris Agreement.
The bill is expected to lower the budget deficit by over $300 billion as it seeks to implement a 15% corporate minimum tax, close certain tax loopholes, boost IRS tax enforcement and reform prescription drug pricing.
As a culmination of over a year of negociating, while it is smaller than the $550 billion originally earmarked in the $2.2 trillion Build Back Better Act, it is still the largest investment in renewable energy in U.S. history.
“Hundreds of businesses and more than 2,900 companies across the country of all sizes and sectors have been advocating for this for more than a year, and even a decade,” said Zach Friedman, director of federal policy at Ceres, a nonprofit organization bringing together investors, companies, and nonprofits to promote sustainability. “It’s historic and what the American economy with the American people and what the planet needs right now.”
He explained that the bill would provide a 10-year certainty for tax credits and investments that would greatly benefit American consumers and businesses. This is essential for manufacturers, supply chains, and U.S. companies investing and purchasing electricity.
The bill will provide billions in investment and financial incentives to wind, solar, electric vehicle, hydrogen, heat pump, and other alternative energies. It’s also allotted $1.5 billion to help oil and gas companies cut greenhouse gas emissions and invest in carbon sequestration technologies. In addition, $4 billion is set aside to help with the climate-related drought issues in the Southwest U.S.
More specifically, the bill enhances American production and allots over $60 billion for onshore clean energy manufacturing in the U.S. across the entire supply chain.
It includes $30 billion in production tax credits to accelerate the manufacture of solar panels, wind turbines, and batteries.
Another $10 billion is awarded as an investment tax credit to build clean energy facilities and $2 billion in grants to revise existing auto manufacturing plants to produce clean vehicles. It also will provide loans to build new clean vehicles and to accelerate research so we’re less dependent on manufacturers based out of countries like China.
Consumers will benefit from new tax credits for purchasing electric appliances, rooftop solar systems, and clean vehicles, though a few conditions for American-made components are attached. The policies would also lower prices at the pump and electricity bills, especially in remote, rural, and economically disadvantaged areas.
The bill further aims to decarbonize the economy across all sectors. This includes reducing greenhouse gas emissions from electricity production, industrial manufacturing, transportation, buildings, and agriculture. Grants, tax credits, and loans will be available to spur innovation and expansion of clean energies and infrastructure, reduction of GHG, climate-smart agricultural practices, and restoration of coastal habitats.
“The legislation’s landmark investment of $369 billion in climate and clean energy programs will help deploy thousands of megawatts of renewable power, create hundreds of thousands of good-paying American jobs, reduce the cost of electric power, and finally put the country on track toward the achievement of our climate goals,” said Gregory Wetstone, president and CEO of the American Council on Renewable Energy (ACORE) in a statement.