Inflation Reduction Act, 2023

Hugh Bartling

Inflation Reduction Act Sectoral Investments ($367 bil)

  • Key federal spending bill, signed into law on 16 August 2022
  • $500 billion in spending on clean energy, health care, tax enforcement
  • 10 year spending / investment plan

IRA Agency Breakdown

Agency Number of Programs
Department of Agriculture 27
Environmental Protection Agency 27
Department of Energy 19
Department of the Interior 16
Department of Commerce 5
Department of Transportation 4
Department of Housing and Urban Development 3
General Services Administration 3
Council on Environmental Quality 1
Department of Homeland Security 1
U.S. Postal Service 1

IRA Carbon-Free Energy Tax Credits

  • Electricity production from renewables
  • Investing in renewable energy projects
  • Electricity produced at nuclear facilities
  • Advanced energy project credit
  • Tax credit for domestic manufacturing of clean energy components (solar panels, batteries, etc)
  • Increased tax credit for solar/wind installs serving low-income communities
  • Credit for biodiesel production & other alt fuels, such as ‘sustainable aviation fuels’
  • Carbon Capture & Storage

IRA Carbon-Free Energy Tax Credits

  • Clean hydrogen production
  • Energy Efficiency Home Improvement Credit
  • Residential Clean Energy Credit
  • Construction of new energy efficient homes

IRA Grant Programs

  • Greenhouse Gas Reduction Fund ($27 bil)
  • Investing in renewable energy projects
  • Electricity produced at nuclear facilities
  • Accelerate heat pump manufacturing
  • Rural Energy for America (renewable projects)
  • Tribal Electrification Program
  • Domestic Manufacturing Grants for EV Vehicles
  • Biofuel production

IRA Grant Programs

  • Methane Reductions Program
  • Environmental and Climate Justice Block Grants
  • Climate Pollution Reduction
  • Air pollution reduction at schools
  • Expand air monitoring programs & sensors in low-income communities
  • Contractor training grants
  • HUD-assisted properties to improve building efficiency

Financing

  • Energy Infrastructure Reinvestment
  • Department of Energy Loan Programs Office
  • Tribal Energy Loan Guarantees
  • Transmission facility financing

IRA & Transportation

  • Clean Vehicle Tax Credit (EVs no bikes!, pre-owned & new, commercial & consumer)
  • Tax credit for building EV charging stations
  • Sustainable aviation fuel infrastructure for airports
  • Neighborhood Access and Equity Grant Program
  • Clean Heavy Duty Vehicles
  • Grants to reduce air pollution at ports

Impact on GHGs

  • US Paris Agreement commitment is 50-52% reduction in GHGs by 2030
  • Independent analysis suggests IRA should give us 31-44% reduction.
  • If we count state + federal regulatory action, we get to 50%

Potential Issues

  • Incentives may not be fully taken up by private actors
  • Trading partners like the EU don’t like the domestic sourcing elements
  • Courts are a wildcard
  • Actual climate legislation is still needed to meet global goals