By Rewiring America, the nation's leading nonprofit supporting electrification
The Inflation Reduction Act of 2022 (IRA) includes $369 billion for “Energy Security and Climate Change,” the single largest climate investment in American history. The programs will reduce U.S. carbon pollution 40 percent below 2005 levels by 2030. This climate package will also help Americans reduce their energy bills, expand domestic clean energy production, reduce the federal deficit and create nine million good-paying American jobs over the next decade. The IRA is unlocking the electric potential of communities across the U.S. and helping American consumers save on electric upgrades, creating market incentives for companies to form around, or shift into, product offerings supported by IRA programs.
This public financing also has massive potential to catalyze private clean energy investment. For example, an estimate from the Environmental Defense Fund shows that the $27 billion in the Greenhouse Gas Reduction Fund could leverage $72.4 billion in private dollar investment. According to the Princeton REPEAT project’s preliminary report, the IRA could drive more than $4.1 trillion in cumulative capital investment in new energy supply infrastructure from 2023-2032. Through a combination of tax credits, direct investments, and low-cost financing, the IRA’s $369 billion will accelerate the adoption of climate technologies and make clean, green options cost-competitive with fossil counterparts. A broad range of industries will benefit, from solar, wind and electric vehicles, to carbon capture, hydrogen and heat pumps. A few
particularly exciting programs for companies working in climate and energy include:
Low-cost financing: $3.6 billion through the U.S. Department of Energy’s Loan Programs Office to guarantee loans up to $40 billion in principal amounts.
Manufacturing: Over $60 billion of investment to on-shore clean energy manufacturing in the U.S., and $500 million to support the domestic production of heat pumps and critical minerals processing under the Defense Production Act.
Electric vehicles: A $7,500 tax credit for new EVs and a $4,000 tax credit for used EVs, with additional tax credits for commercial EVs and EV charging.
Clean energy tax credits: A 2.6 cents/kWh (in 2022 dollars) Production Tax Credit and 30 percent Investment Tax Credit for the next 10 years (with opportunities to increase up to 70 percent if certain conditions are met).
Buildings: $2.50-$5.00/sf for businesses achieving 25-50 percent reductions in energy use over existing building performance standards, and $5,000 for new homes meeting zero energy ready criteria (plus 10 years of residential tax credits and up-front discounts)
Workforce: $200 million in financial assistance to states for training and education to contractors, and apprenticeship training and prevailing wage requirements to access the full potential of IRA incentives.
Environmental Justice: More than $60 billion to disadvantaged communities across the nation, growing marketplaces and consumer diversity while addressing longstanding inequities, from energy burdens to air quality and other health impacts.