The One We’ve Been Waiting For
by Sonam VelaniIn a late July surprise, the Senate Democrats had their cake and ate it too. Immediately following the passage of the CHIPs Act by Republicans, the Democrats delivered a 1-2 punch aptly marketed as “The Inflation Reduction Act of 2022.” Following months of negotiations among Senate Democrats, mainly between our New York hometown hero Senator Chuck Schumer and West Virginia Senator Joe Manchin (often found to be a hero among the fossil fuel industry), we finally have a climate deal!
If passed, this will be our country’s biggest investment in renewable energy - four times larger than our last investment in clean energy back in 2009. There are lots of pages - 752 to be exact - outlining everything from tax incentives for private industry to produce renewable energy to rebates for individuals to purchase heat pumps and electric vehicles. Our friends at ClimateTech VC have a fantastic line-by-line breakdown of the bill. Here are the highlights:
The Inflation Reduction Act billions of dollars to help industry and consumers wean ourselves off of fossil fuels and incentivize the development and use of clean energy infrastructure. Chart by the Committee for a Responsible Federal Budget, reproduced by Adrian Blanco of The Washington Post.
☀️ $260B in clean energy tax credits: Utilities will get tax subsidies for the production of renewable energy such as solar, wind, and hydropower. There are also incentives for manufacturing parts like wind turbines or solar panels. The goal is to make renewable energy production cheaper than fossil fuels.
🚗 $80B in rebates for green consumers: If you’re buying a new electric vehicle, you can get up to $7,500 for the purchase. Are you in line for an ever dwindling supply of used EVs? The government will give you a $4,000 credit. There are over $9 billion available for home energy rebates for those retrofitting their homes with heat pumps and solar panels. All this together could save consumers almost $2,000 a year on their energy bills according to Rewiring America.
🔋 $27B for a green bank: A Clean Energy and Sustainability Accelerator would leverage public and private funds to invest in cleantech and infrastructure, which can jumpstart early stage technologies and deployment in underserved areas.
🌾 $20B for climate-focused farming: These funds would help farmers reduce emissions, incentivizing the use of regenerative agriculture practices, reducing water and fertilizer, and jumpstarting carbon sequestration and storage practices.
🏘 $3B for environmental justice initiatives: Block grants will support community projects that address the public health consequences stemming from climate disasters.
The United States is the largest emitter of greenhouse gasses in history. It’s up to us to address our wrongs, especially given the deeply destructive impact climate change is having on lower income countries across the globe, which emit a tiny fraction of the GHG emissions of their wealthier counterparts. This bill keeps us fighting the good fight, reducing emissions ~40% by 2030 - short of the Biden administration’s previously stated goals of reducing emissions 50% by 2030, but fairly close.
Models by Energy Innovation show that the policies in the Inflation Reduction Act would cut US greenhouse gas emissions 37-41% by 2030. Chart by Energy Innovation.
Thousands of people across the country - who’ve spent decades advocating for clean energy reforms at the local, state, and federal levels - have gotten us to this point. We owe our thanks to all of them! While not perfect, this bill is a big step in the right direction for a clean energy future.
by Sonam Velani