Today, Aug. 16, 2022, President Biden signed into law the Inflation Reduction Act (IRA). Provisions in this law cover diverse topics like climate, health, and taxes. With $369 billion dollars devoted to climate and energy, this law is single largest action taken by the US Congress to curb the growing threat from climate change. Given how deadlocked the Congress has been these past few years and how many bills were never even voted on, the passage of IRA along strict party lines is nevertheless an achievement worth noting.
Do I like everything in it? No! Could I have passed a better legislation? No! I am just celebrating the enactment of this important law that addresses our climate and energy crisis. Earlier today, I had a conversation with artist and host Michael
Killen on his show, The Michael Killen Report, on this topic. A link to it follows a brief discussion of the IRA.
IRA is projected to cut greenhouse gas emissions by 40% from 2005 levels by 2030. That’s 80% of what the larger Build Back Better was projected to achieve. Most of the energy-related provisions focus on electricity. That reflects the growing realization that we need to electrify as much of the society as possible and produce clean electricity to run it. It provides investments and tax credits for a diverse set of energy initiatives covering electrical power generation, transmission and distribution, and consumption.
A. Generation
- Provides $60 B in incentives for installation new clean energy systems—mostly wind and solar. It will lock in investment and production tax credits (ITC and PTC) for the next ten years. By removing this uncertainty of revenues from ITC and PTC, the bill incentivizes businesses to engage in these projects. Leveraged with the private investments, these funds could increase the US renewable energy capacity to 300 GW from its current level of 200 GW.
- Provides funding through Defense Authorization Act for domestic manufacture of solar panels, off-shore wind turbines, batteries, and critical minerals. Currently, most of the critical materials are manufactured in China.
- The bill includes PTC for nuclear power companies to keep them open as well as funds for R&D into newer technologies.
- Extends current tax credits for biofuel and biodiesel for ten years.
B. Distribution
- Modernizes the electrical grid with new interstate high tension transmission lines for greater resiliency.
- Streamlines the permitting process for easement acquisition to facilitate new transmission and distribution lines.
C. Consumption
- Transportation
- Accelerate adoption of EVs through tax credits to customers of up to $7,500 for new $4,000 for used vehicles.
- Funds for building out a network of 500,000 charging stations.
- Promote electrification of heavy-duty vehicles (trucks, buses, etc.). Includes funding for expanding electrification of USPS vehicles, school buses, and government-owned fleet of vehicles.
- Commercial Residential
- Provides rebates and tax credits to home-owners for energy audits and retrofits for improving efficiencies (electrical stoves; heat pumps; insulation).
- Includes tax incentives for district energy systems in residential and business communities.
- Industrial
- Promotes the use of hydrogen for high temp. industrial heating instead for fossil fuels
- Provides tax credits for production of hydrogen with reduced carbon footprint.
There are many important provisions to curb ghg emissions, such as capping of abandoned wells and funds for improved agricultural processes, as well as leasing of lands for oil and gas extraction and pipelines. There are also about $10 billion allocated for “climate justice” measures to redress neighborhoods that have been adversely affected by energy industry.
Will these actions stop climate change? No; climate change is a global phenomenon, and it will take collective action from all other nations as well. Yet, it is a small step in the right direction. Let’s hope it spurs appropriate actions throughout the globe.
Here's the video link. Take a listen.
