On August 16, President Biden signed into law the Inflation Reduction Act (IRA), the largest investment in fighting climate change on the national level this country has ever seen. The IRA is a huge deal and fundamentally changes the game for our work here at the state level. On August 31, we held a webinar to discuss the IRA and its impact on three levels: on individual consumers who want to go green, on towns and cities, and on the state. Here is the webinar recording, as well as a summary and clips of each individual section. Enjoy!
The IRA aims to reduce greenhouse gas emissions in the transportation sector by rapidly electrifying all types of vehicles across the country. It dedicates billions of dollars of funding to clean vehicle manufacturing (including the first-ever Production Tax Credit for battery manufacturing), reinstitutes a federal tax credit for installing charging infrastructure (both private and commercial), creates a federal tax credit for commercial vehicles, and extends and expands the existing federal tax credit for electric vehicles (EVs).
For consumers looking to go electric, it’s particularly important to wrap your head around the changes to the federal tax credit – some of which are already in effect, many of which kick in in 2023 and later. The video above explains those changes in detail, but you can also read about them in this blog.
Heating & Buildings
The IRA incentivizes heating system efficiency through a combination of tax credits, consumer rebates, and other program subsidies. Tax credits that were due to end this winter have been extended for another ten years, supporting solar PV, heat pumps, and other clean energy production and energy efficiency measures. Two things to note: 1) battery storage is now eligible for tax credits, and 2) tax credits for things like heat pumps can be taken multiple times. This means you can plan a ten-year series of home improvements that would qualify for these tax credits.
On the rebate front, roughly $9 billion has been allocated for high-efficiency heating and other electrification. However, it will be states that administer these funds, not the federal government, so consumers won’t see those funds until 2023 or 2024.
Low-income and moderate-income property owners and property managers will qualify for enhanced rebates through state programs funded by the IRA. We’re particularly pleased to see that electric panel upgrades and rewiring are included in the list of rebated measures, along with insulation and air-sealing, crucially important steps in the process of electrification.
To see what IRA funding your household might qualify for, check out Rewiring America’s calculator at How much money will you get with the Inflation Reduction Act? — Rewiring America.
The IRA extends tax credits for solar, wind, and storage through at least 2032 and enhances them, especially for projects benefiting low-income people and employing workers being paid the prevailing wage. It is expected that the credits will result in most of the greenhouse gas emission reductions from the IRA and significant electricity rate reductions by 2030. Millions of people will install solar and storage for their homes. And there will be more utility-scale projects too.
So in Sum...
The IRA really is a big deal. We will keep writing about it as we learn more – and as states start implementing it – but for now, we hope this summary helped you wrap your head around all the pieces!
P.S. We got a lot of excellent questions during our webinar and compiled a Q&A document, which you can access here.