U.S. Inflation Reduction Act Advances Clean Energy and Climate Solutions

The Inflation Reduction Act of 2022 (Public Law No. 117-169), which was approved by Congress and signed by President Biden in August 2022, will invest $369 billion to advance clean energy technologies and other climate solutions, with a focus on increasing domestic advanced energy manufacturing capacity, creating clean energy economy jobs, and addressing environmental justice concerns. Considered the most significant climate law in U.S. history, it is expected to put the U.S. on track to reduce net greenhouse gas emissions by approximately 40% below 2005 levels by 2030. (Figure 1)

Key clean energy and climate provisions in the bill include the following.

• Expansion and extension of clean energy tax credits by 10 years. (For a detailed summary of the tax credits for various clean energy technologies, please see this overview published by The National Law Review.)
• Support for domestic clean energy technology manufacturing ($60 billion for manufacturing solar panels, batteries, and other clean energy technologies in the U.S.)
• Funding for low-income families to electrify their homes, including $9 billion in home energy rebate programs.
• Incentives for electrification of transportation, including $3 billion for the U.S. Postal Service to electrify its fleet (the largest government fleet in the nation); $1 billion for electrification of heavy-duty vehicles, and $3 billion to install cleaner technologies and reduce air pollution at ports.

Individual taxpayers can access the following benefits, subject to income caps:

• A 30% tax credit for installing residential solar panels;
• Up to $7,500 for purchasing an electric vehicle;
• Up to $14,000 for home energy efficiency upgrades.

References

• Earthjustice. "What the Inflation Reduction Act Means for Climate" (August 16, 2022).
• The Inflation Reduction Act of 2022 (Public Law No. 117-169).
  
• The National Law Review. "Relief Arrives for Renewable Energy Industry - Inflation Reduction Act of 2022" (August 16, 2022, updated August 19, 2022). 
• The White House. "FACT SHEET: The Inflation Reduction Act Supports Workers and Families" (August 19, 2022). 

​