The Biggest Climate Action in History

The biggest climate action legislation in history passed 2 months ago. In case you’re still wondering what it is, here’s a quick look.

Last year, the Build Back Better Act was drafted to boost climate change efforts and revitalize the middle class, among many other things. The act was blocked, rethought, and reworked into the recently-passed Inflation Reduction Act. For $369 billion, it makes provisions in the form of tax credits, subsidies, grants, wage and apprenticeship requirements, tax redistribution in favor of the middle class, and more. These provisions will help reduce pollution by:

Supercharging our ability to develop cleaner technologies, from energy production, to greener and more efficient building materials, to carbon capture, all on American soil.?

Bolstering technologies that are already in use, like nuclear power plants, hydrogen, and solar and wind farms

Targeting disadvantaged areas by providing funding into programs that can tackle their problems at the source.

Funding electric vehicles and charging stations for consumers and industries, while making airplane fuels and ports greener

…and so much more. These provisions are set to enable America to reach a 40%-42% decrease in ghg emissions by 2030. That’s only 10% shy of our pledge in the Paris Climate Agreement. If that doesn’t sound like something to celebrate yet, this bill is doing far more than it states. This bill incentivizes any climate change innovation, leaving room for better solutions we don’t have yet. And the tax credits are the key.

The IRA bill is making green energy far cheaper and more appealing than fossil fuels. Solar energy will receive a 30% tax credit, $3 billion is going towards giving every nuclear power plant a $15/MWh tax credit, and any other form of clean energy will receive either a 30% investment credit or a $26/MWh production credit. Through all of these tax credits, the government will be providing 20-50% of funding for any and all green energy projects. All of this funding will be coming from the new minimum corporate tax on business making at least $1 billion/year in revenue.

And there is a small group of provisions that decentivize fossil fuel production. Methane causes 80 times the warming CO2 does. Methane leaks can happen at any stage of the production process, but for the first time in the history of any GHG, a fine will be applied for any operation whose emissions exceed industry standards, starting in 2024. Over $1.5 billion will also be funding advanced monitoring and emission mitigation.

There will be an increase in government taxes on oil taken from federally owned land. Alongside that, the cost of leasing oil land without drilling will increase, incentivizing the selling and discontinued use of those lands. Provisions are included for the superfund tax, which forces companies heavily responsible for pollution to fund the repair of the damage that they cause.

Through all of that, green energy is about to explode across the nation. And when that happens, the groundwork is set for every system and group to benefit.?

For everyday workers, companies are incentivized with tax credits to pay workers and apprentices at the local prevailing wage, and give apprentices the hours they need. That means more opportunity in green energy for people to be paid what they deserve.

The bill also spends $22 billion to help homeowners upgrade their appliances to greener and more efficient ones. They can even take advantage of a 30% tax credit for installing solar panels. Lower-income households could find some relief, as the price of electricity is steadier than the price of gas.

As more and more car makers commit to fully electrifying their fleets, $12 billion goes to funding consumer electric vehicles, in the form of tax credits. Another $3 billion will electrify the USPS fleet, and more for city buses and garbage trucks.

And about $60 billion will be spent on social justice. Communities divided by the interstate highway system will be reconnected. Tribal communities will be supplied with clean energy. Community groups and universities will be funded to tackle the issues that specifically affect their communities. Rural power co-ops will have their debt bought out to shut down their fossil-fuel energy, and then incentivized with tax credits to build green energy.?

Where do we go from here? There are many, MANY changes we’ll be seeing and feeling in the coming years.

We’ll be riding fully electric city buses, our trash will be picked up by electric garbage trucks, and our mail will be delivered in electric postal vehicles.

We can expect to see a lot of construction and renovation in the near future. Power plants, energy grids, charging stations, energy storage…? tax credits exist for virtually everything, whether it's commonplace or just getting started. And construction for it all will be more commonly done with low-carbon building materials, also funded by tax credits.

New nuclear reactors are being developed that can mitigate issues with larger reactors by being less intrusive and more safe. The bill funds the development of advanced modular light water reactor designs that will be able to take advantage of the investment or tax credit.

Carbon capture solutions have received $50/ton of carbon captured and stored, or $35 for carbon captured and reused, in tax credits. With the IRA, CCS will receive $85/ton captured and stored, and $60/ton for capture and reused. Which means we will see less EOR, more sequestration, and more carbon capture solutions.

Money is even being spent to mitigate the carbon impact of forest fires. From every angle, the IRA bill is making historic efforts to turn the tide on climate change. The next decade is going to look very different. Next month, we’ll tackle another climate change issue.