What’s in the historic Inflation Reduction Act

US President Joe Biden hands his pen to US Senator Joe Manchin (D-WV) as Senate Majority Leader Chuck Schumer (D-NY) and House Majority Whip United States James Clyburn (D-SC) looks after Biden signed “Reducing inflation”. Act of 2022″ into law during a ceremony in the State Dining Room of the White House in Washington, August 16, 2022.

Leah Millis | Reuters

The Biden administration signed a landmark climate and tax deal this year that will direct billions of dollars to programs designed to accelerate the nation’s clean energy transition and fight climate change.

As the United States grappled with climate-related disasters this year, from Hurricane Ian in Florida to the Mosquito Fire in California, the Inflation Reduction Act, which contains $369 billion in climate provisions, be a monumental development in mitigating the effects of climate change worldwide. country..

The bill, which President Joe Biden signed into law in August, is the most aggressive climate investment ever made by Congress and is expected to reduce the nation’s global warming carbon emissions by 40% this decade and move the country towards net zero. economy in 2050.

We are seeing a transition from traditional technology to climate technology in the private market: Giant Ventures

The provisions of the IRA have important implications for clean energy and manufacturing companies, climate startups and consumers in the coming years. As 2022 approaches, here’s a look back at the key pieces of legislation that climate and clean energy advocates will control in 2023.

Incentives for electric vehicles

The deal offers a federal tax credit worth up to $7,500 to households that buy new electric vehicles, as well as a used electric vehicle credit worth up to $4,000 for vehicles that are at least two years old antiquity From January. 1, people making $150,000 or less annually, or $300,000 for joint filers, are eligible for the new car credit, while people making $75,000 or less, or $150,000 for joint filers, are eligible for used car credit.

Despite the increase in sales of electric vehicles in recent years, the transport sector remains the country’s main source of greenhouse gas emissions, and a lack of convenient charging stations is one of the barriers for expansion. The Biden administration has set a goal of 50% electric vehicle sales by 2030.

The IRA limits tax credits for electric vehicles to vehicles assembled in North America and intends to withdraw the US from battery materials from China, which accounts for 70% of the global supply of battery cells for to the vehicles. An additional $1 billion in the deal will provide funding for zero-emission school buses, heavy trucks and transit buses.

U.S. President Joe Biden gestures after driving a Hummer EV during a tour of General Motors’ ‘Factory ZERO’ electric vehicle assembly plant in Detroit, Michigan, November 17, 2021.

Jonathan Ernst | Reuters

Stephanie Searle, program director of the nonprofit International Clean Transportation Council, said the combination of IRA tax credits and state policies will boost electric vehicle sales. The agency predicts that roughly 50% or more of passenger cars, SUVs and pickups sold by 2030 will be electric. For electric trucks and buses, the number will be 40 percent or more, the group said.

Next year, Searle said the agency is monitoring the Environmental Protection Agency’s plans to propose new greenhouse gas emissions standards for heavy-duty vehicles beginning in the model year 2027.

“With the IRA already promoting electric vehicles, the EPA can and should be bold in setting ambitious standards for cars and trucks,” Searle said. “This is one of the Biden administration’s last opportunities for strong climate action this term, and they should make good use of it.”

Targeting methane gas emissions

Some pumpjacks are operating while others are idle in the Belridge oil field near McKittrick, California. Oil prices rose in early Asian trade on the prospect that a stalled nuclear deal with Iran and Moscow’s renewed mobilization campaign would constrain global supplies.

Mario Tama | Getty Images

The package imposes a tax on energy producers that exceed a certain level of methane gas emissions. Polluters pay a penalty of $900 per metric ton of methane emissions emitted in 2024 that exceed federal limits, rising to $1,500 per metric ton in 2026.

It is the first time that the federal government has imposed a tax on the emission of any greenhouse gas. Global methane emissions are the second largest contributor to climate change after carbon dioxide and come mainly from oil and gas extraction, landfills and wastewater, and livestock farming.

Methane is a key component of natural gas and is 84 times more powerful than carbon dioxide, but it doesn’t last as long in the atmosphere. Scientists have said that methane must be limited to avoid the worst consequences of climate change.

The Harris Cattle Ranch feedlot, located along Interstate 5, is the largest beef producer in California and can produce 150 million pounds of beef annually, as seen in May 31, 2021, near Harris Ranch, California.

George Rose | Getty Images

Robert Kleinberg, a researcher at Columbia University’s Center for Global Energy Policy, said the methane emitted by the oil and gas industry each year would be worth about $2 billion if it were used to generate electricity or heat homes.

“Reducing methane emissions is the fastest way to moderate climate change. Congress recognized that when it passed the IRA,” Kleinberg said. “The methane tax is a draconian tax on methane emitted by the oil and gas industry in 2024 and beyond.”

In addition to the methane IRA provision, Biden’s Interior Department this year proposed rules to curb methane leaks from drilling, which it said would generate $39.8 million a year in royalties. author for the US and will prevent billions of cubic feet of gas from being wasted. through ventilation, flaring and leakage.

Encourage the production of clean energy

The bill provides $60 billion for clean energy manufacturing, including $30 billion for production tax credits to accelerate domestic manufacturing of solar panels, wind turbines, batteries and processing of critical minerals, and a $10 billion investment tax credit on manufacturing facilities being built. Electric vehicles and clean energy technology.

There’s also $27 billion earmarked for a green bank called the Greenhouse Gas Reduction Fund, which will provide funding to deploy clean energy across the country, but especially in overburdened communities. And the bill includes a hydrogen production tax credit, which gives hydrogen producers a credit based on the climate attributes of their production methods.

Solar panels are installed at the University of California, Merced Solar Farm in Merced, California on August 17, 2022.

Nathan Frandino | Reuters

Emily Kent, U.S. director of carbon-free fuels at the Clean Air Task Force, a global climate nonprofit, said the bill’s support for low-emission hydrogen is particularly notable because it could address sectors such as heavy transport and heavy industry, which are difficult. decarbonize

“US climate policy has taken a big step forward on carbon-free fuels in the US and globally this year,” Kent said. “We look forward to seeing the impacts of these policies play out as the hydrogen tax credit, along with the hydrogen hubs program, accelerate progress toward creating a global market for carbon-free fuels “.

The clean energy manufacturing provisions in the IRA will also have significant implications for startups in the climate space and the large venture capital firms that support them. Carmichael Roberts, head of investment at Breakthrough Energy Ventures, has said that climate initiatives under the IRA will give private investors more confidence in the climate space and could even lead to the creation of up to 1,000 companies.

“Everybody wants to be a part of this,” Roberts told CNBC after the bill passed in August. Even before the measure passed, “there was already a big buzz around climate,” he said.

Invest in communities affected by pollution

The legislation invests more than $60 billion to address the disparate effects of pollution and climate change on low-income communities and communities of color. The funding includes grants for zero-emission technology and vehicles and will help clean up Superfund sites, improve air quality monitoring capacity, and provide money to community-led initiatives through Environmental Justice Block Grants and Climate.

Smoke hangs over the Oakland-San Francisco Bay Bridge in San Francisco, California, United States, on Wednesday, September 9. 9, 2020. Strong, dry winds are sweeping Northern California for a third day, raising the risk of wildfires in a region that has been hit by heat waves, freak lightning storms and dangerously poor air quality by the flames

Bloomberg | Bloomberg | Getty Images

Research published in the journal Environmental Science and Technology Letters found that communities of color are systematically exposed to higher levels of air pollution than white communities due to redlining, a federal practice of housing discrimination. Black Americans are also 75 percent more likely than white Americans to live near hazardous waste facilities and are three times more likely to die from exposure to pollutants, according to the Clean Air Task Force .

Biden signed an executive order after taking office aimed at prioritizing environmental justice and helping to mitigate pollution in marginalized communities. The administration established the Justice40 Initiative to deliver 40 percent of the benefits of federal climate change and clean energy investments to disadvantaged communities.

Most recently, the EPA launched an office in September focused on supporting and delivering IRA grant money to these communities.

Reduction of aging emissions

The deal includes $20 billion for programs to reduce emissions from the agricultural sector, which accounts for more than 10 percent of US emissions, according to EPA estimates.

The president has pledged to cut emissions from the agricultural industry in half by 2030. The IRA funds grants for agricultural conservation practices that directly improve soil carbon, as well as projects that help protect forests prone to forest fires.

Farmer Roger Hadley harvests corn from his fields in his John Deere combine in this aerial photo taken in Woodburn, Indiana.

Bing Guan | Reuters

The Inflation Reduction Act could push workers into the climate industry

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