ASES' Technical Divisions Team September 19, 2022
Clean Energy Overview & Highlights
The Inflation Reduction Act (IRA) is the largest climate bill in U.S. history. A primary policy focus of the IRA is providing tax credits, rebates and loans to support the deployment of clean energy, the increased adoption of fully and partially electric vehicles, and retrofits of homes and buildings to increase energy efficiency and reduce electricity costs. This is an unprecedented level of policy support from the U.S. federal government. Please see below for some highlights and how this bill can benefit you and/or your business:
Residential Clean Energy Credit: A 30% tax credit for residential installations of clean energy (including solar, battery storage, etc.) is offered through the end of 2034.
HOMES Rebate Program: This program allocates $4.3B for state-level rebates for energy-saving residential retrofits through the end of 2031.
Energy Efficient Home Improvement Credit: There is a 30% tax credit for residential efficiency investments (including insulation, windows, heating/cooling appliances, etc.) that is offered through the end of 2032.
High-Efficiency Electric Home Rebate Program: This program allocates $4.5B for state-level rebates for home electrification investments, specifically for low and moderate-income households.
Clean Vehicle Credit: A $7,500 tax credit for the purchase of new electric vehicles is offered through the end of 2032.
Previously Owned Clean Vehicle Credit: A $4,000 tax credit supports the purchase of used electric vehicles.
All of these policy incentives are projected to increase the deployment of clean energy, electric vehicles, and energy efficiency investments. This is an unprecedented level of policy support from the U.S. federal government. Please note that not all households are eligible for all credits and rebates. Consult with state-specific program specialists, tax accountants, and energy professionals about potential savings for your household.
Deeper Dive into the IRA…
The following are excerpts from the White House’s Inflation Reduction Act Guidebook. (Some parts have been lightly edited for brevity, but the section titles are preserved to allow easily referencing the full guidebook.) Please note that not all households are eligible for all credits and rebates. Consult with state-specific program specialists, tax accountants, and energy professionals about potential savings for your household.
For a more visual representation of the IRA’s incentives, check out the Inflation Reduction Act Infographic.
Financing and Expediting Deployment of Clean Energy Technologies
- $27 billion for the Greenhouse Gas Reduction Fund for competitive grants for clean energy and climate projects that reduce greenhouse gas emissions, with an emphasis on projects that benefit low-income and disadvantaged communities.
- $40 billion to guarantee loans for projects utilizing innovative clean energy technologies, including renewable energy systems, carbon capture, nuclear energy, and critical minerals processing, manufacturing, and recycling.
Incentivizing and Supporting Deployment of Clean Vehicles
- Clean Vehicle Credit for consumers purchasing new qualifying clean vehicles, including battery electric, plug-in hybrid, or fuel cell electric vehicles.
- Previously Owned Clean Vehicles Credit (up to $4,000) to support used vehicle buyers who choose to go electric.
Lowering Energy Costs for Households
The Inflation Reduction Act empowers and equips homeowners who want to make upgrades so they can save energy and reduce their energy costs. Families can save money on their monthly energy bills by choosing energy-efficient appliances that use less electricity. They can fix inefficiencies, like drafty windows and poor insulation, that lead to energy waste. New tax credits and deductions in the Inflation Reduction Act can reduce the cost of energy-efficient home upgrades, including heat pumps and other appliances, windows, doors, and more; offset the cost of adding residential clean energy sources, including solar panels and battery storage; and make constructing energy-efficient single- and multi-family homes cheaper and easier. The law also includes nearly $9 billion for consumer home energy rebate programs to electrify home appliances and perform energy efficient retrofits, with a focus on low-income consumers.
- Nearly $9 billion for states and tribes for consumer home energy rebate programs, enabling communities to make homes more energy-efficient, upgrade to electric appliances, and cut energy costs. The Department of Energy estimates that these historic home energy efficiency and electrification consumer rebates, targeted to lower-income consumers, will save households up to $1 billion annually.
- The Energy Efficiency Home Improvement Credit provides up to $3,200 annually in tax credits to lower the cost of energy efficient upgrades by up to 30 percent, including the purchase of heat pumps, insulation, efficient doors and windows, electrical panel upgrades, and energy audits. Heat pumps alone can save households up to $500 in energy costs every year.
- The Residential Clean Energy Credit provides a 30-percent tax credit to lower the installation cost of residential clean energy, including rooftop solar, wind, geothermal, and battery storage.
- The New Energy Efficient Home Credit provides up to $5,000 in tax credits for each new energy-efficient home and up to $1,000 for each unit in a multi-family building. This credit incentivizes builders to lower monthly energy costs for future owners and renters.
Supporting Investment in Energy-Efficient and Low-Carbon Buildings
The Inflation Reduction Act provides tax incentives, grants, and loans to make commercial and residential buildings, including federally assisted housing, more energy efficient and resilient to the impacts of a warming climate.
- $1 billion for the Green and Resilient Retrofit Program at the Department of Housing and Urban Development (HUD), which will provide funding to the owners of HUD-assisted multifamily properties for projects to improve energy or water efficiency; enhance indoor air quality or sustainability; implement the use of zero-emission electricity generation, low-emission building materials or processes, energy storage, or building electrification strategies; or make the properties more resilient to climate impacts.
- Extension and expansion of the energy efficient commercial buildings deduction. Buildings that increase their energy efficiency by at least 25 percent will be able to claim this tax deduction, with bonuses for higher efficiency improvements.
Investing in Affordable and Reliable Clean Energy in Rural America and on Tribal Lands
The IRA provides more than $12 billion to partner with rural and tribal communities to help them access more clean energy, make their energy systems more reliable and resilient, and lower their electricity costs.
- $9.7 billion to support rural electric cooperatives that achieve greenhouse gas emissions reductions by making energy efficiency improvements to electric generation and transmission systems or purchasing and deploying clean energy and carbon capture and storage systems.
- $1 billion for electric infrastructure loans for renewable energy in rural America, which will finance the construction of distribution, transmission, and generation facilities for renewable electricity (from solar, wind, hydropower, biomass, or geothermal), including system improvements and replacements to improve service in rural areas, as well as demand side management, energy conservation, and renewable energy systems.
- More than $2 billion to expand USDA’s Rural Energy for America Program, which provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or energy efficiency improvements.
- $150 million for tribes and tribal organizations to support the powering of unelectrified tribal homes with zero-emissions energy systems and retrofitting of already electrified tribal homes to zero-emissions systems.
Cutting Air Pollution that Harms Public Health and the Climate
The Inflation Reduction Act provides billions of dollars to tribes, states, local governments, community organizations, and others to cut greenhouse gas emissions and other harmful air pollutants from targeted local sources, particularly in areas with environmental justice concerns.
- $3 billion for Environmental and Climate Justice Block Grants for community-based organizations to reduce indoor and outdoor air pollution, including greenhouse gases; monitor for pollution; improve community resilience to the impacts of climate change, including extreme heat and wildfire; and build the capacity of these organizations to engage with state and federal decision-making processes.
- $5 billion for Climate Pollution Reduction Grants for tribes, states, air-pollution-control agencies, and local governments to develop and implement plans for reducing greenhouse gas emissions.
- More than $3.2 billion for the Neighborhood Access and Equity Grant Program to support projects to improve walkability, safety, and affordable transportation access in communities; to clean up existing and prevent new environmental harms caused by transportation projects in disadvantaged communities; and to provide planning and capacity building support to disadvantaged and underserved communities.
For a more visual representation of the IRA’s incentives, check out the Inflation Reduction Act Infographic.
- Making Our Homes More Efficient: Clean Energy Tax Credits for Consumers, U.S. Department of Energy
- Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action, White House
- Official Inflation Reduction Act Bill, White House
- Clean Energy For All, White House
- By the Numbers: The Inflation Reduction Act, White House
- What the Inflation Reduction Act does for green energy, PBS
- Historic climate bill to supercharge clean energy industry, POLITICO
- Inflation Reduction Act (IRA) Summary: Energy and Climate Provisions, Bipartisan Policy Center
- Navigating the Inflation Reduction Act of 2022: A Practical Guide, Troutman Pepper
- The Inflation Reduction Act: Provides Provisions and Incentives for Local Governments, Holland & Knight
- Inflation Reduction Act: Solar Energy and Energy Storage Provisions Summary – Download Factsheet, Solar Energy Industries Association
- The Inflation Reduction Act Provides Pathways to High Quality Jobs,The Center for American Progress
- How States and Cities Can Benefit from Climate Investments in the Inflation Reduction Act, Center for American Progress
- The Federal Green Revolution and You, Solar Today Magazine
Thanks to the bill’s investment in our clean energy future, over 700 million more solar panels will be turning rays into clean, affordable, reliable energy in 2030. pic.twitter.com/IiNjRoYBKv
— The White House (@WhiteHouse) August 13, 2022