The Inflation Reduction Act: Shaping the Clean Economy

By September 19, 2022September 22nd, 2022No Comments

The Inflation Reduction Act includes some of the most robust climate policies our nation has ever seen. Through targeted investments in clean energy, domestic manufacturing, and the electric vehicle market, this legislation solidifies the United States clean economy and creates a pathway to the ambitious goal of net zero greenhouse gas emissions by 2050. We want to help identify what’s in this bill for you and how your community can specifically benefit. 

Historically, we’ve seen time and again that the communities that need these resources the most struggle the most to access these funds – that’s why ReImagine Appalachia is excited to lift up these wonderful resources created by The BlueGreen Alliance. 

The BlueGreen Alliance recently published multiple factsheets that highlight key provisions in the Inflation Reduction Act.

Read the full fact sheets here:

FACT SHEET: Clean Energy Tax Credits in the Inflation Reduction Act

FACT SHEET: Clean Manufacturing Investments in the Inflation Reduction Act

FACT SHEET: Clean Vehicle Provisions in the Inflation Reduction Act

Here are the highlights:

Clean Energy Tax Credits

The bill’s clean energy tax credits support and create good-paying union jobs—2.4 million jobs over the next 10 years—and address racial and economic inequality. Three notable incentives are: 

  • The Energy Communities Credit provides additional dollars to clean energy projects built in communities historically dependent on energy like coal-fired power plants. 
  • The Low Income Communities Credit provides a bonus tax credit to projects located in impoverished areas.
  • Existing tax credits for clean energy technologies were extended and tack on high-road labor standards such as a prevailing wage and registered apprenticeship utilization. These stipulations ensure workers are highly trained and receive a middle class salary for their skills.

Manufacturing Investments

The clean energy incentives can also be stacked on other tax credits meant to boost domestic manufacturing. For too long we’ve relied on imports from overseas production—threatening our national security and accepting higher levels of pollution than if we used U.S. made products. This law makes historical investments in transforming our country’s industrial sector:

  •  A “Buy America” 10% bonus credit is available for projects that use energy components made in the United States. 
  • $4 billion in manufacturing tax credits are allocated for communities that have seen a recent coal mine or coal plant closure. The online map at the above link shows that Appalachian coal country has the biggest concentration of eligible communities in the country.
  • The $50 billion in clean manufacturing investments are estimated to create over 900,000 jobs in the next decade
  • The Inflation Reduction Act also unveiled an unprecedented program to deploy emissions-reducing technology across U.S. manufacturing facilities, expand tax credits for industrial transformation projects, and establish a foundation for purchasing of clean construction materials. This program could reduce tons of harmful emissions in the industrial sector—responsible for nearly a third of U.S. climate use.

Clean Vehicle Transition

Many of the manufacturing investments in the Inflation Reduction Act center around clean vehicles. The transportation sector is the single largest source of climate-warming greenhouse gas emissions. If we want to meet the goal of net zero carbon emissions, our country needs to transition to clear cars, buses, and trucks. The bill offers these solutions:

  • The newly passed legislation funds two programs at the Department of energy to grow the domestic supply chain and get more clean vehicles on the street. Participating in these programs help manufacturing make vehicle models that are eligible for more consumer tax benefits—particularly the $7,500 Clean Vehicle Credit for qualifying electric vehicles (EV). There’s also a Previously Owned Vehicle Credit, ensuring used car consumers can also save on owning an EV.
  • Direct grants are also available to electrify the medium- and heavy-duty vehicles vital to our country’s daily functions. Public school bus, the United States Postal Service, and logistic truck fleets have $7 billion available for the transition to clean vehicles, which will ultimately reduce local air pollutants and harmful emissions. 
  • The tax credits and investments in clean vehicle manufacturing and the heavy-duty fleet transition could result in 422,000 jobs over the next decade.

These long overdue investments tie the jobs our communities need to legislation that protects our environment from rapid climate change. The Inflation Reduction Act labor provisions ensure workers aren’t left behind as the country transitions to cleaner energy resources. The policies are here waiting for us to implement them across the country and make sure our communities can capture the economic gains from a vibrant clean economy. 

From EPA