Amid a flurry of late-breaking activity on the Hill last weekend, the U.S. Senate passed life-changing, landmark legislation. The aptly named Inflation Reduction Act (IRA) is set to bolster job creation and invest in American energy innovation while simultaneously reducing the deficit and addressing pressing public health and climate challenges. Rather than imposing punitive measures on American businesses to mandate a shift in the economy, the IRA focuses on forward-looking incentives for private sector innovators and consumers to bring down the commercial production costs for sustainable technologies and consumer utilities.
Private industry leaders, Treasury secretaries that served in presidential administrations from both political parties, and influential, moderate Senators Joe Manchin and Krysten Sinema have all advocated for the advancement of the IRA. Breaking down support for individual initiatives in the bill, like 79% of the U.S. suggesting we should “prioritize developing of alternative energy sources,” reveals broad-based public backing for its key pillars. Later today, the U.S. House is poised to transition these prospective benefits into a reality for the American people.
Its passage will establish the first comprehensive climate law – a culmination of years of hard work, gradual progress, and careful deliberation. Once enacted, the Inflation Reduction Act will deploy a $370 billion surge in investment throughout the country. Total spending is calculable, but it’s difficult to quantify its benefits. The range of policy priorities addressed is expansive; it includes measures to strengthen energy storage systems, spur renewable energy development, cut prescription drug costs, and improve air quality.
To deter pollution, the IRA requires the oil and gas industry to fortify carbon capture programs and store carbon underground or be fined. Federal capital needed to invest in next-generation energy projects like solar, wind, and EV development will come from the IRA’s newly devised “green bank” armed with $27 billion in loans. Tax credits long made available to solar and wind energy are now bound to apply to critical energy storage systems; homeowners looking to remodel sustainably are encouraged to do so via a $1,200 annual tax credit; and the installation of efficient heat pumps and electric stoves are poised to get a $9 billion boost via tax credits. While not exhaustive, this list of energy and climate-focused components, coupled with the $2,000 cap on out-of-pocket costs for Medicare patients, provides a line of sight into how much of a game-changing win the IRA is for consumers and small businesses throughout the U.S.
While impressive, the IRA is not the only prodigious piece of legislation Congress has urged across the finish line. Unleashing American ingenuity by embracing policies backed by substantial federal investment has become a new standard in D.C. of late. From the passage of the CHIPS Act this month – which will bolster our domestic supply chain, reduce dependence on China, and advance clean tech production – to the continued investment in resiliency initiatives from the Infrastructure Investment and Jobs Act (IIJA), Congress has thrust the U.S. into the position to lead the world in sustainability policy and climate-forward innovations.
