How the IRA can supercharge local climate action and strengthen communities
The Inflation Reduction Act (IRA), the most ambitious climate legislation in U.S. history, was signed into law last month. Not only will it help advance critical climate action, it will also bring huge opportunities right to the doorsteps of Americans across the country.
This new law offers a plethora of policies that will fight the climate crisis, improve air quality and help all communities benefit from clean energy in their neighborhoods and homes. The passage of this national legislation is game-changing for the climate and for people. It will reduce greenhouse gas emissions by about 1 billion metric tons in 2030 — 10 times more climate impact than any other single piece of legislation ever enacted — and it’s the first to put the needs of disadvantaged communities front and center.
Pollution affects everyone’s health, but low-income communities and communities of color have historically been most burdened with negative health impacts. The bill will deploy clean energy at scale over the next decade, and in doing so reduce particulate pollution from fossil fuels to avoid up to 3,900 premature deaths and up to 100,000 asthma attacks annually by 2030.
Tax credits are one key element of the bill that will drive clean energy production. They are available for the next 10 years and designed to benefit communities, support well-paying jobs, reduce pollution and shrink energy costs for consumers. According to recent analyses, the IRA’s power sector tax credits could translate into up to $278 billion in electricity cost savings, with the average household saving up to $220 annually through lower energy bills and less costly goods and services more generally.
In contrast to earlier versions of the credits, these are directly payable to non-taxpaying entities such as states, tribes, municipal utilities and rural electric cooperatives, enabling them to drive clean energy projects in their localities without having to enter into complex financing arrangements. This is critically important, as it enables more of the federal funds to go directly to “steel in the ground” in the communities where they are most needed.
To benefit workers and disadvantaged communities, the tax incentives are five times larger for projects that meet prevailing wage and apprenticeship requirements, which will encourage new well-paying jobs and help us train the next generation of workers. The IRA is predicted to create almost 1 million jobs between now and 2030. Bonus incentives are also provided for clean energy projects sited in or benefiting low-income communities, those that are historic victims of environmental injustice and communities at risk of losing fossil fuel jobs or revenues in the energy transition.
Communities will also be able to shape projects to address specific environmental justice concerns through grants that can be used for everything from reducing pollution in low-income communities and communities of color to increasing transit options and reconnecting communities previously separated by highway expansions. In addition, a $27 billion clean energy technology accelerator, or green bank, will invest in state and local financing institutions to rapidly deploy clean technologies and leverage private sector dollars — with a focus on projects in disadvantaged communities that would otherwise lack access to financing.
At the household level, homeowners will directly benefit from an influx of tax credits and rebates for energy efficiency improvements and clean energy technologies (including heat pumps, EVs, solar panels, electric ovens, induction stoves and more) that will enable them to save money while helping to address climate change and pollution in their communities. More than 200 local governments have set community-wide 100% clean energy goals, and these residential incentives will be critical for encouraging homeowners to take action to help meet these goals. Savings for consumers can be substantial — on the order of $1,800 per year if they take advantage of multiple incentives for heat pumps, water heaters, electric vehicles and solar panels.
So, how can cities and towns take advantage of these federal programs while also advancing equity? Communities don’t need to go it alone — they can learn from peers, collaborate with states and access many technical assistance programs underway. To prioritize community needs, they can hold listening sessions to understand disadvantaged populations’ unique challenges, needs and priorities. Through these conversations, the local government can create a realistic plan that prioritizes projects that have already received local buy-in. In addition, cities that are new to these types of projects can learn from those who have already been directing funding specifically for climate and energy projects within disadvantaged communities.
The IRA is estimated to put the U.S.’s target of cutting emissions in half by 2030 within reach. With the passage of this new law, communities are closer than ever before to reaping the economic, health and climate benefits for all their residents, including those most vulnerable. By taking advantage of these new opportunities at our fingertips, we can make a better future start today.
Lori Bird is director of World Resources Institute’s U.S. Energy Program and Polsky chair for renewable energy.
Source: TEST FEED1
