Progress through politics comes in awkward jumbles. On Aug. 7, 2022, the U.S. Senate passed the Inflation Reduction Act of 2022 (H.R. 5376). The legislation represented about a year of back-and-forth negotiations between Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.), a moderate who spent the better part of a year balancing his own inflationary concerns and his party’s ambitious political objectives.
The legislation is a much-slimmed-down version of the original Build Back Better legislation that failed last year, and focuses on many areas of clean energy development and healthcare.
The new proposal, which the House of Representatives passed on Aug. 12 and President Joe Biden is expected to sign, is sufficiently ambitious. For example, it contains provisions, long coveted by the Democrats, related to Medicare and the Affordable Care Act.
The real meat of the legislation lies in its approach to clean energy. The act contains several investments in the energy sector to help the nation meet its goals for reducing carbon emissions. It would provide $369 billion to combat the climate crisis over the next 10 years and is expected to reduce carbon emissions by 40% by 2030. It would do so by extending and expanding investment tax credits for developing renewable power.
Credits would also be extended for residential clean energy, including solar, wind and heat pumps, and other energy-efficient appliances, so ECs may soon have ample work opportunities in this sector.
Also of interest to ECs are the provisions to promote electric vehicles, as the act offers credits for purchasing EVs.
Other investment highlights include $27 billion to nonprofit, state and local climate finance institutions that support the rapid deployment of low- and zero-emission technologies, including solar and other distributed resources. These entities will leverage public and private investments to help communities reduce or avoid greenhouse gas emissions and other forms of air pollution. At least 40%of investments will be made in low-income and disadvantaged communities. It also invests in other forms of clean energy and energy technology, such as nuclear power and battery storage.
Incentives in the bill would be financed through a 15% corporate minimum tax and a nearly $80 billion investment in the IRS to improve compliance and enforcement.
President Biden praised the deal, saying it “will improve our energy security and tackle the climate crisis.” In the process, he added it will "create thousands of new jobs and help lower energy costs in the future.”