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Inflation Reduction Act: One Year Later

Sept. 6, 2023
One year in, the Inflation Reduction Act is playing a key role in helping the Biden Administration achieve its long-term net zero emissions goals.

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In August 2022, the Inflation Reduction Act (IRA) was signed into law. It marked the most significant action Congress has taken on clean energy and climate change in the nation’s history, according to the White House.

“With the stroke of his pen, the president redefined American leadership in confronting the existential threat of the climate crisis and set forth a new era of American innovation and ingenuity to lower consumer costs and drive the global clean energy economy forward,” the Biden Administration said at the time.

Billions for Clean Energy

The IRA directed $394 billion in federal funding to clean energy, with the funds being distributed via tax incentives, grants and loan guarantees. According to McKinsey & Co., clean electricity and transmission command the biggest slice, followed by clean transportation, including electric vehicle (EV) incentives. Most of the energy and climate funding is being distributed in the form of tax credits. “Corporations are the biggest recipient, with an estimated $216 billion worth of tax credits,” McKinsey says.

On the one-year anniversary of the Inflation Reduction Act, the White House released a report outlining the progress that’s been made thus far and what’s coming next. It says the IRA has put America “on a path to achieve President Biden’s goal of reducing emissions by 50-52% below 2005 levels by 2030, unleashing a clean energy and manufacturing boom, and already lowering energy and health care costs for millions of Americans.”

Here are some of the key milestones that have been achieved in the 12 months since the Inflation Reduction Act was signed into law:

  • The private sector has announced more than $110 billion in new clean energy manufacturing investments, including more than $70 billion in the electric vehicle (EV) supply chain and more than $10 billion in solar manufacturing. 
  • Investments in clean energy and climate have created more than 170,000 jobs, and the law is projected to create more than 1.5 million additional jobs over the next decade.
  • Public and private sector investments driven by the EPA and the Bipartisan Infrastructure Law are now expected to reduce greenhouse gas emissions by approximately 1 billion tons in 2030.
  • The administration has awarded over $1 billion to help communities become more resilient and protect them from the disastrous impacts of climate change, including drought, heat, and extreme weather.
  • American families are projected to save $27-38 billion on their electricity bills from 2022-2030 relative to a scenario without the Inflation Reduction Act.

The USDA & Clean Energy

Through the IRA, the USDA is making the largest single investment in rural electrification since the Rural Electrification Act of 1936, with nearly $11 billion available to build electrification infrastructure in rural America with clean, affordable, reliable energy and enhance the quality of life in rural communities.

The IRA is also investing in America’s clean energy future through these and other funding opportunities:

  • $9.7 billion to support rural electric cooperatives through the Empowering Rural America (New ERA) program to update and transform their energy systems to support the purchase or ownership of renewable energy, renewable energy systems, zero-emission systems and carbon capture systems.
  • $1.3 billion in grants to help agricultural producers and rural small businesses invest in renewable energy systems and make energy-efficiency improvements through the Rural Energy for America Program (REAP).
  • $500 million from the Higher Blends Infrastructure Incentive Program (HBIIP) to increase the availability of domestic biofuels and give Americans additional cleaner fuel options at the pump. 

Ambitiously Combating Climate Crisis

Calling the Inflation Reduction Act “the most ambitious investment in combating the climate crisis in world history,” the White House points to a recent Department of Energy study that affirms the transformative climate progress driven by the IRA and the Bipartisan Infrastructure Law. “DOE estimates that the two laws will cut U.S. greenhouse gas emissions by up to 41 percent below 2005 levels by 2030,” it says.

“Together with additional actions being taken by federal, state, and local governments as well as the private sector, the United States is now on a path to achieve President Biden’s ambitious goal of cutting emissions 50-52 percent below 2005 levels by 2030 and reaching net-zero emissions by no later than 2050,” the White House continues. “This is consistent with external researchers, who project that U.S. greenhouse gas emissions will fall 43-48 percent below 2005 levels by 2035 thanks to laws [that are] already on the books.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.