The Inflation Reduction Act Includes Climate Fighting Policies

President Biden’s Inflation Reduction Act passed the Senate this week and includes sweeping legislation that addresses climate change in the form of investments, tax credits, and penalty fees.

 According to politico.com, “the new legislation would accelerate U.S. emission cuts and put the country on a path to reduce greenhouse gases by 40 percent below 2005 levels by 2030, significantly narrowing the gap with the goal Biden set under the Paris Climate Agreement to cut that pollution by at least half by that date.” 

So what can consumers expect? Included in the $370 billion bill are tax breaks for renewable energy investments in wind and solar power, including a 10-year consumer tax credit for investing in either, as well as a $4000 tax credit for the purchase of a used electric vehicle or $7500 for a new one.

For industry, $60 billion in tax credits has been earmarked for clean energy manufacturing and $30 billion for wind and solar production, and includes tax credits for nuclear power and technologies that capture carbon “that experts say will be needed to get the U.S. to net-zero emissions by 2050, a level scientists say is necessary to prevent catastrophic climate change,” stated the politico.com article.

 To combat the severe drought in Arizona, California, Colorado and Nevada, $4 billion has been designated to reduce water demand and increase water conservation efforts for the Colorado River Basin, the water source for nearly 40 million Americans.

 The Durango Herald reported the money will go to “voluntary system conservation projects that achieve verifiable reductions in use of or demand for water supplies or provide environmental benefits in the Lower Basin or Upper Basin of the Colorado River.” The article went on to include examples of programs that might be in the running for funding, such as conservation measures, paying farmers for their water rights or providing compensation for other types of voluntary water reductions in the Colorado River Basin.

 The politico.com article also noted that $1.5 billion is available to oil companies to reduce their greenhouse gas emissions and penalizes them with a new fee if excess methane emissions from oil and gas drilling is released. A twist in the new bill is that more leases on federal lands and water will be more accessible to fossil fuel companies.

 Gregory Wetstone, president and CEO of American Council on Renewable Energy, said in an interview to politico.com, “We have never had policy in the United States that was actually geared to drive the transition to clean energy and address the climate crisis. And we’re looking now at a measure that is up to the task.”