By Lizzie Stricklin, Communications Manager, BCSE
As BCSE works with industry leaders and policymakers to advance the clean energy transition, ensuring the efficient and effective implementation of the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) is a top priority. These landmark pieces of legislation – along with the CHIPS and Science Act of 2022 – put the United States on a path to achieving significant greenhouse gas emission reductions with strong and long-term federal policy support.
Since the passage of the IRA in August 2022, BCSE has made numerous submissions to shape the design and implementation of the incentives funded by the two pieces of legislation. These incentives are crucial to accelerating clean energy deployment across the country. Last week, BCSE sent a letter to Congressional leadership urging policymakers to reject legislative provisions that would rescind or alter these incentives.
In this blog post, we’ll break down some of the IRA and IIJA’s key clean energy and energy efficiency investments and detail BCSE’s recent advocacy work.
Infrastructure Investment and Jobs Act (IIJA)
The Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law (BIL), was passed by the 117th Congress on November 6, 2021 with bipartisan support. IIJA provides robust funding for energy infrastructure and energy efficiency programs including:
- Energy efficiency funding. The IIJA funds state and local energy efficiency upgrades to buildings and transportation through the Energy Efficiency and Conservation Block Grant Program and the State Energy Program. $3.5 billion also goes to the Weatherization Assistance Program to improve the energy efficiency of low-income households.
- Clean energy demonstrations and research hubs. $21.5 billion of the IIJA is provided for developing innovative technologies such as carbon capture, grid-scale energy storage, and advanced nuclear reactors. This funding includes $8 billion for clean hydrogen hubs, which will advance the decarbonization of heavy trucking and industrial sectors.
- Energy resilience measures. The IIJA includes funding to improve climate and energy resilience nationwide through improvements to weatherization, transportation infrastructure, flood mitigation, cybersecurity, and more.
- Investments in power and grid infrastructure. Modernizing the nation’s electric grid is a key focus of the IIJA, which includes investments to accelerate the deployment of new transmission lines, expand energy storage, and improve the flexibility of the grid.
The IIJA includes more than $62 billion in funding for the U.S. Department of Energy to deliver on these investments in power and grid infrastructure, energy efficiency, and advanced transportation. These investments are expected to create new jobs in the energy sector and reduce greenhouse gas emissions, as a part of the Biden Administration’s efforts to combat climate change.
Through a digital media campaign and outreach to key Congressional offices, BCSE advocated for the passage of the IIJA and inclusion of funding for microgrids, energy efficiency, and resilience as well as clean energy and energy efficiency tax incentives.
Inflation Reduction Act (IRA)
The Inflation Reduction Act (IRA) was passed on August 16, 2022, representing a historic level of public sector investment in clean energy and climate change mitigation. The Democratic leadership in the House and Senate used a process called “budget reconciliation” to pass the IRA, which only required 50 votes to pass, instead of the usual 60 votes required for most bills. Republicans did not support this process and, as such, did not vote in favor of the legislation.
The IRA provides $369 billion in funding for clean energy and energy efficiency initiatives – including $270 billion in tax credits. Key initiatives include:
- Energy efficiency incentives. The IRA restores and greatly increases energy efficiency tax credits like 25C that will financially encourage homeowners to invest in energy-efficient home upgrades. The legislation also includes $8.8 billion for energy efficiency rebates and efficient appliances, with most funds going to low- and moderate-income households.
- Clean energy incentives. A large share of the IRA’s funding goes to tax credits and rebates for energy storage, renewable power and fuels, and deep decarbonization technologies and resources like hydrogen and carbon capture utilization. Importantly, a number of these incentives transition to a technology neutral framework over time.
- Electric vehicle tax credits. The IRA includes up to $7,500 in federal tax credits for consumer and commercial electric vehicles. The Treasury Department released guidance in 2023 addressing the battery and critical mineral provisions for the 30D credit.
- Establishment of the Greenhouse Gas Reduction Fund. The IRA invests $27 billion into the Greenhouse Gas Reduction Fund, which leverages private sector capital by awarding competitive grants to states and localities for projects that reduce greenhouse gas emissions, with an emphasis on projects that benefit underserved communities.
- Funding for environmental justice. The IRA funds grants to states, localities, territories, and tribal governments to reduce harm from air pollution, expand access to sustainable transportation, and improve community resilience.
Through these investments and more, the IRA has already created new jobs in the energy sector and accelerated private investment in clean energy solutions. Combined, clean energy funding from the IIJA and IRA could reduce emissions by more than 1,000 million metric tons of CO2e in 2030, equivalent to the combined annual emissions released from every home in the United States, according to estimates from the Department of Energy.
Through outreach to key Congressional offices and joint stakeholder efforts to the Congress (see this letter to the Senate Democratic Caucus), BCSE advocated for the passage of the IRA and inclusion of funding for energy efficiency initiatives, clean energy and sustainable transportation incentives, environmental justice, and the establishment of a climate bank.
During the 118th Congress, BCSE has maintained its support for the IRA and IIJA’s clean energy and energy efficiency investments, urging policymakers to reject legislative provisions that would rescind or alter them.
BCSE’s Ongoing Guidance
BCSE continues to contribute to the rollout of these historic pieces of legislation as they enter the implementation phase. The Council has submitted numerous comments to the Departments of Energy, Transportation, and other agencies about various measures within both bills. Click here to find relevant BCSE policy actions for these pieces of legislation, including program comments and responses to Requests for Information.
About the authors: Lizzie Stricklin is the Business Council for Sustainable Energy’s Communications Manager.