Earth Day 2024: The Climate Benefits of the Inflation Reduction Act Are Worth Celebrating

by nuclearafrica

Leading up to Earth Day this year, I’ve been reflecting on the meaning and purpose of the annual celebration. Earth Day began under the Nixon Administration in 1970 as a day to support environmental protection and has grown to include nations and communities around the world in appreciation of Mother Earth.  

Of course, like any other holiday, there have been instances of co-optation where big polluters seek to cover up their dirty deeds and greenwash their image by sponsoring Earth Day festivities. But I’m looking to celebrate the positives.

I’ve been to my fair share of trash cleanups, concerts, and craft fairs, but this year there’s one big policy I want to focus on that I think deserves some credit on Earth Day: the Inflation Reduction Act (IRA).

Earth Day and the IRA go hand in hand

Don’t get me wrong, I still plan on showing some love for the planet this Earth Day, but I’m also grateful that the US was able to pass the IRA in 2022 because it represents the single biggest investment in cutting heat-trapping emissions in history (here’s to you, Mother Earth). This super important bill is expected to result in $780 billion to $1 trillion in investments over 10 years that will drive down emissions, improve public health, and help protect the environment on our planet for future generations.

It’s also worth noting that while the IRA will make a massive difference in our fight against climate change, it alone won’t be enough to help us meet the US’s Paris Climate Agreement commitment of reducing its economy-wide emissions by 50% to 52% by 2030. Together with existing state and federal policies including the Infrastructure Investment and Jobs Act (IIJA), the IRA puts the US on a trajectory of about 34% reductions (with recent estimates ranging from 27% to 42%). And even that’s not a given.… How the programs and tax credits are carried out by federal and state agencies can affect the overall progress that can be made as a result of the IRA.

At UCS, we’re working to ensure effective and equitable implementation of key clean energy and clean transportation provisions. The IRA also includes some less than ideal fossil-fuel supporting incentives that will need continued monitoring .

To realize the IRA’s goals, implementation is key

Now, like anything else passed by Congress, the devil will be in the details, or in this case, the implementation of all the programs established under the IRA.

There’s an unprecedented amount of federal funding coming down the pike. This unprecedented amount of federal funding has mobilized nonprofit and community groups around the nation to help ensure the benefits flow to the people and places that deserve them. One of our jobs at UCS is to help make sure it winds up benefiting communities most in need. And those needs are great. Many Americans are still struggling to make ends meet while prices remain high. At the same time, energy burdens make utility bills unaffordable for many. Thankfully, the IRA aims to meet the White House’s Justice 40 goals of delivering at least 40% of the benefits of these investments to disadvantaged communities.

So, what are we doing to help?  UCS is working with coalition partners, our expert staff, and our extensive network of over 20,000 scientists and technical experts to help with the unprecedented need for technical assistance and grant reviews. Here are a few specific examples from UCS’s Climate and Energy team:

Community Change Grants: $2 billion grant funding opportunity to support local community efforts to build climate resiliency and adaptation; mitigate climate and health risks from urban heat islands, extreme heat, and wildfire events; support investments in low- and zero-emission technologies and related infrastructure; and expand workforce development to reduce climate-warming emissions and other air pollutants. UCS is partnering with the Environmental Protection Network to help connect our network of experts to community groups looking to apply for funding. (If you’re a scientist or expert reading this and want to help, we’re hosting a webinar on Thursday May 2nd where you can learn more about the opportunity and how you can offer assistance.)

Solar for All: The $7 billion provision that is included in the EPA’s Greenhouse Gas Reduction Fund seeks to expand access to solar for low-income communities with all funds required to be used to enable low-income and disadvantaged communities to deploy and benefit from residential distributed solar. UCS has submitted letters of support for Illinois, Maine, and Massachusetts applying to the Solar for All program and we are continuing to meet with officials in Michigan to help influence the program design and outreach should that state be awarded funding. We are also working with GreenLatinos to determine community needs and questions around Solar for All and planning to offer additional resources to those community members once the awardees are announced (expected sometime in April 2024).

Low-Income and Energy Communities Bonus Tax Credits: These “bonus” tax credits offer a 10% additional credit for projects located in energy communities (communities defined as places affected by refinery/coal mine/power plant closures), a 10% credit for renewable energy projects located in low-income communities or tribal lands, AND a 20% bonus for renewable energy projects that are installed on low-income residential buildings or that deliver at least 50% of power to low-income households. UCS is working with our coalition partners to ensure these credits are being properly considered as part of our state utility regulatory work. As utilities develop their long-term resource plans for meeting energy demand, we will track the proceedings and give comments and testimony if needed to encourage adequate and accurate consideration of the benefits these credits could have on communities and the grid.

Thriving Communities Grantmaking Program: the EJ Thriving Communities Grantmaking program has established 11 grant makers to distribute $550 million in small grants. UCS is partnering with the RE-AMP network, one of the selected grant makers, to help target grant outreach in rural communities in the Midwest using the Climate and Economic Justice Screening Tool, and to address extreme heat threats to outdoor workers with data from our Too Hot to Work report.

EPA Climate Pollution Reduction Grants: This $5 billion program administered by the EPA aims to reduce climate warming emissions and other air pollution. It is made up of $4.75 billion for implementation grants and $250,000 for planning grants. Applicants submitted initial priority climate action plans, or PCAPs, in March, and they must submit comprehensive climate action plans by mid-2025. UCS submitted comments with recommendations on the PCAPs of Massachusetts, Illinois, Maine, and Michigan, and will continue to engage on the implementation of this grant program with the forthcoming comprehensive climate action plans.

UCS is actively working to ensure tax credits passed or modified as part of the IRA are rigorously implemented to minimize potential for harm, such as with the Clean Hydrogen Production Tax Credit (45V) and the Carbon Capture and Sequestration Tax Credit (45Q).

How is the IRA impacting people and the planet so far?

It’s important to note that many of the programs established or expanded under the IRA are yet to be established, and there is a lot of money yet to be allocated. But, so far there’s a lot to like.

A recent report from the US Department of the Treasury found most of the investments from the IRA so far have gone to underserved and frontline communities.

And MIT and the Rhodium Group have noted the following:

81% of clean investment dollars announced since the Inflation Reduction Act passed have been for projects in counties with below-average weekly wages.

86% of clean investment dollars since the Inflation Reduction Act passed are landing in counties with below-average college graduation rates.

70% of clean investment dollars since the Inflation Reduction Act passed are in counties where a smaller share of the population is employed.

78% of clean investment dollars since the Inflation Reduction Act passed are in counties with below-average median household incomes.

The share of clean investment dollars going to low-income counties rose from 68% to 78% when the Inflation Reduction Act passed. 

An updated analysis from US Treasury, including Q3 and Q4 data from 2023, also shows the continued increase in investments going toward these communities, with an additional $2.4 billion going to energy communities through the Energy Community Bonus tax credit (as opposed to $1 billion going to non-energy communities when compared to pre-IRA levels). However, it is worth noting, that analysis from the US Treasury counts all investments, including those that some environmental justice communities don’t consider beneficial.

Interestingly, additional analysis shows that most funding from the IRA is flowing toward Republican-represented Congressional districts, even though not a single Republican voted for the measure.

It’s still too soon to get a good sense of the planetary impacts the IRA will have, but as a big down payment on the US’s contribution to global efforts, the initial outlook is promising. It’s clear we’ve still got a long way to go to limit the worst impacts of climate change and keep planetary warming below 2 degrees, but I for one will be celebrating both our planet, and the IRA this Earth Day. Will you join me?

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