Notably, there is an expansion of an existing tax credit of up to $7,500 for income-eligible individuals who buy qualifying electric vehicles. The bill also seeks to lower energy costs and reduce utility bills for individuals through additional tax credits that encourage purchases of energy efficient homes, vehicles and appliances. For example, the Environmental Quality Incentives Program would get $8.45 billion in funding, which the agriculture secretary can use to improve soil carbon, reduce nitrogen losses or greenhouse gas emissions, or capture or sequester greenhouse gas emissions stemming from agricultural production. In addition, $27 billion would go to a “clean energy technology accelerator,” or greenhouse gas reduction fund, that allows states to provide financial assistance to low-income communities to benefit from technologies such as rooftop solar installations.Īs for agriculture, there is at least $20 billion to finance practices considered to be “climate smart,” according to one Democratic summary. The bill also increases the value of a tax credit for carbon capture and storage investments, which incentivizes sequestration projects that suppress or remove certain carbon emissions from the atmosphere. Another $6 billion is slated for a new Advanced Industrial Facilities Deployment Program to reduce emissions from chemical, steel and cement plants, which are some of the largest emitters. Numerous tax credits included in the bill aim to reduce emissions from transportation, industrial manufacturing, buildings, agriculture and the production of electricity.Ībout $30 billion in the bill is set aside for grant and loan programs for states and electric companies to speed up the transition to clean electricity. The devices are considered more environmentally friendly than furnaces and air conditioners because they do not run on oil or gas and use less electricity. Heat pumps can be used to heat or cool homes and other buildings. In addition, the bill includes $500 million for the production of heat pumps and minerals processing under the Defense Production Act, which can be invoked by the president. facilities to make clean vehicles, as well as $2 billion in grants to reconfigure existing car factories for the same purpose. The bill would make available $20 billion in loans to build new U.S. There is also $10 billion in investment tax credits for the construction of facilities where those and other clean technologies would be made. There is an estimated $30 billion in production tax credits geared toward increasing the manufacturing of solar panels, wind turbines and batteries, as well as the processing of critical minerals, such as lithium and nickel, used in electric car batteries. Clean Energy ProductionĪccording to a Democratic summary, the bill includes over $60 billion for clean energy manufacturing in the U.S. 18: Biden signed the Inflation Reduction Act into law on Aug. Here we review some of the climate-focused provisions in the bill. (For more on those taxes, see “ Sorting Out the Partisan Tax Spin on Inflation Reduction Act.“) Kyrsten Sinema of Arizona, who has raised concerns about the bill’s provisions taxing corporations and investment income, has yet to publicly state how she will vote. L ast year, President Joe Biden announced that his administration would target between a 50% and 52% reduction in greenhouse gas emissions from 2005 levels by the end of the decade.Īssuming that every Senate Republican votes against the bill, as expected, Democrats would need the support of all 50 members of their caucus - and Vice President Kamala Harris to cast a tie-breaking vote - for the legislation to pass. carbon emissions by roughly 40% from 2005 levels by 2030 - an estimate that is within the range of possible outcomes projected by at least two research firms that have analyzed the legislation in its current form. The bill’s supporters have said it would reduce U.S. But if it receives enough votes to become law, most of the bill’s spending - an estimated $369 billion over the next 10 years - would go toward efforts to combat climate change while also investing in “energy security” for the United States. The budget reconciliation bill that the two Democratic senators have agreed upon aims, in part, to address inflation as well as to lower health care costs and prescription drug prices for millions of people. Joe Manchin, a previous holdout, announced on July 27. 6 on the Inflation Reduction Act, surprising legislation that he and West Virginia Sen. Senate Majority Leader Chuck Schumer said the Senate plans to hold its first vote on Aug.
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