The U.S. passed a historic climate deal this year — here’s a recap of what’s in the bill

U.S. President Joe Biden holds out his pen to U.S. Senator Joe Manchin (D-WV) as Senate Majority Leader Chuck Schumer (D-NY) and U.S. House Majority Whip James Clyburn (D-SC) look on after Biden signed “The Inflation Reduction Act of 2022” into law during a ceremony in the State Dining Room of the White House in Washington, August 16, 2022.

Leah Millis | Reuters

The Biden administration this year signed a historic climate and tax deal that will funnel billions of dollars into programs designed to speed the country’s clean energy transition and battle climate change.

As the U.S. this year grappled with climate-related disasters from Hurricane Ian in Florida to the Mosquito Fire in California, the Inflation Reduction Act, which contains $369 billion in climate provisions, was a monumental development to mitigate the effects of climate change across the country. 

The bill, which President Joe Biden signed into law in August, is the most aggressive climate investment ever taken by Congress and is expected to slash the country’s planet-warming carbon emissions by about 40% this decade and move the country toward a net-zero economy by 2050.

The IRA’s provisions have major implications for clean energy and manufacturing businesses, climate startups and consumers in the coming years. As 2022 comes to a close, here’s a look back at the key elements in the legislation that climate and clean energy advocates will be monitoring in 2023.

Incentives for electric vehicles

U.S. President Joe Biden gestures after driving a Hummer EV during a tour at the General Motors ‘Factory ZERO’ electric vehicle assembly plant in Detroit, Michigan, November 17, 2021.

Jonathan Ernst | Reuters

Stephanie Searle, a program director at the nonprofit International Council on Clean Transportation, said the combination of the IRA tax credits and state policies will bolster EV sales. The agency projects that roughly 50% or more of passenger cars, SUVs and pickups sold in 2030 will be electric. For electric trucks and buses, the number will be 40% or higher, the group said.

In the upcoming year, Searle said the agency is monitoring the Environmental Protection Agency’s plans to propose new greenhouse gas emissions standards for heavy-duty vehicles starting in the 2027 model year.

“With the IRA already promoting electric vehicles, EPA can and should be bold in setting ambitious standards for cars and trucks,” Searle said. “This is one of the Biden administration’s last chances for strong climate action within this term and they should make good use of it.”

Taking aim at methane gas emissions

Some pumpjacks operate while others stand idle in the Belridge oil field near McKittrick, California. Oil prices rose in early Asian trade on the prospect that a stalled Iran nuclear deal and Moscow’s new mobilization campaign would restrict global supplies.

Mario Tama | Getty Images

The Harris Cattle Ranch feedlot, located along Interstate 5, is the largest producer of beef in California and can produce 150 million pounds of beef a year as viewed on May 31, 2021, near Harris Ranch, California.

George Rose | Getty Images

Robert Kleinberg, a researcher at Columbia University’s Center on Global Energy Policy, said the methane emitted by the oil and gas industry each year would be worth about $2 billion if it was instead used to generate electricity or heat homes.

“Reducing methane emissions is the fastest way to moderate climate change. Congress recognized this in passing the IRA,” Kleinberg said. “The methane fee is a draconian tax on methane emitted by the oil and gas industry in 2024 and beyond.”

In addition to the IRA provision on methane, the Biden Interior Department this year proposed rules to curb methane leaks from drilling, which it said will generate $39.8 million a year in royalties for the U.S. and prevent billions of cubic feet of gas from being wasted through venting, flaring and leaks. 

Boosting clean energy manufacturing

The bill provides $60 billion for clean energy manufacturing, including $30 billion for production tax credits to accelerate domestic manufacturing of solar panels, wind turbines, batteries and critical minerals processing, and a $10 billion investment tax credit to manufacturing facilities that are building EVs and clean energy technology.

There’s also $27 billion going toward a green bank called the Greenhouse Gas Reduction Fund, which will provide funding to deploy clean energy across the country, but particularly in overburdened communities. And the bill has a hydrogen production tax credit, which provides hydrogen producers with a credit based on the climate attributes of their production methods.

Solar panels are set up in the solar farm at the University of California, Merced, in Merced, California, August 17, 2022.

Nathan Frandino | Reuters

Investing in communities burdened by pollution

The legislation invests more than $60 billion to address the unequal effects of pollution and climate change on low-income communities and communities of color. The funding includes grants for zero-emissions technology and vehicles, and will help clean up Superfund sites, improve air quality monitoring capacity, and provide money to community-led initiatives through Environmental and Climate Justice block grants.

Smoke hangs over the Oakland-San Francisco Bay Bridge in San Francisco, California, U.S., on Wednesday, Sept. 9, 2020. Powerful, dry winds are sweeping across Northern California for a third day, driving up the risk of wildfires in a region thats been battered by heat waves, freak lightning storms and dangerously poor air quality from blazes.

Bloomberg | Bloomberg | Getty Images

Research published in the journal Environmental Science and Technology Letters found that communities of color are systematically exposed to higher levels of air pollution than white communities due to redlining, a federal housing discrimination practice. Black Americans are also 75% more likely than white Americans to live near hazardous waste facilities and are three times more likely to die from exposure to pollutants, according to the Clean Air Task Force.

Biden signed an executive order after taking office aimed to prioritize environmental justice and help mitigate pollution in marginalized communities. The administration established the Justice40 Initiative to deliver 40% of the benefits from federal investments in climate change and clean energy to disadvantaged communities. 

More recently, the EPA in September launched an office focused on supporting and delivering grant money from the IRA to these communities.

Cutting ag emissions

The deal includes $20 billion for programs to slash emissions from the agriculture sector, which accounts for more than 10% of U.S. emissions, according to EPA estimates.

The president has pledged to reduce emissions from the agriculture industry in half by 2030. The IRA funds grants for agricultural conservation practices that directly improve soil carbon, as well as projects that help protect forests prone to wildfires.

Farmer Roger Hadley harvests corn from his fields in his John Deere combine in this aerial photograph taken over Woodburn, Indiana.

Bing Guan | Reuters



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