What Does the Inflation Reduction Act Mean for Clean Energy?
The inauguration of Joe Biden as president of the United States sparked auspicious investment into revitalizing renewable energy industries and helping make Americans’ lives more sustainable. That begins with the Inflation Reduction Act and clean energy.
This blog will briefly talk about the Inflation Reduction Act, its passage, why it is of such importance for the clean energy sector and how “you” can benefit from the Act.
Background On the Inflation Reduction Act
President Joe Biden signed the Inflation Reduction Act on August 16, commencing a $739 billion program which aims to significantly lower inflation over the next 10 years. The aim is for the U.S. to become more energy-efficient as a nation and reduce greenhouse gas emissions by 40% by 2030.
In a nutshell, the Inflation Reduction Act includes:
- Lowering healthcare costs: Reduced prescription costs with a $2,000 cap for Medicare recipients, and the Affordable Care Act extended for 3 years.
- Federal funding for climate change mitigation: $369 billion contribution to clean energy through tax credits, grants and loan guarantees. The electric vehicle industry will also see significant investment in infrastructure development.
- Redistribution of taxes: A 15% corporate minimum tax rate, in particular amongst the country’s wealthiest.
What the Inflation Reduction Act Means for Clean Energy
The Inflation Reduction Act (IRA) marks the largest investment into clean energy in American history. The $369 billion investment package aims to tackle the climate crisis and achieve the Biden Administration’s goal of a net-zero economy by 2050.
The Department of Energy’s policies consist predominantly of investment tax credits, grants and loans for clean energy industries to upgrade or replace existing energy infrastructure and clean energy technology, and households will benefit from tax incentives.
The graph by McKinsey shows the distribution of funds across clean energy industries: