After moving through Congress with not a soupçon of Republican support, the Inflation Reduction Act (IRA) has landed on the desk of President Joe Biden. He has indicated that he will sign the mammoth $750 billion spending bill—a slimmed-down successor to the Build Back Better Act, spun off from the $1.2 trillion bipartisan infrastructure-focused recovery package signed into law last November—that invests a historic $369 billion in climate– and energy-related provisions over the next decade. Although Biden will sign the bill this week, the White House said that an event will be held on September 6 to celebrate its passage. (The full 730-page bill can viewed here).
Although the total amount dedicated to climate action is scaled-back from what was included in earlier iterations of the bill, it remains the largest federal investment of its kind in United States history. In addition to a commitment to combatting climate change that puts the U.S. on the path to reduce greenhouse gas emissions by 40 percent by 2030, the IRA also includes a wide swath of healthcare-related spending including an annual $2,000 out-of-pocket cap on prescription drug costs for senior citizens.
“This bill is not perfect, but from a climate pollution perspective, the positives heavily outweigh the negatives—by a factor of 10,” said Manish Bapna, president and CEO of the Natural Resources Defense Council (NRDC) in a statement. “It could not come soon enough. This law puts the nation’s goals for combatting climate pollution within reach, while millions are suffering through yet another summer of extreme weather disasters. “
Considered earlier this year to be effectively kaput until centrist West Virginia Democrat Joe Manchin signaled that he would return to the Senate negotiating table following a series of talk breakdowns, the IRA passed the Senate 51-50 on August 8 with Vice President Kamala Harris casting the tie-breaking vote. On August 12, the sprawling climate and health bill passed the House with a 220-to-207 party line vote.
Anticipated to reduce deficits by an $264 billion over the next decade, the fresh spending on health and climate investments will be paid for by a 15 percent minimum tax on corporations with annual profits over $1 billion, a 1 percent excise tax on corporate stock buybacks, and a beefing-up of the Internal Revenue Service’s resources to go after wealthy tax cheats. Republican lawmakers have claimed that the IRA will place an undue burden on the middle class by triggering tax increases for Americans making less than $400,000. This is disinformation as the bill passed in both the House and Senate does not do that. Republican leaders have also pledged to challenge and potentially reverse the soon-to-be-law bill.
Following its passage of the House, the American Institute of Architects (AIA) celebrated the news. “I am proud of the work AIA has done to get Congress to include language addressing our legislative priorities,” said AIA EVP/Chief Executive Officer Lakisha Ann Woods, in a statement. “AIA’s sustained commitment to advocating for legislation addressing greenhouse gas emissions from the built environment as well as resilient and affordable communities is evident throughout this bill. Though the climate crisis still requires our unrelenting attention, this legislation is a step in the right direction.”
The IRA contains multiple key AIA provisions including millions for rehabbing inefficient federal buildings, billions for state-run rebate programs for homeowners embarking on energy-saving improvements and appliance upgrades, and more. As detailed by the AIA, the provisions in full are:
- Building Energy Codes: $330 million in grants to states and local governments to adopt the latest energy codes that meet or exceed the 2021 International Energy Conservation Code (IECC) and/or ASHRAE 90.1-2019. It also provides an additional $670 million for states and localities to adopt and implement zero-energy stretch codes.
- Federal Building Energy Efficiency: $250 million for General Services Administration (GSA) facility retrofits, and $2.15 billion for the Federal Buildings Fund, to be used by the GSA to acquire and install low-embodied carbon materials and products for use in the construction or alteration of buildings. The legislation also includes $975 million for GSA to invest in emerging and sustainable technologies.
- Greenhouse Gas Reduction Fund: $7 billion in competitive grants to enable low-income and disadvantaged communities to deploy or benefit from zero-emission technologies, including distributed technologies on residential rooftops, and to carry out other greenhouse gas emission reduction activities.
- Rebates for Home Energy Efficiency/Electrification: $4.3 billion to state energy offices to develop a HOMES rebate program, which will reimburse homeowners and aggregators for whole-house energy savings improvements. The legislation also provides an additional $4.275 billion to state energy offices to establish a high-efficiency electric home rebate program. The rebates may be used for appliance upgrades, such as heat pumps, electric stovetops/ovens, and non-appliance upgrades, such as insulation, electric wiring, and ventilation.
- Tax Incentives: The legislation also makes significant changes to multiple tax incentives, including the Energy Efficient Commercial Building Tax Deduction (179D), the Energy Efficient Home Improvement Credit (25C), the New Energy Efficient Home Credit (45L), and the Research and Development tax credit (R&D).
“The act will have a profound impact on communities across the country and will be marked in our history as a turning point in our climate fight,” said Peter Templeton, CEO of the U.S. Green Building Association (USGBC), in a statement that followed the passage of the bill in the Senate. The American Society of Landscape Architects (ASLA) also welcomed news of the bill’s passage, noting that it “provides tremendous opportunities for landscape architects to work with all communities to plan and design a more resilient and low-carbon future.”
Some industry groups, including the National Association of Home Builders (NAHB), remain staunchly opposed to the IRA. The NAHB said that the bill “fails to ease inflationary pressures on housing and contains troublesome new building and energy code requirements that could raise the cost of housing for home owners and renters.”
Outside of provisions relating to how Americans build, operate, and inhabit buildings, the IRA includes $30 billion to ramp up the domestic manufacturing of solar panels, wind turbines, and other clean energy technologies along with a $10 billion investment tax credit for companies to build and outfit new manufacturing facilities dedicated to producing such technologies; $2 billion in grants to convert existing auto manufacturing facilities into clean vehicle production hubs along with $20 billion in loans to build new clean vehicle manufacturing plants; more than $20 billion in grants to support sustainable agricultural practices; $3 billion to invest in communities impacted by environmental injustices via Environmental and Climate Justice Block Grants; $3 billion to initiate air quality monitoring systems in disadvantaged communities, particularly those located near major pollution sources; $3 billion dedicated to help the United States Postal Service transition to electrify its fleet of vehicles, which ranks as the nation’s largest governmental fleet; $50 million to bolster the stewardship and protection of the country’s old growth forests; $2.6 billion in coastal resiliency grants to help safeguard communities impacted by sea level rise; an expansion of community solar programs, extended tax credits for clean energy production, and much more.