The Inflation Reduction Act is the Most Important Bill the U.s. Has Passed to Do Something to Fight Climate Change. But What is It? How Does It Help? And How Do Outdoorsy Coloradans Benefit From It? We Give You a Big Rundown to Understand What It All Means.
The Inflation Reduction Act doesn’t have the word “climate” in it, but this bill, signed into law by President Joe Biden in August, is so jampacked with provisions designed to lower our carbon emissions and boost our climate resilience, you wouldn’t be wrong to think of the IRA as that big climate bill from 2022. (In reality, the IRA also includes a $34.2 billion boost to Medicare and $64.1 in Affordable Care Act subsidies.)
“The comprehensive nature of this demonstrates a real willingness to engage across all aspects, from transportation to manufacturing to the energy sector to individuals,” says Max Boykoff, a professor of environmental sciences and department chair at CU Boulder, and a fellow at the Cooperative Institute for Research in Environmental Sciences.
Yes, the bill includes plenty of tax credits individuals can claim. However, Boykoff frames it in more universal terms: “This is an industrial policy bill. This is not chipping away.” It’s designed to reduce emissions across sectors, and it sends a signal to industry, he says, offering an example in the production credit for wind energy. “It’s on the books for 10 years, so it creates predictability for the wind power sector, which has a durable impact.”
“There are many of these kinds of signals,” says Boykoff. “In the transportation sector, the tax credit rebates are associated with production of the battery—it has to be made in the U.S.,” Boykoff continues. “So it’s meant to stimulate the manufacturing sector, and that’s providing jobs. And they’re going to be dignified; they’re going to be good-paying jobs.”
But what’s in this $369 billion bill that the average outdoor-loving Coloradan can get in on? The IRA also includes provisions that will incentivize individuals and small business owners to buy an EV, or even reconsider how you heat your home or office. “This is an industry where, with the right incentive structure, there will be good adoption of EVs for guides—or for whoever is driving a lot,” says Conor Hall, director of Colorado’s Outdoor Recreation Industry Office.
Another way every Coloradan will feel the IRA? Some researchers are estimating the bill alone will create a 40% reduction in carbon from 2005 levels by 2030.
What’s in the IRA
Tax credits for Clean Energy, EVs, Appliances, and More
Hall notes that a lot of people he’s talked with in the outdoor industry were particularly excited about these tax credits… once they figure them all out. This is a huge—and complicated—category in the IRA that includes a slew of new clean energy tax breaks, and in some cases, extends existing credits for solar, wind, EVs, and even home appliances. Individuals and businesses can claim these credits, as can utilities—that’s designed to incentivize a lower-carbon grid.
If you’re a homeowner, you’ll be able to get tax breaks on things like putting solar panels on your house, swapping out your old HVAC for a heat pump (that’s $2,000 alone) or appliance upgrades, like ditching your gas range for induction (a $840 rebate).
There’s also a major new incentive on EVs, which get $14.2 billion alone in tax credits for both new and used electric vehicles in the new legislation. The state of Colorado already offers a $2,500 tax credit for new EVs and $1,500 on a two-year (or more) lease, but starting in 2023, Coloradans will also be able to claim a federal tax credit of $7,500 for a new car and $4,000 for a used EV. That’s $10,000 total on a new EV.
The EV tax credit is an example of how the IRA built layers in to support entire industries (think: mining, materials, engineering, manufacturing) here in America. For an EV purchase to qualify for a tax credit, a percentage of the battery components must be made or assembled in America, and that percentage increases every year. There are even requirements for where the battery minerals originated.
Because there are so many available tax credits, and because of those aforementioned layers, the White House launched a website, cleanenergy.gov, in September to help consumers suss it all out.
You’ve heard of methane, but think way beyond the cow burps: Landfills are sources of this powerful greenhouse gas, as are leaks in oil and gas production, and transportation. Methane is, unfortunately, very good at warming in the short term: Its lifespan in our atmosphere is shorter than carbon’s, but over 20 years, methane is 84–86 times more powerful when it comes to trapping heat. With so much warming power, many climate experts believe it’s a good idea to focus on reducing methane emissions, as we’re also drawing down carbon.
The IRA sets limits on methane flares and other forms of methane leakage at oil and gas operations—an issue familiar to Coloradans.
“Colorado’s at the forefront with state-level rules, regulations, and laws on this, but this actually does address leaks with financial penalties,” says Boykoff. But the IRA also sets a royalty fee on methane extraction on public lands and adds funding to the EPA for regulation of the new limits. “What’s promising here is that you can put these laws in place, but if you don’t monitor them, it’s worthless,” he adds.
Another feature of the IRA’s methane regulations is they go beyond regulating leakage at the point of extraction. “Part of the law is going to address the supply chain—across trucks and pipelines—and actually make a significant dent,” says Boykoff.
National Parks and Forest Funding
The IRA includes multiple provisions that will affect Colorado’s national parks and other public lands, including $1.8 billion for hazardous fuel reduction on USFS land and $250 million for resiliency projects on BLM land, as well as funding to hire in these understaffed agencies.
“We need a lot more to really dig out of this backlog, but this is a really serious investment,” says Hall. “I’m cautiously optimistic that we’re seeing some real funding being put toward wildfire mitigation—still not enough, but more than we’ve had historically.”
The IRA also gives the NPS a much-needed staffing boost.
“There’s $500 million set aside to hire for the National Parks Service, so that starts to address some of the chronic underfunding and chronic understaffing of the parks,” Hall said. “I was just talking with one of the Forest Service leaders here in Colorado earlier this week, and they are, for the first time in a long time, starting to hire for 12 positions, and that will help with permitting, which has been an issue for many of our outfitters, and that will help with recreation management. Across the board, it’s going to be really helpful.”
Green Bank, Urban Trees, and Other Environmental Justice Provisions
The IRA includes several provisions for environmental justice, ranging from funding for the Federal Highway Administration to improve safety and walkability in economically disadvantaged neighborhoods to funding urban forestry initiatives that will plant more trees in neighborhoods that are hotter due to historic racist policies. (In Denver, neighborhoods with higher heat vulnerability tend to have a lower average income and have more Brown and Black residents than cooler neighborhoods.)
“We were thrilled to see that urban tree initiative to support forestry and urban tree initiatives,” says Hall. “It’s tremendously positive for climate and urban areas. We’ve known for a long time we need to plant a lot more trees.”
The IRA also funds a $27 billion Greenhouse Gas Reduction Fund to launch a national “green bank.” It’s designed to be an incubator for innovative GHG reduction projects, and $15 billion is specifically earmarked for low-income and disadvantaged communities.
Boykoff notes this is another comprehensive aspect of the IRA—it acknowledges not everyone is a homeowner who gets those solar credits. “It earmarks money for community solar, so it’s not just for homeowners, it’s for the community,” he says.
What’s in the IRA That Might Surprise You
Oil and Gas Leasing
The IRA mandates the lease of federal public lands and waters for oil and gas drilling. The IRA ties wind and solar leases to oil and gas: Offshore and on public lands, the government can’t lease out public lands for wind or solar unless it has offered up a certain amount for oil and gas development.
However, though the leases must be offered to oil and gas, they’re not required to be sold. Boykoff says his take on this provision of the bill was optimistic. “You look at the way those land leases have actually been utilized, less than 3% that are leased are used,” he says. “Maybe many of these offerings will be leased and developed, but recent past has shown otherwise.”
What’s Not in the IRA
Civilian Climate Corps
Rep. Joe Neguse, a Democrat representing Colorado’s 2nd Congressional District, has been pushing for several years for a modern-day version of the Depression-era Civilian Conservation Corps. His 21st Century Conservation Corps Act would have funded $9 billion for a youth corps dedicated to climate resilience projects, with an eye here in Colorado toward wildfire mitigation. The modern CCC didn’t make the final version of the bill that went to the president’s desk, but considering Neguse’s enthusiasm for it, we doubt his fight for a new CCC is over.
Cover Photo: Yifu Wu on Unsplash