The Inflation Reduction Act – Basics on the New Climate Bill
Earlier this summer, the Inflation Reduction Act (IRA) was passed by Congress and signed into law by President Biden. The legislation provides federal action in three main areas: taxes, healthcare and climate. To deliver approximately $370 billion in climate and clean energy funding, the Act makes reforms to the tax and healthcare systems, including a new minimum corporate tax, an extension of ACA health insurance subsidies and authorizing Medicare to negotiate lower prescription drug prices.
Local governments will have the opportunity to pursue clean energy initiatives, to strengthen their communities’ resiliency and to reduce emissions through competitive grants programs, local investments and clean energy tax credits provided for in the IRA’s climate provisions. To accomplish this, the Act reinvigorates some existing programs while creating several new ones. For example, it expands existing programs to help consumers save on their energy bills and to encourage upgrades to energy efficient appliances. It also creates new programs that offer substantial funding to local governments like the Neighborhood Access and Equity Grant Program, which will support projects that improve neighborhood equity, safety and affordable transportation access. Another new program, the Greenhouse Gas Air Pollution Implementation and Planning grants, will help local governments reduce greenhouse gas emissions. Strategics Consulting is watching for additional guidance on the existing and new competitive grant programs.
The IRA also allocates funding to federal agencies for a specific policy purpose without providing other details or directing the funding to a specific program. For example, it provides $1.3 billion in funding for transportation projects in disadvantaged communities. Strategics Consulting is monitoring how these broadly allocated funds will be implemented. There are many climate, infrastructure and clean energy provisions in the IRA worth noting for state and local stakeholders.