If you’re like me, you’ve probably heard of the Inflation Reduction Act (or IRA) passed by Congress and signed into law back in August. The IRA has been called “The most significant legislation in U.S. history to tackle the climate crisis.” But what does that really mean? What is the IRA going to do for you and your family? And how is it going to tackle the climate crisis?
The IRA funds four main initiatives and has five funding sources. The Act allocates $369 billion for energy security & climate change, $4 billion for Western Drought Resilience, $64 billion to extend the Affordable Care Act, and over $300 billion to reduce the Federal deficit. We’ll be focusing on the money being doled out for energy and climate change as well as drought resiliency.
From a funding standpoint, the IRA’s biggest focus is climate change and energy. The authors of the Act have a goal of reducing CO2 emissions 40% by 2030 and plan to accomplish that in a myriad of ways. Private citizens will see expanded tax credits on electric vehicles (EVs) up to $7,500 per new vehicle and $4,000 for a used vehicle (with manufacturing location and income limitations). Over $9 billion will be distributed to the states to be given out in the form of rebates for up to 100% of the cost of energy-efficient electric technologies such as solar panels, battery storage, and heat pumps. These rebates will be distributed through each state’s energy office, so stay tuned to The Colorado Energy Office and Walking Mountains Science Center for more information on when the rebates will be available!
The IRA will also dole out $1 billion for energy efficiency improvements in public housing, $27 billion to fund a “National Green Bank” meant to fund efficiency projects in low-income communities, and $60 billion to incentivize domestic manufacturing of clean energy technologies. Finally, $60 billion will be allocated towards environmental justice initiatives, including clean energy in low-income communities and $3 billion to reconnect communities divided by highways. Finally, the Inflation Reduction Act will enact new royalties on oil and gas extraction and penalty fees on methane leakage.
On the drought resiliency front, the Inflation Reduction Act includes $4 billion for the Bureau of Reclamation to fund drought relief projects. The Bureau plans to distribute grants, contracts, and financial assistance that will reduce water demand & diversion and restore ecosystems in areas affected by drought. Priority will be given to projects in the Colorado River Basin, so we should expect funding to reach the rivers in Eagle County! The IRA also gives $550 million to water programs for socially or environmentally disadvantaged communities and $12.5 million in emergency drought funding for Native American tribes.
Here in Colorado, we should expect to see significant funding increases for everything from energy efficiency rebates, to electric vehicles, to drought resilience. Next time you’re looking to purchase a new vehicle, stove, water heater, or air conditioner, be sure to look at the rebates available from the IRA via the Colorado Energy Office and Walking Mountains Science Center. If you’re a business owner, tax credits will soon be available for up to $5 per square foot towards energy efficiency improvements.
The Communities that make up Eagle County and the Climate Action Collaborative have set ambitious goals to reduce our greenhouse gas emissions 50% by 2030 and 80% by 2050. The funding that is available in the Inflation Reduction Act will help us reach our goals by accelerating the transition to an all-electric, renewable, energy efficient future. We encourage you to take advantage of the available rebates for homes and businesses so you can save money and reduce our county-wide emissions!
Will Barror is the Sustainability Fellow at Walking Mountains Science Center. If you have questions about the Inflation Reduction Act, don’t hesitate to email him: willb@walkingmountains.org