“Think of the IRA as a free electric bank account with your name on it…” — the Go Electric Now guide to the Inflation Reduction Act
Have you ever wanted to put solar panels on your roof or drive an electric car, but couldn’t quite afford it? Would you like to insulate your house to stay warmer in winter and cooler in summer, but found that too expensive?
Well now, the people-friendly/climate-friendly financial incentives built into the new Inflation Reduction Act (IRA), signed into law by President Biden last August, could provide the funds to help you achieve your personal environmental-citizen goals.
If this sounds like a sales pitch, it is, because the more I learn about the IRA, the more I’m sold on its benefits for people — homeowners, renters and workers — and for the planet. The bill’s provisions could set the U.S. on a path to a near zero-emission energy system, attained within two or three decades.
Since America is the world’s largest per-capita greenhouse gas emitter, and second-largest emitter overall, there will be a trickle-down effect from our progress. Because we will mostly electrify our largest emission sources — our transportation and housing sectors — our fossil fuel consumption will drop precipitously. This will likely force up the price of fossil fuels worldwide, making alternative energy production — for which we can provide much of the technology — more attractive to poorer countries.
Meanwhile, the E.U. is on its own path toward low emissions. As I noted in my last post, the International Energy Agency, which tracks energy financing and investment, pointed out in its 2o22 annual report that “Renewable power is being turbocharged as countries seek to strengthen energy security [in the wake of Russia’s invasion of Ukraine].” By 2022-2027, the report continues, “global PV capacity [alone] is set to [outstrip coal and] become the largest power capacity in the world.”
How can the IRA help you to help save the planet? The benefits for property owners are of two basic types, direct, upfront discounts for building energy upgrades, and tax credits for installing new alternative-energy equipment. All the incentives are significant.
For example, you can get up to a $4,000 upfront discount for upgrading your electrical panel to a new “smart” panel. Getting rid of your furnace and installing a heat pump can net you $8,000, and upgrading windows and insulating can earn $1,600.
These improvements will cut your annual energy bills while also reducing the demand for electricity, most of which is still generated by fossil fuels. (The IRA also provides incentives for power companies to upgrade, but those will be discussed in a different column.)
Tax credits covering 30% of the cost of rooftop solar installations are available now. And a credit of $7,500 per new electric vehicle ($4,000 for a used model) will be available in 2023, as will the many other discounts and credits from the IRA. Additionally, direct discounts and tax credits can be combined in many cases.
To learn more, go to rewiringamerica.org/app/ira-calculator. For a more in-depth overview of the IRA, with clear, basic explanations of each technology it incentivizes and detailed, illustrated case studies of how it works for people with varied incomes and housing conditions, see the Rewiring America: Go Electric Digital Guide, follow the links and download the PDF. Finally, for a broad view of the many facets of the IRA beyond home energy upgrades, such as its investments in indigenous communities and schools, simply google Home – Rewiring America.
The IRA and similar renewable energy investments worldwide can put us on a path to keep the planet’s temperature rise below the critical threshold of 1.5ºC, a goal that seemed increasingly unattainable just a year ago. Suddenly, the future is looking much brighter at our ecological house.
NOTE: For recent historical context, see the July 28, 2022 Firebird Journal article Climate action falls to the states: for now that discusses how a Supreme Court decision on EPA regulation of coal fired power plants, combined with the defeat of an earlier climate bill in the Senate left U.S. climate action in the hands of the individual states prior to the passage of the Inflation Reduction Act.
Editor’s Note: A version of this article appeared previously in other publications as part of an ongoing series called “Your Ecological House,” written by Philip S. Wenz, the publisher of Firebird Journal.