Inflation Reduction Act (IRA): Marking a Year of Catalytic Climate Action

The Inflation Reduction Act (IRA) was predicted to catalyze the clean energy transition in the United States when it was enacted one year ago—and it has delivered on that expectation. The IRA provided unprecedented investments in clean energy and infrastructure across industry sectors and has spurred significant reductions in carbon emissions. A recent Princeton University research study published in Science estimates that the IRA will cut U.S. carbon emissions between 43%-48% (from 2005 levels) by 2035.

A Brief Overview of the IRA

The IRA, signed into law by President Biden on August 16, 2022, represented the largest investment in climate action in U.S. history. The aim of the legislative clean energy and climate incentives was to stimulate the clean energy sector, to promote sustainable agriculture and to enhance the resilience of communities to the impacts of climate change. The IRA provided tax incentives and subsidies for clean energy projects, which bolstered massive private investments in wind, solar and other renewable energy technologies. The White House has prepared an IRA Guidebook to provide an overview of the available “clean energy, climate mitigation and resilience, agriculture, and conversation-related investment programs.”

Spurring the Clean Energy Revolution

The IRA prompted a paradigm shift in the U.S. energy landscape, igniting a clean energy revolution. In the past year, the country has witnessed an exponential surge in private investments in planned clean energy projects, with companies announcing over $270B worth of projects. We have also witnessed a necessary change in the clean energy manufacturing sector. Upwards of 100 major clean energy manufacturing facilities have been announced in the past year, marking a significant increase compared to the rate of investment in the preceding years. It is estimated that the IRA has already created more than 170,000 clean energy jobs (per the White House Fact Sheet), heralding a new era for renewable energy and manufacturing revitalization.

Accelerating Sustainable and Resilient Agricultural Practices

The IRA made significant investments in forest restoration and conservation. The IRA provided nearly $20B over five years for United States Department of Agriculture’s (USDA) Natural Resources Conservation Service (NRCS) to address oversubscription in popular conservation programs. These programs aim to promote climate-smart agriculture, which integrates the dual goals of sustaining agricultural productivity and mitigating climate change. The IRA also allocated $5B in additional funding to the Forest Service for forest health treatments to protect communities from wildfires and other investments. This investment is not only crucial for carbon sequestration but also for preserving biodiversity and ensuring the long-term sustainability of forest ecosystems.

Enhancing Climate Resilience for Communities

The IRA recognizes the importance of building climate resilience at the community level. It provides funding for infrastructure upgrades, making communities more resilient to the impacts of climate change, such as drought, heat and extreme weather. The Act has already awarded over $1B to help communities become more resilient and protect them from the disastrous impacts of climate change.

Driving Economic Growth and Green Job Creation

The IRA is not just about tackling climate change; it’s also about driving economic growth and job creation. The clean energy sector has already created more than 170,000 new jobs in the past year, and it’s projected to create more than 1.5 million additional jobs over the next decade. The IRA is also fostering economic growth in rural communities. It provided nearly $11B for rural electric cooperatives to upgrade their energy systems and enhance the quality of life in rural communities. This investment is creating jobs and lowering energy costs in rural areas, contributing to their economic growth and development.

Lower Energy Costs

The IRA is helping to lower energy costs for American households. As a result of the historic investments driven by the IRA, Americans across the country are already seeing savings on their home energy costs. This has shown that innovation in climate and sustainability pays real dividends.

A Year of Significant Progress and Promise for the Future

This milestone year for the IRA showcases significant strides made in advancing a clean economy the United States. While challenges remain, the progress made thus far is encouraging. As the IRA continues to be implemented and cabinet departments like the IRS, DOE and USDA and agencies like EPA continue to roll-out programs and guidelines, it holds the promise of driving further advancements in clean energy and infrastructure, climate-smart agriculture and sustainable development, and shaping the transition toward a more sustainable and resilient future.

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