House Passes Inflation Reduction Act, Significant Energy Policies to Become Law

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by KnowESG

The United States House of Representatives passed the Inflation Reduction Act, essentially making the country’s most ambitious energy and climate policies on record law.

The legislation includes nearly $370 billion for energy incentives and programmes, and President Biden is expected to sign it this week. It passed the House across party lines 220-207, with every Democrat voting in favour while four Republicans did not vote.

It is the second significant piece of legislation aiding US sustainability efforts that Congress has passed in less than a year. The $1 trillion infrastructure bill includes billions for energy-efficient buildings, water, and nationwide electric vehicle charging stations.

The Inflation Reduction Act, however, puts significant money toward specific energy and climate initiatives. The legislation claims it will reduce emissions in the US by 40% based on 2005 levels through 2030, which several outside studies support. Biden has a goal to reduce emissions by at least 50% by that time.

Incentives and tax credits in the bill include domestic renewable energy production and commercial deployment of wind, solar, hydrogen, batteries, and other low-carbon energy sources. The act allocates $30 billion in incentives for companies that produce those energy sources, including tax credits over 10 years. The law also includes $30 billion to help utility companies transition to clean energy.

Additionally, the legislation includes $10 billion in incentives for domestic manufacturing of electric vehicles and $6 billion for clean manufacturing of heavy industries such as cement and steel. A methane reduction program is included with fines that increase to $1,500 per metric ton above established limits by 2026, as well as environmental justice grants.

It also has significant incentives to increase carbon capture and storage systems, increasing a tax credit to $85 per metric ton of carbon dioxide captured from $50 per metric ton. The carbon capture market is growing and is expected to be valued at $5.35 billion by 2030, according to Grand View Research.

The Inflation Reduction Act moved quickly through Congress after being introduced at the end of July, gaining Senate approval on August 7. Other aspects of the law include tax and healthcare provisions.

Source: Environmental Leader

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