5 Ways the Inflation Reduction Act is Shaping The Clean Energy Future
A Two-Year Review

On August 16th, 2022, the Inflation Reduction Act (IRA) was signed into law by the Biden-Harris Administration. This historic piece of climate legislation is unprecedented in the amount of funding dedicated towards climate and clean energy programs. Now more than ever before, climate risk is gaining momentum as one of the most pressing issues facing businesses and communities around the world. This anniversary comes at a point where the U.S. is preparing for a change in administration during the November presidential election and faces challenges from the Supreme Court regarding regulations from federal agencies like the EPA.

During this crucial moment, we must take the time to reflect on the foundation set by the IRA, address challenges and opportunities, and look forward to which programs and issue areas are at the forefront of the national and international conversations on climate change and clean energy. As we reflect on how far we have come from last year’s update, here are 5 ways the Inflation Reduction Act is shaping the clean energy future:

1.  HISTORIC CONTRIBUTIONS TO CLIMATE RESILIENCY

The IRA has contributed 334,565 new jobs, driving $372 billion in new investments across 47 states and Puerto Rico. Along with more climate-positive job growth, exciting clean energy projects have been announced across the country. Now, on the second anniversary of the IRA, we can note the success of these programs and begin to set the foundation for climate and clean energy in the years to come. 

2.  IRA PROGRAM IMPLEMENTATION

We are now firmly in the implementation phase of the IRA rollout, which means that the exciting projects announced over the past two years have begun to fund projects and create opportunities across the country for businesses, communities, and individuals. 

The Greenhouse Gas Reduction Fund is a $27 billion program that combines financing and private capital through several programs, including the National Clean Investment Fund, Clean Communities Investment Accelerator, and Solar for All programs to fund projects that will reduce greenhouse gas emissions. 

The IRA created the Environmental and Climate Justice Program (ECJ Program) under the EPA to provide financial and technical assistance for environmental justice initiatives. The EJC Program has appropriated $2.7 billion for financial assistance and $200 million for technical assistance to be awarded by the end of September 2026. One of the prominent opportunities are the Community Change Grants. These grants support community-driven projects to strengthen climate resilience, transition to clean energy, and promote environmental justice. The request for proposals is open until November 21, 2024. 

A final example of the positive impact of the IRA is the American Climate Corps, a program that connects early-career climate professionals with clean energy jobs across the country. The portal opened in April of this year, and early-career individuals are now able to apply for jobs building clean energy infrastructure. These jobs train youth to work on climate solutions and prepare them for future career opportunities in clean energy, community resilience, public lands and waters, and more. 

These programs demonstrate how federal and state governments, communities, and businesses are working together to usher in the clean energy future. 

3.  PROTECTING CLIMATE SMART AGRICULTURE 

Every five years, Congress must pass a package of legislation, The Agriculture Resilience Act, that funds the Department of Agriculture (USDA), more commonly known as the Farm Bill. The current farm bill negotiations have been ongoing since 2021, and there are pieces within it that are crucial to funding and were originally part of the IRA. A historic  $20 billion in funding from the IRA is set to support oversubscribed climate-smart agriculture programs administered by the USDA. These “climate guardrail”  funds support USDA programs that promote regenerative agriculture practices that will increase farm resilience to extreme weather events, lower costs, improve yields, and ensure that the funding does not go to false climate solutions. These funds must be protected from legislative and financial cuts as the Farm Bill negotiations are finalized. 

The IRA Discrimination Financial Assistance Program is a $2.2 billion program that directs the USDA to provide financial assistance to farmers and ranchers who have experienced discrimination in USDA lending programs prior to 2021. This program is an essential step in recognizing the systemic harms to underserved farmers and ranchers and financially compensates these individuals. The IRA not only has looked forward to supporting climate programs, including clean energy and regenerative agriculture, but also has recognized the historic harms of past federal policies that have made the playing field uneven. As of July 31, 2024, the application process is closed and there have been around 43,000 farmers and ranchers who have received payments from this program. 

While much more in the way of reparations for past harms to individuals who have experienced discrimination by the US government is needed – including in most part to Black, Brown, Indigenous, and People of Color (BIPOC) farmers – ASBN commends this first step by the government to right the wrongdoings of the past and we hope this initiative will spark a change to a more equitable course for the future.

4.  GRID INTERCONNECTION

Critics of the transition to clean energy often cite outdated and misleading claims about clean energy technologies’ reliability, cost, and scalability. While some of these claims are real challenges to this transition –– many are overstated or blatantly incorrect. One of these common challenges is electric grid reliability and the difficulty of grid interconnection, especially in rural areas. This challenge requires funding and the removal of prominent barriers so that clean energy can be accessible to rural communities and tribes. 

Recently, the Treasury Department began a rulemaking process to update the clean electricity production tax credit and clean energy investment tax credit. Through the IRA, the credits were expanded with the goal of simplifying the process for businesses to qualify for credits for clean energy. These proposed simplifications include setting zero emissions power generation as a primary condition for qualifying for credits, and removing the end date of credits in favor of a phase-out strategy, ASBN submitted a comment on the proposed rule calling for careful implementation of this guidance to ensure that small businesses and tribal energy projects are included in the benefits of simplification and are not presented with undue burdens or financial barriers. However, it is critical that the final rule ensures that any simplified process does not open the door for fossil-fuel-powered plants to find loopholes to continue expanding their polluting activities. These rulemaking processes are important for businesses and business leaders to be aware of, as tax credits like these determine how the funding from the IRA will be distributed; In the case of this treasury rule, how tax credits for clean energy will function going forward beyond the IRA. 

5.  MANUFACTURING

One of the most exciting opportunities provided by the IRA has been the support given to accelerate the transition to clean energy manufacturing across the country, particularly in rural areas that were formerly industry giants in steel, coal, and other heavily polluting and non-sustainable practices. Massive opportunities exist for the outdated energy and manufacturing infrastructure to be repurposed and transformed into hubs of safe, reliable, and sustainable energy production. 

In 2022, the IRA was estimated to have the potential to create 900,000 jobs through an injection of $50 Billion in clean manufacturing investments. To recap, as of the two-year mark, over 300,000 jobs have been created for mechanics, electricians, construction workers, and many others that make clean energy projects a reality. Many of these newly announced projects are in areas where formerly there were coal and steel manufacturers; leading polluter industry giants. 

The IRA has added massive opportunity to accelerate the transition to clean energy or “green” manufacturing, revitalizing communities, providing energy at lower costs, avoiding environmental harm, and most popularly across political spectrums, for creating jobs. As the implementation phase of these programs continues, we can ensure that clean energy manufacturers continue to grow to meet the growing demands for clean energy across the country. 

A NOTE ON CHEVRON DEFERENCE

Our ability to continue to effectively implement the IRA funding and create greener jobs requires a transparent and consistent regulatory landscape. Regulation clarity is essential, but unfortunately, the U.S. Supreme Court (SCOTUS) has handed down two rulings that do the opposite.

Two cases decided by SCOTUS this year have the potential to cause far-reaching effects on how the regulatory systems impact businesses. These cases, Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce, overruled the long standing legal doctrine known as Chevron deference, named for the court’s holding in Chevron v. Natural Resource Defence Council, which recognized the practical knowledge and experience of agency experts in requiring courts to uphold an agency’s reasonable interpretation of a statute where there is ambiguity around a question presented. Now, when congress has not spoken directly to an issue at the center of controversy, judges across the country are permitted to substitute their varying opinions in place of agency experts, including overturning the opinions of scientists at the Environmental Protection Agency, doctors at the FDA, lawyers and accountants at the IRS, and labor experts at OSHA. Chevron deference has been an extremely critical part of the system of checks and balances that has provided transparency and stability in the regulatory landscape. Without it, businesses, communities, and federal agencies face vast uncertainty moving forward.

In the aftermath of these SCOTUS decisions, along with the threat of Congress using the Congressional Review Act (CRA) to challenge several critical rules made by the EPA and other agencies to strengthen clean air and water protections, there is massive uncertainty about how the future of regulations across the federal government will be written. Now is a crucial time to speak about the success of climate investments, like the IRA, and continue to work to protect and strengthen the pathways to a more sustainable clean energy economy. 

CONCLUSION

The Biden-Harris Administration has set lofty goals to achieve massive reductions in carbon pollution, improve conservation efforts, and commit to environmental justice standards within this decade. Federal lawmaking under the Bipartisan Infrastructure Law and the Inflation Reduction Act have spurred activity and investment in clean energy, conservation, and infrastructure to support a transition from harmful, polluting industry towards American manufactured sustainable energy. With two years of substantial federal funding now in place and a new administration on the horizon, it’s crucial to highlight programs that drive this transition and explore innovative solutions to address both emerging and enduring challenges.

Business – and life as we know it – is on the line, making it imperative for business leaders to engage in this transition. Climate risk is a real and present threat to businesses’ ability to thrive. Together, our members are advancing the business voice applauding these historic programs under the IRA and calling for more initiatives in the future that will continue to create jobs, strengthen the U.S. supply chain, and promote sustainability for our communities and a clean energy future. 

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The American Sustainable Business Network (ASBN) is a movement builder in partnership with the business and investor community. ASBN develops and advocates solutions for policymakers, business leaders, and investors that support an equitable, regenerative, and just economy that benefits all⁠—people and planet. As a multi-issue membership organization, ASBN advocates on behalf of every business sector, size, and geography. Join Here.