Inflation Reduction Act Proposal Includes Energy and Climate Investment

The proposed “Inflation Reduction Act” from Senate Majority Leader Chuck Schumer (NY) and Sen. Joe Manchin (WV) is a budget reconciliation package with a range of energy investments and incentives, as well as deficit-reducing tax measures, that Democrats would have to pass without Republican support. In total, the plan would spend around $433 billion, with $369 billion directed to energy and climate activities.

The plan has $60 billion of incentives to bring clean energy manufacturing to the U.S, including production tax credits to accelerate U.S. manufacturing of solar panels, wind turbines, batteries, and for investment in critical minerals processing. The plan also includes investment tax credits to build clean technology manufacturing plants that make electric vehicles (EVs), turbines and other products. In a win for electric vehicle manufacturers, the bill includes a $4,000 consumer tax credit for lower/middle income individuals to buy used clean vehicles, and up to $7,500 in tax credit to buy new clean vehicles.
 
Other energy incentives include $9 billion in consumer home energy rebate programs, focused on low-income consumers, to encourage electrification of home appliances and for energy efficient retrofits. The bill provides 10 years of consumer tax credits to make homes energy efficient and run on clean energy, making heat pumps, rooftop solar, electric HVAC, and water heaters more affordable. The bill also includes a $1 billion grant program to make affordable housing more energy efficient.
 
At the time of publication, procedure for the Inflation Reduction Act remained unclear. Subscribe to ASME Capitol Update for additional information.