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Inflation Reduction Act: the role “Build Back Better” will play for the environment

The Inflation Reduction Act (IRA), a core part of President Biden’s Build Back Better plan, was signed into law on August 16th, 2022. The legislation has been hailed as a $370 billion dollar investment into climate action. A majority of it–$251 billion dollars to be exact–has been set aside for clean energy initiatives in the public and private sector. So how will people and ecosystems directly benefit from the law?


Photo Credit: Adam Schultz

Tax Credits


Looking to purchase a new car? Qualifying electric vehicles (EVs) may be eligible for up to $7,500 and $4,000 in tax credits for new and used vehicles, respectively. The rules for qualifying EVs, however, are stringent and focused on domestic supply chains according to The New York Times, so be sure to check before purchasing.


Thinking about switching to solar? Homeowners who install residential clean energy may be eligible for a 30% tax credit (Residential Clean Energy Credit) on equipment costs. Home energy improvements also go beyond just solar panels.


Energy efficiency includes efficient windows and doors, insulation, air sealing, and appliances like heat pumps! The Energy Efficiency Home Improvement Credit provides up to $3,200 a year in tax credit for such upgrades (please note that the credit for heat pump installation is capped at $2,000).


Nature-Based Solutions


You may have heard of “nature-based solutions”, which refer to actions that harness nature’s benefits to fight climate change. These actions are touted as a win-win for people and the planet because they include protecting, restoring, and sustainably managing ecosystems. Some examples of nature-based solutions include restoring oyster populations in the New York City harbor to improve water quality and reduce coastal erosion, as well as building green roofs and strengthening tree cover to alleviate the urban heat island effect.


Rooftop garden, Photo Credit: Top Leaf Farms

A good portion of the IRA-funded nature-based solutions relate to agriculture. Because farming and animal agriculture take up nearly 50 percent of our land (USDA), there is a massive opportunity for industry to adopt climate-friendly practices that improve soil carbon sequestration, water conservation, emission reductions, and biodiversity.


More farmers and ranchers will be able to implement such practices, thanks to the grants provided by the Environmental Quality Incentives Program, which has received $8.4 billion dollars in funding; the Regional Conservation Partnership Program, which has received $4.95 billion dollars in funding; and the Conservation Stewardship Program, which has received $3.2 billion dollars in funding from the IRA. Conservation easements, which are frequently used to protect open space in ranches, farms, or land trusts, will also be bolstered by the $1.4 billion dollars allocated to the Agriculture Conservation Easement Program.


Nature-based solutions also include protecting and restoring existing ecosystems. Coastal states, tribal governments, nonprofits, and higher education institutions may draw from the $2.6 billion dollars in grants and technical assistance dedicated to coastal projects. Projects eligible for funding encompass conservation, restoration, protecting habitats and resources, and building resilience.


If you’re an avid visitor of our numerous National Parks, you may be happy to hear that $500 million dollars will fund increased staffing of the National Parks Service, and another $200 million dollars will fund national parks maintenance projects! An additional $500 million dollars will support conservation and restoration projects in areas covered by the Bureau of Land Management or National Parks Service (NPS). Our National Forests, which are also open to visitors and at risk of uncontrollable wildfires, will be receiving $1.8 billion dollars for prescribed burning and other efforts that remove flammable vegetation.


For our local ecosystems, $125 million dollars will be spent on projects in National Wildlife Refuges or state wildlife management areas. These projects must address the threat of invasive species and restore habitats to be eligible. Another $125 million dollars will be awarded to states, local governments, tribes, and private landowners for assessing and implementing recovery plans related to threatened and endangered species.


The IRA has also devoted $700 million dollars to the Forest Legacy Program for conservation easements and land interests. This program encourages protection of private forests and is administered by the U.S. Forest Service in partnership with state agencies. With up to 2.8 million acres of forest land protected so far, the additional funding ensures intact habitats for wildlife, clean resources, and opportunities for recreation for years to come!


And finally, a huge sum of $1.5 billion dollars will be available via grants for tree planting activities! Remember how green space is a key nature-based solution when it comes to combating the urban heat island effect? These grants will be awarded through the Urban and Community Forestry Assistance Program.


Environmental Justice


Environmental justice seeks to remedy the disproportionate climate and environmental harms that have been placed on marginalized communities. These include people of color, indigenous tribes, and low-income communities.


The IRA spotlights the growing environmental justice movement in a variety of ways. For example, the EPA’s Office of Environmental Justice and External Civil Rights will provide up to $3 billion dollars in grants and technical assistance to community-based organizations, nonprofits, or tribes. This money can be used to monitor air pollution, invest in zero-emission technology, address urban heat islands, and improve community engagement with public policy-making!


A better understanding of the differential pollution and climate burdens will have compounding benefits for the environmental justice movement. The Climate and Environmental Justice Screening Tool, which informs federal investments and decision-making, will also benefit from a portion of the $32.5 million dollars allocated to improving federal environmental data.


Indigenous people, whose cultures are closely intertwined with the environment, are particularly impacted by climate change. Several different funds are dedicated specifically for tribal communities: $75 million dollars in loans for developing energy resources under the Tribal Energy Loan Guarantee; $12.5 million dollars for short-term drought relief projects; $10 million dollars for tribal fish hatcheries; and $225 million dollars for habitat restoration projects, adaptation activities, and community-directed relocation. Because tribal relocation has a fraught past, “community-directed” relocation seeks to place decision-making in the native community’s hands. You can read more here and here on how several tribal communities are planning to use IRA funds.


Gov. Stephen Roe Lewis sharing how President Biden’s Bipartisan Infrastructure Bill will benefit the Gila River Indian Community. Kyle Knox/GRIN

Island communities are also heavily affected by climate change. The IRA will provide $15.9 million dollars to U.S. territorial governments for climate change planning and related projects. Native Hawaiian community representatives and local governments will receive $25 million for developing a Native Hawaiian Climate Resilience program. Climate change communication and research, environmental analysis, and adaptation planning in Hawaii are all eligible uses of IRA funds.


For students interested in agriculture and natural resources, the USDA will also allocate $250 million dollars total in grants to 1890, 1994, Alaska Native-serving, Native Hawaiian-serving, and Hispanic-institutions. These funds will support students with scholarships, paid internships, and opportunities.


Poor walking and transportation infrastructure in disadvantaged communities can compound issues for public health and economic opportunity. The IRA sets aside $3.2 billion dollars for transportation projects in disadvantaged communities. The Department of Transportation will also award grants to projects that improve walkability and affordable transportation access, and clean up existing environmental harms from historical transportation projects in these neighborhoods. Clean water is another crucial aspect to public health. The IRA also allocated $550 million dollars to the Bureau of Reclamation, focusing on completing water projects that deliver domestic water supplies to disadvantaged communities.


Underserved farmers, ranchers, and foresters will also benefit from the IRA, though in a more circuitous route. Nonprofits and educational institutions will receive support ($125 million) to provide technical industry assistance and outreach to underserved farmers. Another $250 million dollars will be available to government entities (tribal entities included) and nonprofits in the form of grants, specifically for projects that improve land and market access for underserved producers.


Black farmers were denied USDA loans at higher rates than other groups even as recently as 2020, and the issue similarly extends to Hispanic, Native, and women farmers in other aspects of agricultural support. $10 million dollars will fund equity commissions that investigate and address racial equity issues within USDA and its programs. The IRA also dedicates $2.2 billion dollars in financial assistance to producers who have experienced discrimination in USDA’s farm lending programs prior to January 1, 2021. While the details are still being determined, the USDA is currently seeking public comment on the program design.


The IRA also extends the Investment Tax Credit and Advanced Energy Project Credit through 2024, with environmental justice-related caveats. The Investment Tax Credit offers bonus credits for wind or solar projects in low-income or tribal communities. Companies can also earn bonus credits for attaining certain wage, apprenticeship, and domestic requirements, or projects located in an energy community.


“Energy communities” are 1) areas where a coal-fired power plant or coal mine was located, or 2) areas where a certain percentage of employment and tax revenues are linked to fossil fuel industries. And out of the $10 billion dollars dedicated to the Advanced Energy Project tax credit, $4 billion dollars are set aside specifically for projects in energy communities. This tax credit will support manufacturing facilities in implementing renewable energy or reduced-emission equipment.


Speaking of clean energy, we know that communities located near industrial facilities are also disproportionately affected by air pollution. Thanks to the Inflation Reduction Act, the EPA will award up to $170 million dollars in grants to “fenceline” communities, supporting air monitoring efforts and upgrading existing technologies.


Conclusion


While the Inflation Reduction Act was a massive investment into climate action, there is still much work left ahead. It is crucial that eligible parties, from your regular person applying for a tax credit to the indigenous communities to state governments, are aware of the resources and funding available for climate action.


The answer to “how will people and ecosystems benefit from the law” is not siloed to the list of programs, tax incentives, or dollars. Change also takes place at all levels of the government and community–even if the measures outlined do not apply directly to you, there are ample opportunities for us to address climate change!


If you are interested in reading more about the energy and transportation breakdown of “Build Back Better”, check out these articles:



Sources:

Inflation Reduction Act Guidebook

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