Citizens’ Climate Education: The Inflation Reduction Act Will Support Homeowners and Communities

Guest opinion by Tony Hays

After months of congressional wrangling, the Inflation Reduction Act is now law. Provisions within this law set aside $385 billion for climate and energy proposals, thanks to a compromise agreement with Senators Joe Manchin of West Virginia and Chuck Schumer of New York, the majority leader. This includes:

• $260 billion for clean energy tax credits to incentivize solar, wind, hydropower and other sources of renewable energy
• $80 billion that includes new rebates for electric vehicles and green energy at home
• a $27 billion “green bank” to incentivize public and private investment funds in energy technologies and infrastructure
• $1.5 billion in rewards for cutting methane emissions. 

Of particular interest for potential electric vehicle (EV) buyers is that the rules for federal tax credits for new cars are changed. Under the prior system, a maximum credit of $7,500 was available for the first 200,000 vehicles sold by each manufacturer, and Tesla and General Motors had passed that limit. Under the new rules, the limit on the number of vehicles sold is removed, although there are constraints on where EV batteries are manufactured, electric motor parts are sourced, and vehicles assembled. In addition, there are household income constraints. However, a new $4,000 credit is available for the purchase of used EVs. All these credits and restrictions come into effect on different dates, so due diligence is required if you want to maximize the benefits of buying an EV. 

For homeowners, the High Efficiency Electric Home Rebate provides a credit up to $8,000 to install heat pumps that can both heat and cool and a credit up to $1,750 for a heat pump water heater. In addition, a credit up to $840 will be available to offset the cost of heat pump clothes dryer or an electric stove. The home may well need additional electrical power capacity, and the program offers up to a $4,000 rebate to upgrade the electrical panel, and up to $2,500 for improvements to wiring. Besides the electrical systems, a rebate of up to $1,600 will be available to insulate and seal the house. This is encouraging news if you want to reduce your carbon footprint and save money at the same time.

These actions are expected to result in a reduction of US emissions by about 42% below 2005 levels by 2030, which is getting closer to the administration’s goal of 50-52% by that date.  But there’s still a long way to go to reach the Paris Agreement goal of net zero by 2050.

Tony Hays has worked in aircraft design and operations in the UK, Canada, and the US since 1962, and currently teaches classes in aircraft design, mostly in Asia.  He has a special interest in the design of aircraft and their propulsion systems to reduce carbon emissions.  He is a member of the south Orange County Chapter of Citizens Climate Education.