The Climate Bill: An Overview
The Details Behind the Inflation Reduction Act
What does the Inflation Reduction Act, or Climate Bill, mean for businesses?
Congress recently passed the largest climate bill in U.S. history with the Inflation Reduction Act (IRA) becoming law on August 16th, 2022. The provisions of the IRA include many new solar incentives for businesses, municipalities, non-profits, rural companies, low-income communities, and more. These incentives include a new 30% Federal Tax credit for the next ten years, as well as additional bonus credits for projects installed in low-income or rural communities, for example.
The passing of the IRA is expected to move the U.S. much closer to its climate goals, which include the creation of a “carbon pollution-free power sector by 2035 and net zero emissions economy by no later than 2050.”
What does this mean?
- Federal Investment Tax Credit (ITC) is increasing to 30% for both commercial solar and residential solar projects, and is now a transferable credit
- The 30% ITC now applies to standalone storage/battery projects
- Nonprofits and municipal and tribal governments are now eligible for a 30% direct pay tax credit
- Bonus credits for meeting certain domestic content requirements, locating in energy communities, or allocated credits for being on qualified low-income property
- Additional REAP (Rural Energy for America Program) funding available for agricultural producers and small businesses in eligible rural areas
- Tax credits up to $7500 for new electric vehicle purchases and $4000 for used electric vehicle purchases
While this law provides ample financial savings and investment incentives to the industry, it also creates a new path for businesses to meet crucial ESG/CSR goals that they have set.
A note from GreenSpark leadership
The Inflation Reduction Act is a monumental moment in the clean energy revolution. When the President signs the bill into law, Clean Energy Businesses like GreenSpark Solar will be presented with a more level playing field to compete with massive utility companies and the fossil fuel industry. We have been in business for 20 years and to date have never had more than a few years of runway. Having ten years of runway will give GreenSpark the ability to scale our efforts to combat the climate crisis, to gain the financial wherewithal to end the inequities in the energy business that are exacerbated by the local utilities and the fossil fuel industry here in Rochester. The Inflation Reduction Act when signed into law is also going to allow GreenSpark to build on and improve our vision to be a choice employer and provide for our people at every turn while employing hundreds more than we already do!
– Kevin Schulte, CEO
The climate provisions in the Inflation Reduction Act (IRA) are truly historic and represent a massive investment in building American manufacturing to support our fight against climate change. Is it perfect? No. The gaps will be filled by the countless innovative actions of small businesses such as GreenSpark Solar and others that will utilize the provisions of this bill to accelerate market based solutions to climate change. The IRA will provide for the democratization of renewable energy savings, the creation of good and meaningful jobs here in Rochester and beyond, as well as sustainable economic development that’s good for businesses, communities, workers and the planet.
– George McConochie, COO
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