In the summer of 2022 President Biden signed the Inflation Reduction Act into law. The law was the US’s largest investment in climate and clean energy ever. But what’s happened since then? Who has actually been implementing the bill?
Megan Hall: Welcome to Possibly. Where we take on huge problems, like the future of our planet, and break them down into small questions with unexpected answers. I’m Megan Hall.
In the summer of 2022 President Biden signed the Inflation Reduction Act into law. The name doesn’t say anything about it, but this was actually the US’s largest investment in climate and clean energy ever.
What’s happened since then? And will the law change under a new administration? Our reporters Juliana Merullo and Nat Hardy are here to fill us in.
Juliana Merullo: Hiya Megan!
Nat Hardy: Hey there!
Megan Hall: So remind me- why is the Inflation Reduction Act such a big deal?
Juliana Merullo: Basically, the Inflation Reduction Act, or the IRA, was this huge bill that put aside hundreds of billions of dollars for projects that address climate change.
Nat Hardy: To learn more about what’s happened since it was signed into law, we talked to someone who has had a big role in implementing it.
Seth Hanlon: I’m Seth Hanlon, Deputy Assistant Secretary for Tax and Climate Policy in
the Department of the Treasury.
Megan Hall: Wait a second. The Treasury Department? For a climate bill?
Juliana Merullo: I know, it’s surprising! But the Treasury has been one of the main departments in charge of carrying out the IRA. Seth says,
Seth Hanlon: the Inflation Reduction Act is the largest investment in clean energy and
climate in U.S. history and actually the bulk of those investments came
in the form of tax incentives
Megan Hall: Tax incentives? Is that like the tax credit I got for my electric car?
Nat Hardy: That’s one of them! But the IRA actually created or updated 20 different tax incentives. And a lot of people haven’t heard about some of the biggest ones: they’re called technology neutral tax credits.
Megan Hall: What do those do?
Juliana Merullo: Basically, even before the IRA there were tax credits that encouraged companies and utilities to build clean energy facilities and generate renewable energy. But there were limits on what specific technologies could be used for which credit.
Nat Hardy: These new technology neutral tax credits can be used for ANY are open to all clean energy sources. They give companies and utilities the option to choose which credit is better for them.
Juliana Merullo: To find out more, we spoke with Hannah Kolus. She’s a senior analyst at Rhodium Group, an economic policy think tank.
Hannah Kolus: The IRS tech neutral tax credits are the most important component of
the IRA from a decarbonization perspective
Juliana Merullo: Hannah and her colleagues at Rhodium estimate that the IRA tax credits have led companies and consumers to invest almost 500 BILLION dollars in clean energy technology.
Nat Hardy: That’s a 70% increase compared to the two years before the IRA!
Juliana Merullo: And even though we’re still falling a little short of our emissions reductions goals, these tech neutral tax credits have gotten us a lot closer. They’re expected to reduce US emissions by at least 30% by 2030.
Megan Hall: Wow! So what’s the Treasury’s role in all this?
Nat Hardy: Well even though these credits were included in the law, the Treasury still has to create rules and guidance that help people figure out if they’re eligible.
Seth Hanlon: “Soon after IRA passed, we at Treasury published requests for information from the public, essentially asking what’s the most important issues that need to
be clarified?”
Juliana Merullo: They got thousands of responses. Over two years later, they are still sorting through all of the public comments and finalizing rules. It’s a long, complicated process.
Megan Hall: Ok, but won’t all of these credits just be changed under the Trump administration?
Juliana Merullo: Seth says it’s important to remember that the tax credits themselves are law, so they can only be changed by Congress.
Nat Hardy: As for the guidance and regulations, once those are finalized, Seth says,
Seth Hanlon:: A future administration could reopen those regulations. They would have to go through the same process of proposing changes and then a public notice
and comment period. And consider all those comments before finalizing any changes to regulations
Juliana Merullo: Which could take another couple of years.
Nat Hardy: But a lot of these tax credits actually have some bipartisan support, in part because the majority of new investment in clean energy has been in Republican districts.
Juliana Merullo: So we really don’t know what will happen. But in the meantime, Seth says he and his colleagues at Treasury have spent the end of Biden’s time in office trying to finalize as much guidance as possible.
Megan Hall: We’ll keep an eye on that! Thanks Juliana and Nat!
That’s it for today. You can find more information, or ask a question about the way your choices affect our planet, at ask possibly dot org.
Possibly is a co-production of Brown University’s Institute for Environment and Society, Brown’s Climate Solutions Initiative, and the Public’s Radio.
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