Comment on this story
Comment
With more than $300 billion in spending focused on reducing emissions and promoting clean energy production, the agreement reached Wednesday between Senate Majority Leader Charles E. Schumer (DN.Y.) and Sen. Joe Manchin III (DW.Va. .), could become the most significant national climate bill to date – containing many provisions that, if passed, would have a direct impact on the lives of millions of Americans.
Called the Inflation Reduction Act of 2022, the deal includes a set of incentives, such as tax credits for electric vehicles, or EVs, and sustainable home improvement efforts aimed at changing the way households consume and use energy , and can help people who want to make greener choices.
The Senate deal could be the most significant climate bill yet
The legislation has the potential to be “transformative,” said Leah Stokes, associate professor of environmental policy at UC Santa Barbara.
“The bill will make it more affordable for ordinary Americans to afford clean technology,” Stokes said. Her incentives, she added, could help offset some of the upfront costs associated with investing in more sustainable innovations, such as electric cars or energy-efficient heat pumps. In turn, Stokes and other experts emphasized that many Americans can expect to see significant reductions in their overall energy costs.
If households invest in climate-friendly and energy-efficient technologies, with financial support from the bill, it could help the average household save $1,800 on their annual energy bill, according to an analysis by Rewiring America, an electrification nonprofit. Another analysis by RMI, a clean energy think tank, found that tax incentives for clean energy sources that would increase the use of wind and solar over the next decade could save American households up to $5 billion over two years .
Here’s a breakdown of a few key incentives that could have practical and direct benefits for you. Note, however, that there are limits and eligibility requirements that, depending on individual circumstances, may determine how much you can benefit from some grants.
How the Schumer-Manchin climate bill could affect you and change the US
Tax credits for electric vehicles
Many buyers of new and used electric vehicles will receive a tax credit.
The real “game changer,” Stokes said, is that the bill would also remove a previous restriction that prevented manufacturers of popular electric cars from offering tax credits after selling a certain number of vehicles.
For new electric vehicles, a $7,500 tax credit can be applied at the point of sale. Those who buy used EVs can get a credit of up to $4,000.
This is how the electric vehicle revolution is going
The new pre-owned EV credit could be significant in helping the country transition away from fossil fuel-powered vehicles, said Joe Britton, executive director of the Zero Emission Transportation Association.
“It’s going to be one of the really unseen catalysts,” Britton said, noting that about 70 percent of Americans aren’t in the market for a brand-new car.
“Because once you get behind the wheel of an EV, there’s a 95 percent chance you’ll never go back,” Britton added, “and so exposing Americans of all income levels to electrification will have a really positive impact on our ability to transition.” “
While there has been discussion that paying people to remove non-EVs from the road might be a better approach, the bill’s provisions are likely to be “much simpler,” said Steven Nadel, executive director of the American Council on energy efficient economy. “Vehicle retirement programs are getting complicated.”
Almost anything would be a better incentive than Rattle Cash
Although tens of millions of Americans can take advantage of these tax credits, there are eligibility requirements.
For new EVs, the tax credit will apply to income below $300,000 “in the case of a joint return or surviving spouse,” $225,000 for those filing as head of household and $150,000 for single filers. For used EVs, income for the same categories cannot exceed $150,000, $112,500, and $75,000, respectively.
There are also limits on how much the vehicle can cost.
“If you want to buy an electric Lamborghini, sorry, it won’t qualify,” Nadel said.
To qualify for the credit, new EVs that are vans, SUVs or pickups cannot exceed $80,000, while other types of vehicles cannot cost more than $55,000. Used EVs may be eligible if they cost no more than $25,000.
The credit also depends on manufacturers producing qualifying vehicles, Britton said. But, he noted, the bill includes funding that will help achieve those goals.
Incentives for clean energy and efficiency
The bill contains numerous incentives, including rebate and tax credit programs, designed to encourage home improvements that would increase energy efficiency and use more clean energy technologies.
For example, the HOMES rebate program will reward eligible households for energy savings, Nadel said. People would typically receive $2,000 if they made changes that saved them 20 percent or more of their total energy costs and $4,000 if they save 35 percent or more. Those amounts could increase for low- or moderate-income households, which the bill defines as individuals or families with a total income below 80 percent of the median income of the area in which they live. Households in underserved communities would also be eligible for incentives.
In addition, the bill would encourage home electrification and efficiency improvement projects. Eligible people who install heat pumps for space heating or cooling; heat pump boilers; Electric pump clothes dryers; or electric stoves, hotplates, stoves or ovens, among other technologies, can benefit from rebates and tax credits.
What’s more, other home improvements, such as improving insulation, air sealing or ventilation to help increase energy efficiency as well, may become subsidized.
Europe is overheating. This air conditioner can help.
The legislation would also support solar energy for residential and public buildings.
The previous credit for residential solar projects was set to expire at the end of 2023, but if passed, the bill would introduce a 30 percent credit for households that install solar panels through 2032 before a subsequent two-year phase-down period.
“It’s a significant number,” Erin Duncan, vice president of congressional affairs at the Solar Energy Industries Association, said of the 30 percent credit. Duncan said the provisions in the bill “will allow the industry as a whole to have more predictability about what it can offer consumers and also allow consumers to make choices based on when it’s right for them.”
Other elements of the agreement would help make it easier for community solar projects — or projects that multiple community members can invest in and benefit from — to move forward, she added. “Community solar can be extremely important in democratizing who can participate in these energy choices.”
Funds for affordable housing improvements
The deal will also provide funding, including a $1 billion grant program, for owners or sponsors of eligible affordable housing to make properties more energy and water efficient.
Some eligible projects will include addressing climate resilience, as well as improving indoor air quality or sustainability, implementing low-emission technologies, including zero-emission electricity generation, energy storage or building electrification.
If affordable housing properties can be renovated using the bill’s funding, Nadel said it would mean “tenants in those apartments will have much more modern, comfortable, energy-efficient apartments” and lower utility bills. energy.
Overall, experts largely praised the climate deal, urging lawmakers to move quickly to pass the legislation so people can start taking advantage of these incentives.
“For consumers, this is a huge change in the most positive way that will make our communities more sustainable and help us keep our costs manageable,” Duncan said. “We’re also going to create tons of jobs for our neighbors or maybe ourselves, so I think that’s really exciting.”
Sign up for the latest news on climate change, energy and the environment, delivered every Thursday
Add Comment