At the one-year anniversary of the historic Inflation Reduction Act (IRA) signed last August, you may be wondering where things are in the implementation process. There are many working parts for such a large and complex bill (a whopping 725 pages!). What’s important for you to understand is how this will impact you directly including the many money-saving incentives you can take advantage of — now and in the future. Let’s review: (1) what the IRA contains, (2) incentives and programs funded by the IRA, (3) recent updates, (4) and specific resources for California residents.

Summary of the Bill

The IRA was signed into law on August 16, 2022, and targets various sectors of the economy including climate and energy, health care, and taxes. On the climate front, it allocates $369 billion in energy security and climate change programs over the next ten years. The bill also includes health care provisions that invest $64 billion, increases funding for the Internal Revenue Service, and more.

The scale of the climate and energy provisions makes this the most ambitious piece of climate legislation in the United States, a monumental step forward for the future of our nation and reaching our climate and energy goals. According to Bipartisan Policy Center, here are just a few areas where these investments are, or will be, going:

• Clean Vehicle Tax Credits

• Residential Energy Efficiency

• Carbon Management

• Energy Innovation

• Community Investment and Energy Justice

• Clean Energy Financing

And much more!

The two main sources of pollution in the United States are emissions from transportation and energy production, respectively. Last year the Rhodium Group came out with a report on the IRA’s impact on greenhouse gas (GHG) emissions. They found that the IRA would drive US net GHG emissions down to 32-42% below 2005 levels in 2030, compared to 24-35% without it. 

As Fred Krupp, President of the Environmental Defense Fund, stated when the bill was signed, “It’s a new day in the fight against climate change, thanks to the Inflation Reduction Act.… It will make a difference in people’s lives, cutting energy costs and creating high-quality jobs.” A new sense of hope has been created as we now have tangible programs and methods for an energy transition that is sustainable for our future.

Ways Americans Can Save

Individuals can save money today while ensuring a cleaner future. The Environmental Defense Fund outlined 8 ways the IRA can save you money on key topics like home heating, cooling, air sealing, and EVs.

Incentives for homeowners
1: There are tax credits on qualifying electric vehicles. Up to $4,000 for the purchase of a used EV and up to $7,500 for a new car. And in 2024, these credits will be issued through dealerships at the time of sale.

2: The IRA supports a grid-wide move to cheaper, cleaner sources of electricity, reducing both the cost to consumers and pollution, saving a typical household up to $220 per year over the next decade without having to change a thing.

3: Heat pump water heaters will be eligible for a rebate of up to $1,750. An upgraded breaker box (to help prepare for an all-electric home) may be eligible for a $4,000 rebate. 

4: Did you know that gas stoves leak methane even when they are turned off? The IRA provides a rebate of up to $840 for an electric stove, cooktop, range, or oven to make this switch more affordable.

5: Improving your home’s insulation seals energy leaks, saving you money on your monthly utility bills, and you can save up to $1,600 through the IRA. You can find out if you are eligible for this rebate here.

6: Heat-pump clothes dryers use about half the electricity as traditional dryers. Switching to this energy-efficient alternative could provide you with a rebate of $840, check if you are eligible here.

7: A heat pump can heat and cool your home, using less energy and efficiently providing comfortable temperatures. Households can qualify for a tax credit of up to $2,000 for the purchase of an electric heat pump. And for households with low incomes, you can receive a rebate of up to $8,000 on installation. Explore these incentives here. 

8: It is a great time to install solar panels! The IRA provides a tax credit of up to 30% to households that invest in clean energy such as solar. Here you can explore a guide to this tax credit.

Renters benefit too. Though renters and residents living in multifamily properties might not have direct control of utilities and appliances in their buildings, they can still benefit from incentives from many programs outlined by the IRA. One of the rebate programs, the Homeowner Managing Energy Savings (HOMES) program, benefits both single-family homes and multifamily buildings. This program will support performance-based rebates for whole-house energy efficiency upgrades for multifamily property owners to retrofit their units or buildings. Another program, the High-Efficiency Electric Home Rebate Program (HEERA), allows homeowners to upgrade inefficient and non-electric appliances and is open to both single-family and multifamily property owners. Another program is the Department of Housing and Urban Development’s Green and Resilient Retrofit Program. The IRA provides $1 billion in direct funding for owners of Section 8 multifamily properties and HUD-assisted housing to improve energy, water efficiency, air quality, and more. Lastly, for wind and solar projects, the low-income communities bonus credit provides tax credits for qualifying projects based in low-income communities. 

Green jobs. The IRA is also driving a boom of green jobs, ushering in a new age of economic prosperity and opportunity for individuals and businesses alike. By 2030, the law is set to double the clean energy workforce to employ nearly 1 million Americans. Climate Power US came out with a report on July 25 totaling the new clean energy jobs created since the IRA was passed. More than 170,600 new clean energy jobs have been created for electricians, mechanics, construction workers, technicians, support staff, and more. Not only have many jobs been created, higher paying jobs have been as well. According to research by the Brookings Institution (a leading policy think tank), landing a clean energy job can result in an 8%-19% income increase. Many of these jobs with higher wages offer good benefits without the requirement of a four-year degree, making them accessible to many Americans. The Climate Power US report also provides snapshots of clean energy projects in states across the country, by sector, and by congressional district. Overall, this boom of green jobs signifies a promising future for many Americans in clean energy.

What’s New

How much progress has been taking place thanks to the momentum generated by the IRA? Let’s go through some recent updates.

On July 14 the Biden Administration announced it is making $20 billion available from a federal “green bank,” created by the IRA and overseen by the Environmental Protection Agency. The general concept of a green bank is to reduce costs and make capital more affordable and available to clean energy projects. These newly available funds are for clean energy projects such as residential heat pumps, electric vehicle charging stations, and community cooling centers. The first program is the National Clean Investment Fund, receiving $14 billion to provide grants to up to three national clean financing institutions. The EPA stated this will enable them to partner with states and the private sector to provide affordable financing for tens of thousands of clean technology projects nationwide. 

The second program, Clean Communities Investment Accelerator, will provide grants for up to seven nonprofits that will work with other groups to provide access to investments needed to create clean technology projects. Applications under these programs are due this fall, with grant awards expected next year.

Then on July 27, the Department of Energy announced it is accepting applications for state and territory implementation of the two Home Energy Rebate programs created by the IRA. These two programs will provide $8.5 billion to states and territories to lower energy costs and increase efficiency in American homes by making home energy upgrades more affordable. The goal is to ensure all communities have access to affordable, reliable, clean electricity and help deliver on the President’s ambitious clean energy and climate goals.  

If you are interested in checking out more updates and actions taken by state agencies, here is an IRA tracker tool created as a joint project of Columbia Law School’s Sabin Center for Climate Change Law and the Environmental Defense Fund. 

So far, there are 272 new clean energy projects nationwide, totaling $278 billion in new investments. In other words, programs are being created, funds are being doled out, and a year into the bill being signed, we have seen large changes, with much more on the horizon. 

Incentives in California

How can California residents take advantage of these incentives — both those that are currently available as well as programs rolling out soon? Here are some resources to help.

• The Switch Is On campaign was founded in 2019 by the Building Decarbonization Coalition (BDC) to educate everyone about the importance of home electrification. In May 2023, they updated their incentives guide that walks you through each type of incentive and appliance switches/upgrades. You can also use their incentives finder tool to look up incentives in your area, speak to experts, and explore income-qualifying programs.

• In California, the HOMES rebate program (mentioned above) sets aside up to $8,000 per single-family home and $400,000 for a multifamily building, depending on energy savings and household income. The HEEHRA program allocates up to $14,000 for appliance and home upgrades. This program largely applies to low- or moderate-income (LMI) households and owners of eligible LMI multifamily buildings. Both programs will be available in 2024. Many of these major upgrades would require renters to work with their landlords. Renters can try having open conversations with their landlord or property owner, showing them the math on specific upgrades that can save them money now and in the future.

• It is also important to understand why making the switch is so important. Acterra’s Green@Home program offers education and outreach to residents on simple ways to reduce the use of fossil fuels, saving both carbon emissions and money. Green@Home hosts a virtual workshop series with featured speakers exploring electrification topics such as EV charging, heat pumps, induction cooking, and more. You can check out past workshops and watch other educational videos here. 

Where We Are Now

Some concluding thoughts: A year later, with thousands of jobs created, many incentives and tax rebates available, and even more programs coming soon; the Inflation Reduction Act is reshaping the outlook for our future. As a young environmentalist myself, the IRA gives me great hope that we continue to trend toward a clean and just energy transition. Though this energy transition won’t happen overnight and is long overdue, seeing all the progress, innovation, and actions toward clean energy is extremely promising.