Two months ago, it appeared that the United States would fail to act on climate change. However, with the recent passage of the Inflation Reduction Act (IRA), we have a once-in-a-lifetime opportunity to rethink how we power our lives. The IRA includes $350 billion in climate investments, bringing a carbon-free economy within reach. And because the bill directs a significant amount of funding to underserved communities, our clean energy future will be equitable and just. But we must move faster!
Indeed, Earth’s habitability depends on how rapidly we decarbonize every sector of our lives, and we’re falling behind. The ambitious goal committed to in the 2015 Paris Accord to keep global warming below two degrees Celsius may not be met by many of the countries that signed onto the agreement. In the US, we lost precious years of progress under the Trump administration which sought to undermine our national climate goals by withdrawing from the Accord in 2018. And as the second largest carbon emitter, our responsibility to the global community is enormous.
Fortunately, we know what we need to do to meet our Paris commitments, and with the passage of the IRA, we now have the tools to do it. Part of our work will involve an expansive build out of new renewable energy resources supported by a 10-plus year extension of the investment and Production Tax Credits (ITC and PTC)—the most important policies supporting renewable resources in the US. Coupled with the first ever ITC for energy storage technologies, our grid can be 100 percent renewable day or night. Substantial funding for Grid-Enhancing Technologies (GETs), microgrids, electricity transmission planning, and non-transmission alternatives is also provided through the IRA, which will ensure our energy system can manage the coming electrification of other sectors. Working together, these innovations will strengthen our electrical grid, increase reliability, and lower energy costs across the country.
Revolutionizing our energy system will require a transformation of the clean energy supply chain and will enable us to have the technologies and manufacturing capabilities necessary to be fully self-reliant. Since his first week in office, President Biden has been focused on making sure the “future is made in America by all of America’s workers.” The IRA allocates $30 billion to accelerate US manufacturing of solar panels, wind turbines, batteries, and critical minerals processing which will create nine million US jobs over the next 10 years. These types of investments are critical to providing the long-term certainty our suppliers need to expand their US-footprints and bring back critical manufacturing lines to support clean energy deployment.
Renewable energy has quickly become the most cost efficient and reliable form of energy, but many Americans are still not enjoying the benefits of a cleaner grid. As of 2021, 31 states and the District of Columbia have implemented some form of renewable or clean energy standard to incentivize and encourage utilities and other energy-intense sectors to move away from gas, oil, and coal. While the IRA will supercharge the efforts in those states, it also makes real the opportunity for investments and clean energy progress in states that have resisted the clean energy transition, and which have historically relied on fossil fuels for their economic prosperity. These communities must be an active partner in this transition because the problems we need to solve are complex and our ability to solve them will dictate how rapidly we clean our grid.
Just last week, the western United States experienced some of the hottest temperatures ever recorded for the region. All-time records fell in many cities across multiple states. At the same time, more than 53 wildfires were burning across the country. When extreme weather happens, underserved communities are often hit hardest. These communities also host a disproportionately high number of fossil energy plants and, as a result, suffer some of the highest rates of pollution-related diseases. Urgent and sustained investment is needed to help close those polluting fossil facilities and create cleaner environments. The people in these communities deserve to see their energy bills lowered. And they deserve to feel engaged in and empowered by the clean energy economy.
The IRA prioritizes funding for underserved communities in many ways. First, it creates the first ever Greenhouse Gas Reduction Fund. This fund will direct $27 billion to support the deployment of low-and zero-emission technologies, with $20 billion going to nonprofit financing institutions to support rapid deployment of clean energy projects. An additional $7 billion is allotted for state/local/nonprofit programs to directly install zero-emission distributed technologies in low-income communities. Second, the IRA creates two new incentives to support clean energy projects that are located in or serve low-income communities. Those incentives will help deploy community solar and rooftop solar projects in underserved communities, delivering clean energy savings where it is needed most. Finally, the IRA provides $9 billion to help electrify appliances in LMI households, $1 billion for energy efficiency upgrades in affordable housing units, and $3 billion in grants to support neighborhood equity, safety, and affordable transportation access. Taken together, these investments represent a commitment to helping make the clean energy transition real for everyone, everywhere.
At Nexamp, we’re excited to get to work to make sure the IRA delivers on all its clean energy promises. We applaud the members of Congress and their staff, the President and his staff, and all the advocates and activists who made this moment possible. Nexamp’s CEO Zaid Ashai and I were honored to join the IRA celebration at the White House earlier this week. We look forward to watching this bill transform the way we power our lives and are grateful to play a role in that transformation.
Since we turned on our first community solar project, we’ve been working to make our product offerings simple and accessible by all. We’ve been working with regulators, utilities and community action agencies to streamline our low-income program enrollment and provide a better customer experience. We offer higher discounts for low-income subscribers and are eager to leverage the programs within the IRA to provide even greater savings to our low-income customers. We will continue to seek out new partners and new opportunities to deliver clean energy savings to underserved communities and help them feel the benefits of the clean energy economy.