Two years after it passed Congress and was signed into law, the Inflation Reduction Act has become the most important climate legislation in United States history.

President Biden’s greatest climate achievement is giving Americans the opportunity to stop burning fossil fuels and lower their energy costs – while also fueling a boom in domestic manufacturing, cleaning our air and creating good jobs.

Federal laws such as the IRA, the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the U.S. Environmental Protection Agency’s standards to reduce air pollution from vehicles and power plants have caused the pace of annual emissions reductions in America to more than double this decade compared to the 2010s.

The IRA provisions are the catalyst for this transition to clean energy and have helped bring U.S. emissions down 37 percent from 2005 levels. That puts us about halfway to our national climate goals of reducing emissions by 50-52 percent by 2030 and on track to net-zero emissions by 2050.

But the IRA is not only an environmental success – it has also boosted the American economy by shifting manufacturing domestically, creating jobs, saving consumers’ money and attracting billions in new investment.

Follow the money

The IRA’s clean energy incentives will enable the U.S. to phase out fossil fuels by spending $369 billion on clean energy projects. Goldman Sachs estimates that these investments will spur cumulative investments of $2.9 trillion by 2032.

IRA investments are paying off. In the two years since the law was enacted, clean energy investments have created more than 334,000 new jobs and participating companies have invested nearly $500 billion in clean energy. That’s more than half of all private investment nationwide and 64% more than all oil and gas investment.

These economic benefits come from both parties. 85% of all investments went to Republican-controlled congressional districts, and Energy Innovation’s modeling projects that Texas ($15 billion GDP, 100,000 new jobs) and Florida ($10 billion GDP, 85,000 new jobs) will be the two states that benefit most economically from the IRA clean energy tax credits by 2030.

It’s important to note that the economic boost from the IRA reaches the communities that need good jobs the most. 81% of the total investment has gone to districts with below-average wages. Clean energy jobs pay about 21% more than average and can usually be obtained without a four-year degree.

Unlike previous economic recoveries, the increased use of clean technologies is decoupling employment and economic growth from greenhouse gas emissions in the United States. The United States is now on track to reduce the greenhouse gas intensity of its GDP by 57 percent by 2030 compared to 2005 levels.

Switching to clean energy

The IRA provisions also give Americans the opportunity to save money by switching from fossil fuels to clean energy.

The U.S. Treasury Department reports that consumers have already saved $1 billion on electric vehicle purchases through IRA provisions, for a total savings of $18,000 to $24,000 in fuel and maintenance per vehicle. Leasing an electric vehicle is now the most affordable option for new car buyers across the U.S., and charging an electric vehicle is cheaper than gas in every state.

The same goes for utility bills. The Internal Revenue Service reports that more than 3.4 million American families have already deducted $8.4 billion in clean energy and home energy efficiency tax credits from their 2023 federal income taxes, saving up to $3,100 per year depending on the technology installed. And new utility-scale clean energy generation supported by IRA tax credits will save customers $4.4 billion on their utility bills.

So what are all these IRA provisions that help Americans get good jobs, breathe cleaner air, and save money?

Accelerating electric transport

The IRA regulations have given a boost to clean transportation as the American truck fleet switches from expensive fossil fuels to affordable electricity.

• Income-eligible consumers will receive a credit of up to $7,500 toward the purchase of new electric vehicles, including light- and medium-duty trucks and personal vehicles. New electric vehicles are now less expensive than traditional gasoline-powered cars.
• Electric vehicle sales have accelerated to over 9% of total vehicle sales in the U.S. and are expected to reach 11% of total sales this year, up from about 2% in 2020.
• Auto and battery makers have announced $88 billion in investments for new domestic factories to produce electric vehicles and their supply chain components, aiming to boost global competitiveness by building a “battery belt” in the US Midwest and Southeast.

Building clean, affordable homes

Rebates for buildings and homes help Americans reduce energy costs, improve housing affordability, reduce carbon emissions, and improve social equity.

• The IRA provided $8.8 billion in federal funds for home and building rebate programs aimed at the seventh U.S. family living in energy poverty.
• The Home Electrification and Appliance Rebates (HEAR) program provides $4.5 billion to help low- and moderate-income households purchase energy-efficient appliances such as heat pumps and water heaters, as well as energy efficiency measures such as insulation and air sealing.
• The Home Efficiency Rebates (HOMES) program provides $4.3 billion for energy-saving retrofits in single-family and multi-family homes, with double the incentives for low- and moderate-income homes and multi-family housing units.
• The 45L Energy Efficient Home Credit offers incentives to builders to construct Energy Star-certified homes that are certified as Zero Energy Ready by the U.S. Environmental Protection Agency and the U.S. Department of Energy (DOE). The HEAR and HOMES programs, on the other hand, offer special incentives to builders who do the work, provided the installation occurs in a disadvantaged community.

Charging the American power grid

Electricity infrastructure is currently experiencing a renaissance because much of the expected IRA impact, particularly the tax credits, will come from the electricity sector.

Manufacturing – A Clean Industrial Renaissance

U.S. industrial emissions are expected to become the country’s largest polluter within a decade, but IRA regulations are fueling a renaissance of clean, Made in America industry.

• The IRA funding includes a nearly $6 billion investment to transform America’s industrial sector through the U.S. Department of Energy’s Industrial Demonstrations Program. This funding is designed to commercialize new technologies designed to reduce industrial emissions.
• The IRA also provides over $4 billion for green government procurement programs for low-carbon materials such as asphalt, concrete, cement and glass.
• The new 45x Advanced Manufacturing Production Tax Credit expands domestic production of certain components for wind and solar power, as well as batteries. It also covers the production of thermal batteries, which can eliminate emissions from industrial process heat and reduce its cost by two-thirds.
• The new Project Credit 48C directly promotes emissions reductions by offering a 30 percent investment tax credit for projects that retrofit an industrial facility with equipment that reduces emissions by at least 20 percent. It also offers a 30 percent investment tax credit for projects that retrofit, expand, or build new industrial facilities to produce clean energy technologies or critical minerals.
• The IRA granted additional lending authority to the DOE’s Loan Programs Office, enabling financing for the early adoption of innovative industrial technologies.

A clean economy is a healthy economy

Anniversaries provide an opportunity to reflect on what has happened and think about the future.

Two years after its founding, the IRA has launched a clean economic transition that cleans our air, creates good jobs, saves Americans money, and fights climate change.

While some IRA provisions like 48V are still being drafted and others like the HOMES and HEAR programs are still being implemented, the future looks bright for America’s most important climate action – and every state will benefit.