By Pat Miller • Building Electrification Team
With the passage by Congress of two historic acts that have the potential to revolutionize climate action, we are celebrating what may be “Our Climate Moment.” The May Building Electrification (BE) monthly webinar presented by me and my husband, Steve Miller, highlighted the benefits and provisions of the two acts: the Inflation Reduction Act (IRA) and the bipartisan Infrastructure Investment and Jobs Act (IIJA).
Together, these laws will most likely provide more than $1 trillion in direct spending on climate projects during the next decade. I say “likely” because the legislation imposes no spending cap on the tax credits. The tax credit funding is limited only by the number of people who take advantage. Furthermore, the laws are expected to spur more than $4 trillion in new capital investment when individuals, companies, cities, and states invest money to reap the benefits of these laws. This will save money for American households, create more than nine million good jobs, and reduce energy bills for the entire country—all this in addition to the climate benefits themselves. And underlying it all is President Biden’s “Justice40” initiative to deliver 40% of all climate investments to disadvantaged communities to address pollution burdens that the fossil fuel extractive and exploitative economy has imposed.
At the core is something near and dear to our hearts: building efficiency and electrification to lower greenhouse gas emissions. For us, that’s the goal—100% clean electricity, plus weatherization for maximum energy efficiency. The individual incentives (rebates and tax credits) in the IRA are all voluntary. Nothing in the laws requires people to switch from gas or oil to electric appliances, but there are ample rewards for doing so. It can be done at any time over the next nine years, whenever it is convenient (e.g., when the water heater dies and must be replaced).
The different efficiency and electrification programs are complicated. Note that tax credits for building electrification and efficiency, solar and batteries, and electric vehicles are available to almost anyone who has income taxes to pay, as the credits work by reducing an individual’s tax liability. Tax credits are also available for commercial or multifamily buildings or even nonprofits. Some are in effect now in 2023 and can be applied for in your 2023 IRS tax return early in 2024. Also note that there is a maximum tax credit limit per household each year, so it is to your advantage to stretch your upgrades over several years.
The federal guidance for states to implement the rebate programs was just released in July 2023. The rebates vary by income levels, and annual totals are capped for each state. Rebates will be available as discounts on purchase of any covered product or service (brands and models must meet efficiency criteria). They will take effect when the state announces details and availability of the state programs, which will likely begin in early 2024.
It behooves everyone to become acquainted with these programs and plan for appliance replacements and efficiency upgrades to your home. Many appliances will wear out in the next few years. Replacing them with the more efficient versions will save you money and lower your energy bills forever.
Steve and I lowered our energy bills as demonstrated in a webinar account of our electrification journey. We replaced one of our gas furnace/AC units with an electric heat pump. After the first year (in our previously weatherized house), we calculated we saved 23% in energy costs and reduced our home’s carbon emissions by 83%. We recently switched to 100% clean local community solar, which guarantees 21% savings in electricity cost compared to JCP&L rates. We drive a plug-in hybrid and buy only two-to-three tanks of gas a year. We recently replaced a leaking gas water heater with an electric heat pump. Our goal is net zero and all-electric before the IRA runs out. We are already over 80% there.
Resources
May Webinar: https://shorturl.at/csHK5