The U.S. Senate is considering legislation that supporters say would represent the nation’s largest investment in energy efficiency in history, and its biggest and best attempt yet to fight climate change.
The Inflation Reduction Act (IRA) aims to reduce inflation by increasing corporate tax revenue by closing loopholes and supporting programs that help consumers cut their energy bills through efficiency.
CUB supports the IRA because we have long argued that climate change will cost electric customers billions in higher bills in years to come, so fighting it through strong clean energy legislation is a pro-consumer issue.
The American Council for an Energy-Efficient Economy (ACEEE) called the IRA the largest combined investment in energy efficiency in U.S. history. “While far more investment will be needed to address the climate crisis, the IRA investments…will put us on a much better path,” ACEEE wrote. “And the investments will save money for American consumers and businesses, grow the energy efficiency and clean energy industries, improve public health, and strengthen energy security.”
The proposal is a compromise reached by West Virginia Sen. Joe Manchin and New York Sen. Chuck Schumer after another bill Build Back Better stalled last year. The Senate opens debate on the legislation as early as this week. It would require a simple majority, under a procedure called “budget reconciliation.”
The IRA aims to reduce emissions by 40 percent by 2030, and “would represent the single biggest climate investment in U.S. history, by far.” While the legislation touches on health insurance and tax issues, the legislation devotes the largest chunk of spending, $369 billion, to fight climate change, including…
- $9 billion in rebate programs to help consumers make energy efficiency upgrades and switch to more efficient electric appliances.
- 10 years of tax credits for making heat pumps, rooftop solar, electric HVAC and water heaters more affordable.
- $4,000 tax credit for lower/middle income drivers to buy used clean vehicles, and up to $7,500 tax credit to buy new clean vehicles.
- $1 billion grant program to make efficiency upgrades to affordable housing.
- Tens of billions of dollars in tax credits, grants and loans to support U.S manufacturing of solar panels, wind turbines, electric vehicles and batteries. (Get more details on the IRA.)
The clean energy measures are designed to combat inflation as well as climate change. Robbie Orvis, of the nonpartisan think tank Energy Innovation, said elevated energy prices have driven about a third of the 9 percent increase in the overall Consumer Price Index over this past year. “By helping Americans become less reliant on fossil fuels, the spending helps ease the global oil crunch and cut consumer bills,” Vox reported.
To fund these clean energy initiatives, the bill would levy a minimum 15 percent tax on corporations, like ExxonMobil, that have $1 billion+ in yearly profits. It also would reportedly add a 1 percent excise tax companies would have to pay on the amount of stock they repurchase. The legislation would beef up Internal Revenue Service enforcement to capture more unpaid taxes.
“We passed the Climate and Equitable Jobs Act in Illinois, and that was a big step forward,” CUB Director of Communications Jim Chilsen said. “But we’ve got more work to do, and we need strong legislation coming out of Washington. This is about consumer-friendly ways to fight climate change–protecting our planet and at the same time protecting our pocketbooks.”
Action Item: Support the Inflation Reduction Act Climate change gets worse, and energy prices get higher and higher. Please tell Washington to pass the Inflation Reduction Act.