The climate and tax deal, announced Wednesday by Senate Democrats, will invest hundreds of billions of dollars in programs designed to accelerate the nation’s transition away from a largely fossil-fuel-based economy and towards cleaner energy sources. It will be poured.
Dubbed the Inflation Reduction Act of 2022, the law is a far cry from the ambitious multitrillion-dollar domestic policy and tax proposals sought by President Biden and passed by Democrats in Congress for more than a year.
What remains is a scaled-down but still important package born out of compromises between Democratic Senator Joe Manchin III of West Virginia and Senate Majority Leader Chuck Schumer of New York.
A quick look at the bill’s content shows that Democrats want to overwhelm the Republican opposition in the Senate as early as next week.
Zero-carbon power plant tax credit
The deal will provide billions of dollars in tax credits over 10 years to companies building new, emission-free sources of electricity such as wind turbines, solar panels, batteries, geothermal power plants and modern nuclear reactors. Become. Previously, Congress offered short-term wind and solar credits, which often expired in a year or two. The new bill’s credits will cover all zero-carbon technologies and will last at least 10 years, giving businesses more certainty.
Read more about electric vehicles
With the overall automotive market stagnating, the popularity of battery-powered vehicles is skyrocketing around the world.
The bill also expands tax credits for companies that capture and bury carbon dioxide from natural gas power plants and other industrial facilities before the gas is released into the atmosphere and heats the earth. It also provides tax breaks to keep existing nuclear power plants running. Since 2013, more than 13 nuclear reactors have closed nationwide, and as they tend to replace fossil fuels, closures often lead to higher emissions. It also provides subsidies and tax credits to states and power companies to reduce their carbon footprint.
Incentives for electric vehicles
The deal extends the popular consumer tax credit for new electric vehicle purchases to up to $7,500 and offers, for the first time, a $4,000 credit for used electric vehicles.
Only people with an annual income of $150,000 (or $300,000 for joint filers) or less are eligible for new car credits, and only people with up to $75,000 for used cars (or $150,000 for joint filers) are eligible. becomes. This program will run until the end of his 2032. Credits are available for new vehicles valued up to $55,000 and new pickup trucks, SUVs and vans valued up to $80,000. Another billion dollars in the bill will fund zero-emission school buses, heavy trucks, public transit buses, and other commercial vehicles.
help people lower their energy costs
The bill aims to reduce energy costs by investing $9 billion in rebates for Americans to buy homes and renovate them with energy-efficient appliances. Also included is his 10-year consumer tax credit that reduces the cost of heat pumps, rooftop solar, water heaters, electric HVAC, or electric heating, ventilation and air conditioning technologies.
Investment in domestic manufacturing
This package will secure $60 billion for clean energy manufacturing in the United States. This includes a $30 billion production tax credit for solar panels, wind turbines, batteries and critical mineral processing, and a $10 billion investment tax to build manufacturing facilities to produce electric vehicles and renewable energy. Includes deductions. energy technology.
These provisions are aimed at halting and reversing the migration of offshore clean energy production to countries like China. The bill would see him invest as much as $500 million in heat pumps and critical mineral processing through the Defense Production Act.
The bill would also set aside $27 billion for a “green bank” aimed at developing clean energy projects, especially in disadvantaged communities.
Crackdown on methane
The bill would also impose fees for excess methane leaking from oil and gas wells, pipelines and other infrastructure. Methane is a particularly powerful greenhouse gas. It dissipates more rapidly than carbon dioxide, but is many times more powerful at heating the atmosphere. The polluter will pay a fine of $900 per tonne of methane emissions that exceed federal limits in 2024, increasing to $1,500 per tonne in 2026.
Investing in low-income communities
The bill will invest more than $60 billion to help low-income communities and communities of color disproportionately burdened by the environmental and public health impacts of climate change. This includes subsidies for zero-emission technology and vehicles, funds to reduce the negative impact of highways, bus stops and other transportation facilities, and construction projects located near disadvantaged communities.
agriculture and forests
Another $20 billion will be set aside for programs that reduce emissions from cattle and other livestock, agricultural soils and rice production. According to the government, agriculture produces about 11% of the greenhouse gases emitted by the United States. The bill would also fund grants to support forest conservation, fire-resistant forest development, and increased urban afforestation, in addition to coastal habitat conservation and restoration.
Brad Plummer contributed to the report.