U.S. President Joe Biden holds out his pen to U.S. Senator Joe Manchin (D-WV) as Senate Majority Leader Chuck Schumer (D-NY) and U.S. House Majority Whip James Clyburn (D-SC) look on after Biden signed “The Inflation Reduction Act of 2022” into law during a ceremony in the State Dining Room of the White House in Washington, August 16, 2022.
Leah Millis | Reuters
The Biden administration this year signed a historic climate and tax deal that will funnel billions of dollars into programs designed to speed the country’s clean energy transition and battle climate change.
As the U.S. this year grappled with climate-related disasters from Hurricane Ian in Florida to the Mosquito Fire in California, the Inflation Reduction Act signed into law in August was a monumental development to mitigate the effects of climate change across the country.
The bill is the most aggressive climate investment ever taken by Congress and is expected to slash the country’s planet-warming carbon emissions by about 40% this decade and move the country toward a net-zero economy by 2050.
The IRA’s provisions have major implications for clean energy and manufacturing businesses, climate startups and consumers in the coming years. As 2022 comes to a close, here’s a look back at the key elements in the legislation that climate and clean energy advocates will be monitoring in 2023.
Incentives for electric vehicles
The deal offers a federal tax credit worth up to $7,500 to households that buy new electric vehicles, as well as a used EV credit worth up to $4,000 for vehicles that are at least two years old. Starting Jan. 1, people making $150,000 a year or less, or $300,000 for joint filers, are eligible for the new car credit, while people making $75,000 or less, or $150,000 for joint filers, are eligible for the used car credit.
Despite a rise in EV sales in recent years, the transportation sector is still the country’s largest source of greenhouse gas emissions, with the lack of convenient charging stations being one of the barriers to expansion. The Biden administration has set a goal of 50% electric vehicle sales by 2030.
The IRA limits EV tax credits to vehicles assembled in North America and is intended to wean the U.S. off battery materials from China, which accounts for 70% of the global supply of battery cells for the vehicles. An additional $1 billion in the deal will provide funding for zero-emissions school buses, heavy-duty trucks and public transit buses.
U.S. President Joe Biden gestures after driving a Hummer EV during a tour at the General Motors ‘Factory ZERO’ electric vehicle assembly plant in Detroit, Michigan, November 17, 2021.
Jonathan Ernst | Reuters
Stephanie Searle, a program director at the nonprofit International Council on Clean Transportation, said the combination of the IRA tax credits and state policies will bolster EV sales. The agency projects that roughly 50% or more of passenger cars, SUVs and pickups sold in 2030 will be electric. For electric…