August Federal Advocacy Roundup : The Inflation Reduction Act

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August has been a busy time for the federal government! The White House and Congress have been active, from enacting climate legislation to issuing a second executive order following the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization to advancing superchip production.

The big news, of course, is the Inflation Reduction Act (IRA), which passed last week on August 16th. Securing the largest-ever effort to tackle climate change, the Inflation Reduction Act invests ~$490 billion dollars over a 10-year period. The climate-related provisions can be broken down into three buckets of incentives: (1) incentives for consumers to buy energy-efficient products, (2) incentives for manufacturers to produce clean energy products, and (3) incentives for manufacturers and governments to pursue and implement climate-friendly policies. Notably, the IRA’s climate change provisions focus on offering positive incentives to these groups instead of using the threat of regulatory action to curb harmful activity. And although the bill concentrates its spending on climate change, it also includes efforts to combat rising healthcare costs and to raise taxes on the wealthy.

Climate scientists and economists expect the Inflation Reduction Act to cut emissions by 40% by 2030, and estimate that it will create 9 million good paying jobs through a combination of public and private investment. While remarkable, this reduction of emissions falls short of the 50% reduction that many experts say is needed to prevent the worst outcomes of climate change, a reduction that would have been achieved by the much bolder ~$2 trillion Build Back Better bill. In order to obtain the support of Senators Manchin and Sinema, the strengths of the bill have been undermined by concessions granting fuel pipeline permits and tax cuts on private equity compensation. Additionally, passing the bill via a budget reconciliation process constrained what types of expenditures could be included.

Taken together, these dynamics significantly weakened the bill’s impact but also ensured its passage. Some environmental justice organizations have been critical of the bill’s weaknesses and missed opportunitiesSo, while the bill is an important step forward, it is clear there is much more work ahead.

Below, we have provided 1) a summary of the Inflation Reduction Act and 2) selected toplines from President Biden’s two executive orders on reproductive rights following the Dobbs ruling.

The Toplines

💳 Incentivizes Consumers to Go GreenThe bill will provide consumers with a mix of tax credits and tax rebates on purchases of electric cars, high-efficiency home appliances, heat pumps, solar panels, and other climate-friendly products. 

🌄 Environmental Justice: The fund specifically appropriates ~$60 billion towards efforts to ameliorate legacies of environmental racism and classism. 

🏗 Incentivizes Manufacturers to Build Green Technology: The bill extends and expands tax incentives for solar and wind energy, and invests billions in cleaner battery technologies. 

📃 Closes Tax Loopholes: The bill enacts a 15% corporate minimum tax, a 1% fee on stock buybacks, and enhanced IRS enforcement aimed at wealthier individuals. 

🏥 Improves Access to Healthcare: The healthcare provisions primarily focus on limiting the cost of prescription drugs, extending subsidies to the Affordable Care Act for another three years, and enabling Medicare to negotiate prices directly with pharmaceutical companies–with the goal of reducing the costs for all patients.

Local Government-Specific Procedures

Additionally, the Inflation Reduction Act includes several provisions that make federal resources available to local governments to fight climate change. These provisions charge executive agencies with the responsibility of disbursing these funds to local governments. 

💰 Clean Energy Tax Credits: The bill extends and expands federal tax credits for solar, wind and other zero-carbon electricity generation projects at an estimated cost of $127 billion. Local governments are eligible for the IRA’s clean energy tax credits though the IRA’s new direct pay provision. Larger credits are available for projects which pay prevailing wages or are located in low-income communities or communities dependent on fossil fuel jobs and revenue. (p. 165)

🏘 Neighborhood Access and Equity Grant Program: The Federal Highway Administration (FHA) will disburse $3 billion in grants to local governments and other eligible entities for new or retrofitting projects that improve walkability, safety, and affordable transportation. $1.2 billion is reserved for investment in economically disadvantaged communities. (p. 263)

🌅 Investing In Coastal Communities And Climate Resilience: The National Oceanic and Atmospheric Administration (NOAA) will have $2.6 billion to improve the climate resiliency of coastal and maritime communities via grants to local governments and other eligible entities. (p. 211)

🏢 Improving Building Efficiency and Resilience: The Department of Energy (DOE) will disburse ~$1 billion via grants to states and units of local governments that have authority to adopt building codes. These grants aim to help these localities adopt energy efficient building codes and to help existing infrastructure achieve compliance with building codes. (p. 224) The bill also extends tax credits for energy efficiency in commercial and residential buildings, and appropriates an additional $1 billion to improve the energy efficiency and climate resilience of affordable housing buildings. (p. 210)

🏫 Reducing Pollution at Schools: The Environmental Protection Agency (EPA) will disburse $37.5 million via grants in order to help schools located in low-income and disadvantaged communities to monitor and reduce greenhouse gas emissions. (p. 252)

🚚 Clean Heavy Duty Vehicle Fleets and Commercial EV Credits: The IRA includes tax credits of equal to 30% of the cost of light and heavy duty commercial electric vehicles which local governments are eligible to receive through the bill’s direct pay provision. In addition, the EPA will have $1 billion to disburse to transform heavy duty vehicle fleets (e.g. school buses,  garbage trucks and transit buses) into clean energy fleets. These grants are eligible for local governments and contractors. $400 million of this will be reserved specifically for communities that are affected by air pollution. (p. 147, 186, 246)

🏧 Green Banking Fund: The bill appropriates $27 billion to the Greenhouse Gas Reduction Fund to set up the first ever national green bank. Local governments can apply to use funds to set up local green banks which already exist in seventeen states, and which target investment in clean energy projects in low income communities. (p. 248)

🏭 Pollution Reduction Planning: The EPA will disburse $5 billion in grants to state and local governments for establishing and implementing plans to reduce climate pollution. (p. 259) 

🛣 Build Greener Highways: This provision provides the FHA with $2 billion to offset costs for local governments and contractors. The funding can be used for federal highway projects that meet two criteria: (1) use energy efficient construction materials and (2) do not add single-occupancy vehicle lanes. (p. 268)

Since the Supreme Court’s June Dobbs decision that overturned Roe v. Wade, President Biden issued two executive orders in response, one in July and one in August. Here are some of the actions outlined in the executive orders: 

  • The White House will protect and support individuals who seek to travel out of state. Health and Human Services (HHS) is exploring the possibility of Medicaid supporting those who travel out of state for abortion access, and Attorney General Merrick Garland has committed to defending in court the right to travel for abortion access.
  • The Federal Trade Commission (FTC) will take steps to protect consumers’ privacy when seeking information about and provision of reproductive health care services, including any location and health information contained in fertility and period tracking data. We are already seeing how social media companies can assist law enforcement efforts to criminalize abortion. 
  • HHS will look to protect and expand access to medication abortion.
  • HHS launched, which provides timely and accurate information about reproductive rights and access to reproductive health care.

Southern Economic Advancement Project Survey re: Federal Aid Implementation

The Southern Economic Advancement Project (SEAP), an LP partner, is conducting research to identify issues, compile recommendations, and promote best practices for prioritizing equity and engagement in the implementation of federal fiscal relief programs. The goal of this survey is to identify challenges and opportunities for promoting equity and engagement in the implementation of federal funding programs resulting from legislation such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan (ARP) Act.


Evergreen Explains: The Climate Impact of the Inflation Reduction Act

If you’re looking for an even deeper dive into the Inflation Reduction Act, Evergreen Action has assembled an in-depth analysis of the numerous climate-related provisions included in the bill. 

A Better Balance WebHub: Using American Rescue Plan State and Local Fiscal Recovery Funds to Advance Paid Leave

A Better Balance has launched a new web hub on how local and state governments can leverage the American Rescue Plan Act funds to advance paid leave. The web hub includes materials, background, and partner resources.