Last week U.S. President Joe Biden signed the Inflation Reduction Act (IRA) into law. The bill is already being hailed by some as the most important action the United States government has taken toward climate change mitigation, although some economists question the legislation’s immediate impact on inflation. According to a White House brief, some of the biggest benefits are expected to come in the form of lower healthcare and prescription drug costs, more affordable clean energy development for consumers and businesses, and a reduction in the nation’s deficit.
“You have to shake the tree to get the plum,” Thomas Peterson, CEO of The Center for Climate Strategies, said in a briefing about the recent legislation held by the American Sustainable Business Network last week. He’s speaking to the opportunities this legislation opens to businesses, including a lot of money. The bill invests $369 billion toward energy security and climate change, according to a summary published by Senate Democrats.
Peterson has been involved in climate legislation from the time of the Kyoto Protocol, at one point acting as senior advisor to the White House Climate Change Task Force. He said he’s seen a lot of progress since that landmark moment. While the Kyoto Protocol took a more top-down approach, Peterson noted that the Paris Agreement now has a more grassroots take on progress.
The only issue with the Paris Agreement, Peterson said, is that it doesn’t self-implement. It simply doesn’t provide funds to do so. Even so, Peterson calls the Paris Agreement the biggest policy development for climate in the last 27 years. What’s more? He places the IRA right under the Paris Agreement as its “kissing cousin” in significance. Basically, the U.S. is finally putting its money where its mouth is — and the country’s climate goals need a lot of money, he emphasized. After all, by 2030 the U.S. plans to reduce its net greenhouse gas emissions by around half. By 2050, the nation aspires to reach net-zero emissions.
The general intention that Peterson sees behind the IRA is to enable the private sector to step in and do its part to tackle climate change. Businesses need to be proactive, he said, especially since the public sector can’t finance the majority of the work that needs to be done to reach our climate goals. “We’re really talking about mobilizing funds at an astonishing scale,” Peterson added.
A couple of the opportunities Peterson mentioned as worth exploring are the clean energy tax credits, which are also applicable to tax-exempt entities, and the first-of-its-kind national clean energy business accelerator called the Greenhouse Gas Reduction Fund (GGRF). The Fund can allocate up to $27 billion for clean energy technology development.
One small business expert, Rhonda Abrams, outlines for USA Today the myriad tax credits available under the bill, including hefty credits for commercial electric vehicles. For vehicles over 14,000 pounds, those credits can reach $40,000. Abrams adds that this stimulus to the clean energy economy will also have incidental benefits for small businesses: "Small businesses will see demand for their services and products increase as a result of this legislation,” she writes. “Homeowners who convert to energy-efficient home energy products — like new HVAC systems or heat pumps — almost always use a small business for the work.” The boost also extends to small manufacturers and suppliers, Abrams writes, since the bill includes mandates that support domestic manufacturing.
The results could be staggering. Senate Democrats estimate a 40 percent reduction in carbon emissions by 2030 and millions of new domestic manufacturing jobs in the clean energy sector.
But reaching that summit requires commitment from businesses. After all, incentives mean nothing if there’s no investment or purchase. It’s time to start shaking that plum tree.
Image credit: NASA via Unsplash
Roya Sabri is a writer and graphic designer based in Illinois. She writes about the circular economy, advancements in CSR, the environment and equity. As a freelancer, she has worked on communications for nonprofits and multinational organizations. Find her on LinkedIn.