The Inflation Reduction Act aims to boost clean energy, increase tax revenues, and reduce the costs of healthcare. This act was signed into law in 2022 and directs new federal spending toward lowering healthcare costs, reducing carbon emissions, improving taxpayer compliance, funding the Internal Revenue Service, etc.
This act is a landmark of America’s federal law, which aims to curb inflation as much as possible. The Inflation Reduction Act clean energy transition comes at a certain time when increasing costs of fossil fuel energy are hitting companies really hard.
The exponential rise in the expenses of fossil-fuel-powered energy has boosted inflation. High costs of fossil fuel energy have accelerated the transition to clean energy. This resulted in the U.S. President’s Inflation Reduction Act passing into law in 2022.
So, let us discuss some important information regarding this beneficial act below.
The Inflation Reduction Act: What Is It?
The Inflation Act contains around 500 billion dollars in new federal spending with the goal of increasing tax revenues, reducing healthcare costs, powering the U.S. on clean energy, and even funding the Internal Revenue Service. With the aspect of clean energy in mind, the IRA addresses the challenge of surging the cost of fuel energy.
The IRA aims to encourage procurement of critical supplies domestically, catalyse investments in domestic manufacturing capacity, and jump-start commercialization and R&D of leading technologies, like carbon storage and clean hydrogen.
Now, we will discuss the incentives and subsidies that are available to help your business transition to cut the demand for fossil-fuel energy and associated costs while opting for clean energy.
How Can The IRA Help You?
The Inflation Reduction Act is actually beneficial in several ways, such as follows:
· The IRA Offers Tax Credits To Support Clean Energy Projects
The IRA provides a tax credit of a maximum of 30% for the installation of solar PV systems. It even offers a 10% credit for underserved communities’ clean energy projects. This, as per the White House, must have previously depended on tasks like extraction, storage, and even use of oil, coal, or natural gas.
In turn, the tax credits and deductions of the IRA propel growth and reinvestment, allowing companies to build and scale key areas. Thus, it can help businesses in improving infrastructure as well as reducing energy costs.
· The IRA Offers Support In Installing Onsite Alternative Energy Systems
The IRA includes tax incentives for companies to invest in onsite sustainable energy sources. For example, wind turbines, solar panels, or even geothermal energy. The incentives offered under this act will assist in offsetting the expenses of installation as well as maintenance of such systems. This will eventually reduce heating and electricity bills, which is quite a significant business expense nowadays. These lucrative incentives are set to launch in 2023, 31st May.
· The IRA Reduces Energy Waste
The Methane Emissions Reduction Action Plan under the IRA aims to reduce leaks from the production and distribution of natural gas, streamlining operation and use of energy while reducing notable emissions of harmful greenhouse gas.
The use of fossil fuel generates around one-third of all methane emissions from human activity. The IRA reports that the amount of methane that is emitted from oil and gas needs to be decreased a lot if we wish to meet Net Zero Emission 2050 targets. The beneficial plan called the Methane Emissions Reduction Action Plan serves to assist companies to reduce their dependence on fossil fuels to a great extent.
Under the policies of this plan, the government will offer around 1.55 billion dollars in technical and financial assistance, around 700 million dollars of which will be used for pollution reduction activities at marginal convention wells.
In addition, the government will even implement a charge called waste emissions charge per ton of methane in various gas and oil facilities once thresholds are exceeded.
Furthermore, the budget will be used for funding research and development as well as several new modernization and safety programs. Many believe that this extensive investment will be able to open the doors for alternative and harmless sources of fuel for companies that are still working on fossil fuels.
The Use Of Inflation Reduction Clean Energy Transition To Get A Green Economy
According to the estimate of the U.S. Energy Information Administration or EIA, the emissions of energy-related carbon dioxide will drop more than initially forecast by 2030 compared to 2005, a notable decline that’s attributed to the IRA.
This significant act offers $369 billion of government incentives for various climate and energy-related programs and projects for more than 10 years. This kind of investment is expected to increase wind turbine, solar panel, and even battery production, along with facilitating the production of new eco-friendly facilities, along with creating many new green tasks, manufacturing, transportation, etc.
Therefore, just by implementing the IRA, the government of America will be able to reduce the amount of the net greenhouse gas emissions of the country to a great extent. So, if you are looking for a company to meet your complex digital transformation requirements in a sustainable way, then you must rely on Venus Global Technology.