Understanding The Inflation Reduction Act (IRA) - Introduction and Update

Rate It Green Members and Friends - 

Hello to everyone gathering at Greenbuild this week!  I had hoped to attend in person but had some schedule complications.  As much as I think we absolutely need to connect and share information online when we can’t be together, I of course believe it’s meaningful and impactful to gather and build community in person.  I’ll be attending as I can online, and I’ll hope to ”see you” there! 

I have spent a good deal of time in the past weeks “getting to know” the Inflation Reduction Act, or IRA, as much as I can.  Passed on August 16, 2022, the IRA is the largest investment to date in energy efficiency and clean energy, and much of these funds will directly affect new and existing buildings.  To be honest, I was being cranky and stubborn and had been putting this effort off, as I had been checking in some, and I had wondered why information wasn’t just readily available, I suppose.  I mean,$370 billion seems like a lot of tax credits, rebates, loans, and grants. It seemed like there might reasonably be a set of directions “in neon (LED) lights.”  I expected major educational efforts from the federal and state governments, and all kinds of changes I could see.  But it was time to dig in and figure out as best I can just what is going on.  I wanted to know what this bill is really all about, what it’s really going to achieve for the green building and related industries, and how people, organizations, and all kinds of entities are going to access all of these credits and financing opportunities.  

The bad news first:

• This is somewhat a hurry up and wait situation, and it’s just taking longer than I expected to implement the IRA.  I thought January 1, 2023 was more of a real kick off, and while it is for taxes and some programs, a lot won’t happen in terms of rebates and direct financing opportunities until well into 2024.  The states have to apply to the federal government to get their plans approved for rebates and other  funding, and this is a process and takes time.  A challenge with delays is that some people who know more funding is coming may be holding off on related improvements until they’re here, so this negative consequence or the risk of it is a disappointment. (Making provisions retroactive would have helped with this.) 
• There isn’t quite as much information out there as I’d expect and like (I made a list of the IRA Tools & Resources  I found.  Check it out, and please let me know what to add!) 
• This legislation is just so big and complex, it’s hard to process whole.  My advice is to get an overview, but then to really think through your part of the industry, including possible growth, and to focus on opportunities, and ask questions of the agency or entity that is really most likely to provide the most direct help.  As you learn, I’d also really encourage you to share back - we can all help each other. 
• It’s going to take a good deal of educating to increase demand for energy efficiency and clean energy investment, and quickly, and a lot of this work is going to fall to industry professionals.  There’s a great opportunity for those who can take the lead and provide solid client and potential client education, and also for those who can confidently answer questions and offer informed, trusted advice.  My guess is that state energy offices  will provide more information when they receive their funding allocations, but this opportunity already exists.

Now, the really  good news:

• $370 billion is a lot of money, and the impact of the IRA, especially in addition to existing funds from the The Energy Policy Act (EPAct) of 2005, the Infrastructure and Investment Jobs act (IIJA) of 2021, and other related legislation, these funds and programs will have a transformative effect on buildings, infrastructure and water systems, jobs and manufacturing, supply chains, and a real acceleration in the evolution and growth of energy efficiency and clean energy products, services, technologies, companies, market segments, and entire markets. 
• The tax credits are available right now! Although I know it sounds like I am complaining that all of the IRA benefits aren’t yet available, but the tax credits did start January 1, 2023!  You can air seal and insulate, upgrade your electrical service,  buy energy efficient appliances, and install clean energy technology today and take those credits when you file your taxes! 
• The rest of the funds are coming! DOE released guidelines to states on July 27, 2023 on how to apply for the planned DOE funding.  The states then follow their own processes, including allowing for public comment, and submit these applications.  It’s anticipated that DOE will begin approving applications and the first rebates will be available sometime in 2024.   
• If you’re confused, you’re not alone!  And, it will get better, especially as State, Territory and Tribal Energy office plans are approved and more programs roll out.  

My best advice is to prepare as much as you can as soon as you can.  Plan the benefits you want to aim for, personally and professionally, so that you’re well positioned to meet your goals and save, and to take advantage of all of the opportunities you can. 

For now, I have shared what I learned in a personal piece, which may be a bit long but hopefully really helps those who don’t know as much about the IRA get a solid start:  The Inflation Reduction Act (IRA), Introduction and Update. I have also shared sources and resources in a separate document: IRA Tools & Resources.  As I and my colleagues learn more, and as more benefits become available, and as our community (YOU) shares their wisdom and experiences, we’ll keep posting more.  

I’d love to hear success stories - Who out there is already taking advantage of the IRA tax credits? Let me know and we’ll celebrate your accomplishments.  Are you tax knowledgeable or an expert on the IRA?  If yes, I'd love to hear your ideas about how we can share more IRA information and make this complex subject more approachable - and accessible - for everyone.  It would also be great to hear from people in other countries (please forgive the US focus for this news) about incentives and what is working to increase energy efficiency  in other parts of the world.  We can also share challenges and lessons learned so we can all learn from them and move forward together.  Also, send your IRA questions!  What would you like to know?  I may not know the answer, but perhaps someone else does, and I am sure others have the same question and will appreciate your effort.    

We’ve got a start!  Where we go from here to build on that foundation depends on what we all do from here!  I look forward to some great IRA conversations. 

Click to read our full September News. And, add your voice to our community! 

Thank you, 

Allison Friedman
Founder, Rate It Green

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