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How much funding do the Bipartisan Infrastructure Law and Inflation Reduction Act include for clean energy deployment?

The Congressional Budget Office estimated that the Inflation Reduction Act would invest $370 billion in the clean energy transition, of which $270 billion is in the form of tax credit incentives. The values of most tax credits established by the Inflation Reduction Act are not capped, however, meaning that the total investment could be much larger depending on the level of uptake by consumers and businesses. For example, Goldman Sachs has estimated that the federal investment could be as high as $1.2 trillion.

The Bipartisan Infrastructure Law invests another $550 billion in new federal infrastructure projects, many of which encourage and incorporate climate-smart investments. This includes funding to build a vast network of electric vehicle chargers, electrify thousands of school and transit buses, and invest in updated energy transmission to help bring renewables online and build a resilient 21st century electric grid.

How will these laws be funded by the federal government?

In passing the Inflation Reduction Act and Bipartisan Infrastructure Law, Congress authorized the use of funds to establish, continue or modify any agency, program or activity created by these laws. Congress also appropriated the necessary funds for multiple years, meaning funding is automatically available and does not have to be approved each year in the annual appropriations process.

Funding for the Inflation Reduction Act will come from enforcing taxes on large corporations and wealthy individuals (no family making less than $400,000 will see a tax increase) while funding for the Bipartisan Infrastructure Law comes through various sources, such as repurposing of unused Covid relief, and is not based on changes to the tax code.

What is the expected climate impact of the Inflation Reduction Act?

If its climate investments are implemented to their full potential, the Inflation Reduction Act is likely to reduce carbon emissions to 37%-41% below 2005 levels by 2030, closing in on the federal target of 50%.

Where in the U.S. are clean energy projects and programs being implemented?

Since the passage of the Bipartisan Infrastructure Law in 2021 and the Inflation Reduction Act in 2022, projects and programs have begun to be implemented across the country. While some projects and benefits are being prioritized in disadvantaged communities as part of the Justice40 commitment, most programs do not have a pre-set formula for how much funding will go to each state. Ultimately, distribution of new projects will depend on the location of competitive grant awardees and private sector investment in clean energy deployment. Non-state entities receiving funds — including local governments, tribes and communities — will have a say in how and where projects are implemented at the local level as well.

How long will it take for Americans to realize the benefits of the Inflation Reduction Act?

Implementation of new clean energy technology, infrastructure and other climate-friendly measures will take time, as the Inflation Reduction Act covers 10 years' worth of investments and incentives. However, many sectors are already seeing a flurry of action and investment following the law’s signing in August 2022. Billions of dollars in investments have been announced across more than a dozen states — including many new battery and electric vehicle manufacturing facilities due to the Inflation Reduction Act’s key manufacturing tax incentives.

Other incentives have already been deployed and are available to businesses and consumers. These include investment and production tax credits to support development and deployment of renewable energy technology; tax credits for the purchase of qualifying electric vehicles and energy-efficient home upgrades like heat pumps; and more. Additional Inflation Reduction Act incentives will be rolled out as guidance is released over the next year. Current information on tax credits and deductions can be found here.

 

How can I weigh in on the implementation of new climate policies and investments?

The primary opportunity for public comments on the implementation of these laws will be through responding to Requests for Information (RFIs) or Request for Comments (RFCs) issued by implementing agencies, such as the Internal Revenue Service, the Department of Energy and the Environmental Protection Agency. These RFIs and RFCs will be published in the Federal Register for commenting and responses can be viewed on Regulations.gov. Comment periods will vary in length, from days to months, and are intended for the public (including individuals, businesses, non-profits, NGOs, local governments and others) to weigh in on the development of newly created programs and funding streams.

 

What role will Congress play in implementation?

Congress has oversight for all newly created and funded programs. This oversight can take place by conducting hearings, requesting responses in writing from agency officials, and generally overseeing the implementation process of the Inflation Reduction Act and Bipartisan Infrastructure Law at the agency level.

 

What can states do to engage in the implementation process for federal climate legislation?

Responding to Requests for Proposals (RFPs), forming public-private partnerships, and aligning state policies and budgets with the clean energy transition to take advantage of new tax incentives are all ways states can engage in implementation of these pivotal laws. States can also engage communities and local decision-makers to ensure equitable distribution of projects and benefits, particularly through the siting and permitting of energy projects.

 

How is equity being addressed in the implementation process?

The Justice40 Initiative is a whole-of-government commitment by the Biden administration to deliver 40% of the overall benefits from a set of federal investments, including in the Inflation Reduction Act and Bipartisan Infrastructure Law, to “disadvantaged” communities. Historically marginalized, low-income, Indigenous and communities of color live with more climate burden as a result of systemic racism and underinvestment. This initiative seeks to address some of those historical injustices and inequities, while ensuring that new investments bring environmental benefits and economic opportunities to these areas. The White House highlighted the environmental justice investments from the Inflation Reduction Act in this fact sheet.

 

Can a president or Congress overturn the Bipartisan Infrastructure Law or Inflation Reduction Act?

President Biden can veto any legislation that is put forward to fully or partially overturn legislation, and Congress would need a two-thirds majority to override this veto. If a future administration and Congress try to overturn the legislation in 2025 or later, they will likely run into headwinds as Americans around the country will be realizing the cost-savings and jobs benefits of these laws.