Previously, Congress had set arbitrary end dates for renewable energy tax credits, giving the industry just a year or two to react. This leaves precious little time to acquire the necessary hardware, obtain all required permits, and obtain funding before the incentives expire. The new legislation solves this problem by providing a new 30% investment tax credit for clean energy projects, including advanced geothermal and nuclear technology. The best part is that credit is on hold for the next ten years, giving developers time to design, finance and build new renewable energy infrastructure.
As reported this week by Tina Casey, major new transmission lines will soon be built to carry renewable electricity from where it is generated to where it is consumed. The result of all this is that we can expect an explosion of renewables over the next decade, driven by the new incentive package that will further reduce the cost of clean energy.
Reduction of inflation and carbon capture
Most of us a CleanTechnica think that carbon capture is a myth invented by the fossil fuel industry to allow it to continue with the thermal generation of electricity. It’s a lure and a changeover proposal that says, “We continue burning coal and methane today to produce electricity, and we promise that we will suck the carbon emissions we create out of the atmosphere at an unspecified date in the future.” It is similar to the promises made to clean up old mines and wells. They cross their hearts and hope to die when they make such promises, but somehow they never manage to clean up their mess.
Maybe this time it’s different. (Emphasis on maybe.) Federal incentives have helped lower the price of solar energy by 90% or more over the past 15 years or so. Perhaps carbon capture will be something like this: a new technology that will become commercially viable over time. According to Bloomberg Green, the new law will increase the carbon capture incentive from $ 50 per ton to $ 85 per ton. It actually costs around $ 300 a ton today, so there’s a long way to go, but who knows?
Repression of methane losses
We all know that methane is a powerful greenhouse gas, but billions of tons of this substance escape into the atmosphere every year. Virtually every oil well emits methane, but oil companies are not in the methane business and therefore are content to let it run away as it costs them nothing. Oil producers have been bitterly opposed to being forced to deal with their mess and, due to lax laws, have been able to avoid it. Until now.
The Inflation Reduction Act imposes a $ 900 per tonne fine on excess methane emissions starting in 2024 and increasing to $ 1500 per tonne in 2026, according to the New York Times. The legislation also includes other incentives to persuade fossil fuel companies to spend what is necessary to repair ongoing leaks in their pumping and transmission infrastructure.
Heat pumps and electrical systems
The Inflation Reduction Act places a lot of emphasis on producing heat pumps nationwide and helping people and companies install them. It provides significant incentives for low- and moderate-income households to electrify their homes, replace ovens, boilers, water heaters and stoves that run on fuel oil or methane with highly efficient electrical devices that can be powered by renewable energy.
The $ 4.28 billion high-efficiency electric home rebate program would provide a discount of up to $ 8,000 for installing heat pumps that can heat and cool homes, and a discount of up to $ 1,750 for a water heater. with heat pump. Homeowners can also get up to $ 840 to offset the cost of a heat pump dryer or electric heater, such as a high-efficiency induction range.
Many homes will need an upgrade of their electrical panels before these appliances can be installed, and the program offers a discount of up to $ 4,000 for such improvements. To make homes more energy efficient, a discount of up to $ 1,600 will be available for insulating and sealing a home. A discount of up to $ 2,500 is also offered for electrical wiring improvements needed to support all of those new appliances.
The program will be administered by the states and runs through September 30, 2031. Homeowners can apply for discounts of up to $ 14,000. To qualify, household income cannot exceed 150% of the median area income.
“The impact of this program is enormous, as it will help over a million low and moderate income families switch to electricity,” said Sam Calisch, Special Projects Head for Rewiring America, in an email to Bloomberg Green. “It looks like a landslide victory for electrification. We estimate at current prices, households getting heat pumps for space and water heating, an electric vehicle, and putting solar on the roof to save $ 1,800 a year on energy bills. Not only that, but these families will get off the roller coaster of fossil fuel-fueled inflation, with stable bills going forward. ”
For homeowners who don’t qualify for the discounts, the IRA provides a tax credit of up to $ 2,000 for installing heat pumps. Other energy efficiency measures such as installing an induction stove or new windows and doors qualify for tax credits of up to $ 1,200 per year.
Investments in national production
The IRA allocates $ 60 billion to clean energy production in the United States, including $ 30 billion in manufacturing tax credits for solar panels, wind turbines, batteries and critical mineral processing and $ 10 billion in credits investment tax to build manufacturing plants that produce electric vehicles and renewable energy technologies.
These provisions are intended to stop and reverse the migration of clean energy production overseas to countries like China, something that neoliberals have been promoting for 40 years. The bill will also invest $ 500 million through the Defense Production Act to produce heat pumps and process critical minerals and set aside $ 27 billion for a “green bank” to implement clean energy projects. particularly in disadvantaged communities.
The Inflation Reduction Act will invest over $ 60 billion to support disadvantaged communities that are disproportionately burdened by the effects of climate change on the environment and public health. This includes grants for zero-emission technologies and vehicles, as well as money to mitigate the negative effects of highways, bus depots and other transportation facilities, along with construction projects located near disadvantaged communities.
Another $ 20 billion would be earmarked for programs to reduce emissions from cows and other animals, as well as from agricultural land and rice production. Agriculture generates about 11% of the greenhouse gases emitted by the United States, according to the government. The bill would also fund grants to support forest conservation, the development of fire-resistant forests and the increase in urban tree planting, along with the conservation and restoration of coastal habitats.
Politics means that you always have to say that you are sorry about something. The fossil fuel industry got some things it wanted in the new legislation, mainly a deal to open federal lands to all forms of energy: solar, wind and geothermal, as well as oil and gas drilling. On balance, the good far outweighs the bad.
In his latest email, Bill McKibben has some interesting news about the fossil fuel industry. He cites the official quarterly report of the Federal Reserve’s Dallas branch, which notes that even with high oil prices there has been no increase in investment in the oil zone. The reason, explains an executive, is the success of divestment campaigns over the last decade:
“Investors are not yet returning to the well, so to speak. Private investors like endowments and foundations are structurally gone forever, and it’s actually different this time around. Pension plans are also hesitant to commit capital despite high prices. Public equity investors are still asking too much, which has led companies to go public via a special purpose acquisition company and reverse merger operations, indicating that the discount required by traditional initial public offering investors is too high to be digested. The administration could be blamed, but it’s the investors’ fault. ”
McKibben says, “I’ve read it and thought about the hundreds of thousands of people who played big or small roles in those divestment campaigns around the world. There is much more we can do. We now have momentum and the best use of momentum is to overturn the opposition. “Come on!
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