The Inflation Reduction Act: Leading America Towards a Sustainable Future

The Inflation Reduction Act: Leading America Towards a Sustainable Future
Published on
July 17, 2023

The Inflation Reduction Act of 2022, often abbreviated as the IRA, is a landmark law that's transforming the American clean energy landscape. When President Biden signed the Inflation Reduction Act into law on August 16, 2022, he took one of the most remarkable steps that the U.S. has ever seen in confronting climate change and promoting clean energy.   

The legislation is proving to be a game-changer in addressing climate change, promoting renewable energy and outlining the future of the American economy. It reflects a significant pivot towards sustainability and points to an exciting future for America. 

What is the Inflation Reduction Act? 

The IRA is a massive government investment in renewable energy and related technologies. The Act isn't just throwing money at the problem, though; it extends a 30% investment tax credit (ITC) through 2024 for a variety of electricity generation facilities, including solar, qualified fuel cells, and waste energy recovery, among others. 

By design, the IRA is geared towards making America a leader in clean energy technology and manufacturing. This legislative juggernaut has even gone so far as to redefine American leadership in the fight against climate change

Let's dive into the clean tech stuff a bit more, shall we? One of the critical components of the IRA is that it doesn't limit itself to established technologies. It funds exploration into new areas and provides loans and tax breaks that businesses, especially those in the environmental sector, can use to research and develop both new and existing technologies. 

A prime example is the IRA's approach to carbon capture. In the last year, carbon technology has exploded, in part thanks to the support of the IRA, leading to a surge in investment in this sector. 

The IRA doesn't stop at promoting technological innovation, though. It also puts money where it can make a substantial difference—offering robust energy tax incentives to enhance energy security. The IRA directs approximately $369 billion to energy and climate spending, supporting wind, solar, clean energy storage, and other clean energy manufacturing projects

These hefty investments have the potential to bring about a drastic reduction in U.S. greenhouse gas (GHG) emissions—up to 43% below 2005 levels by 2030. This is an essential step to meeting the U.S.'s Paris Agreement commitment to cut emissions 50% to 52% by 2030. 

The ripple effects of the IRA extend beyond the environment and climate change mitigation. It is also anticipated to strengthen the U.S. economy, creating an estimated 1.3 million new jobs and avoiding nearly 4,500 premature deaths annually due to reduced air pollution by 2030. 

At the core of the IRA is a comprehensive plan that touches on various key areas, from clean energy technology to reducing carbon emissions, with an eye to promoting domestic manufacturing and innovation. Even more interestingly, it's not just about cutting-edge technology. The IRA also considers the everyday lives of American citizens, offering families a chance to save on their utility bills and receive tax credits for electric vehicles and energy-saving appliances

Photo by Gustavo Quepón on Unsplash

Who Benefits from the Inflation Reduction Act 

In essence, the IRA is a broad, sweeping piece of legislation that covers a lot of ground. Tax law? Check. Climate resilience? You bet. Healthcare? Absolutely. But more than that, the IRA aims to make life easier for American families by lowering everyday costs, ensuring corporations pay their fair share and taking significant steps to combat the climate crisis. 

One of its important provisions is the Direct Pay (or elective pay) policy, which allows tax-exempt entities like local governments, states, tribes, territories, and nonprofits to get tax credits for clean energy technologies.

This law has an extensive impact on a variety of sectors in the United States, from the tribal communities to non-profit organizations to local governments.  

Tribal Communities 

Let's start with tribal communities. By passing the IRA, President Biden has made it clear that working families, including Tribal nations and American Indian, Alaska Native, and Native Hawaiian families, are a priority. The IRA contains several Tribal-specific provisions that are intended to lower costs for prescription drugs, healthcare and energy. Plus, the IRA is expected to bring the most significant action to confront the climate crisis, lower the deficit, and ensure the super-wealthy and corporations pay their fair share. 

But it's not just about cost-cutting measures. The IRA is also a massive investment in tribal communities. The IRA allocates $720 million in climate resilience and energy funding directly to tribes, including money for drought relief and electrification. This is expected to support tribal nations who are on the front lines of climate change. 

Beyond that, there's also funding for tribal energy development efforts. This includes grant and loan guarantee programs to implement energy projects for electrification, climate resiliency, and energy generation, as well as direct payments to tribes and tribal members to implement clean energy projects

Non-Profit Organizations 

But the tribal communities aren't the only ones who stand to gain from the IRA. Non-profit organizations also benefit, particularly through the IRA's energy component. By investing in domestic energy production and manufacturing, the IRA aims to reduce carbon emissions by roughly 40 percent by 2030. This includes a number of incentives that could be highly beneficial to non-profit organizations. 

Local Governments 

Lastly, let's talk about local governments. They, along with tribal governments and non-profits, can access tax credits for building a clean energy economy under the IRA. These credits can help these entities build projects more quickly and affordably, which in turn could create jobs, lower energy costs for families and drive American innovation. 

A Breakthrough in Climate Action 

One of the main reasons this legislation is considered a breakthrough in climate action is its potential to dramatically reduce the country's carbon emissions. The Inflation Reduction Act earmarks funding for critical technologies such as carbon capture and storage and clean hydrogen. By boosting research, development, and commercialization of these technologies, we can start to significantly cut our carbon footprint

The IRA also acknowledges the importance of renewable energy in the fight against climate change. It introduces incentives to accelerate the transition to a clean energy economy, which is expected to spur significant deployment of new clean electricity resources

Moreover, the Inflation Reduction Act isn't just about the environment; it's also about building a fairer America. It directly addresses environmental justice priorities and requires recipients of many funding streams to demonstrate equity impacts

Finally, it's not just about immediate action but also investing in the future. According to the Congressional Budget Office, this law will reduce budget deficits by $237 billion over the next decade, ensuring that the United States can continue to lead the global clean energy economy while providing a sustainable lifestyle for its people. 


In conclusion, the Inflation Reduction Act represents a historic stride towards a cleaner, more sustainable, and equitable America. 2022 is a landmark legislation that impacts various sectors in the United States. Its influence is felt across tribal communities, non-profit organizations, and local governments. From boosting energy production to promoting climate resilience, the IRA is set to reshape the economic landscape of these entities, bringing in a new era of prosperity. 

The Inflation Reduction Act is a testament to American innovation and determination in the face of the existential threat of climate change. It's a big leap forward, and we're just getting started. 

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