Reducing the use of fossil fuels is the single most important step the global community can take to reduce climate change impacts.

Increasing energy efficiency is the most effective way to reduce fossil fuel use, and it brings other economic benefits like lower utility bills. However, energy efficiency, whether at home or in a house of worship, is an expensive process, and the cost of energy improvements can be discouraging. The up-front cost of energy improvements has been a barrier to low-income ratepayers interested in promoting environmental care. It also has been a barrier for faith communities, particularly because government programs that facilitate energy improvements are typically structured as tax incentives that are not applicable to faith communities.

The passage of the Inflation Reduction Act (IRA) has changed the way households and congregations will pursue energy efficiency over the next ten years. With large tax credits and new incentives for tax-exempt entities, residential and commercial consumers can pursue energy efficiency more affordably than ever before. Large solar projects and energy property improvements are now budget-friendly and practical, including for houses of worship.

The Inflation Reduction Act of 2022 makes the single largest investment in climate and energy in American history. The IRA demonstrates the U.S.’s serious commitment to halving its own greenhouse gas emissions by 2030. It includes a multitude of provisions aimed at empowering local communities to go solar, retrofit their homes for greater energy efficiency, and reduce energy expenditures.

The $737 billion package contains several promising provisions that will advance the American energy system, empowering consumers and businesses to “go green.” Additionally, the Act’s historic passage improves Americans’ equitable access to Medicare with a $64 billion investment in the expansion of the Affordable Care Act. A 15% corporate minimum tax is also included in the IRA and presents an opportunity to increase federal revenue.

All the provisions of the IRA are important, but the climate and energy provisions are the most revolutionary. The legislation relies on strategic, influential tax incentives to drive changes in consumer and producer energy and transportation choices. Because the IRA climate provisions are tax incentives, the Internal Revenue Service (IRS), and not energy or environmental agencies, will be the primary implementer.

This report contains a summary of the IRA’s climate and energy-related provisions, which residential and commercial consumers can leverage to achieve energy savings and help meet our nation’s science-based emissions reduction goals.

Residential Clean Energy Property Credit

The High-Efficiency Electric Home Rebate Act (HEEHRA) provides $4.5 billion in direct rebates for low to moderate- income households for the installationof new energy-efficient appliances. The Department of Energy houses this program and is expected to distribute these funds to State Energy Offices and Tribes in 2023. Through HEEHRA, qualifying households will receive immediate discounts on qualifying electrification expenses such as ranges, cooktops, and wall ovens.More information will be provided as funds are available through the Department of Energy.

Solar Investment Tax Credit

The IRA amends the Solar Investment Tax Credit (ITC) to increase its tax percentage to 30 percent, with additional commercial tax bonuses dependent on certain installation qualities. The Solar Investment Tax Credit, enacted in 2006, has helped grow the solar industry for several decades, creating thousands of jobs and progressing the solar movement throughout the nation.

Greenhouse gas emissions are responsible for environmental impacts, and they also generate economic, and health challenges. A new report estimates that the “social cost” of greenhouse gas emissions is roughly $185 per metric ton—the economic damages, in dollars, that result from the emission of one additional ton of carbon dioxide into the atmosphere. The processes that yield greenhouse gas emissions also result in emissions that make people sick. The Rhodium Group, an independent research organization, estimates that by 2030, the IRA will cut conventional air pollutants resulting from electric power by roughly 82% compared to 2021 levels. Resources for the Future’s Social Cost of Carbon 101.

Greenhouse Gas Reduction Fund

The Greenhouse Gas Reduction Fund allocates $27 billion in investment funding to clean energy technologies and emission reduction projects.14 The program provides $20 billion in green financing and $7 billion in grants for low-income and disadvantaged communities. The program focuses on accelerating the equitable
and sustainable development of zero- emission technologies. Additionally, the EPA is launching a stakeholder engagement program to help implement the Greenhouse Gas Reduction Fund to its fullest extent.

Environmental and Climate Justice Block Grants

The IRA provides $2.8 billion in Environmental and Climate Justice Block Grants for “community-led” projects that reduce GHGs in disadvantaged communities.15 These funds will be administered to community-based nonprofit organizations to help advance “air pollution monitoring, prevention and remediation; mitigating climate and health risks from extreme heat and wildfires; climate resiliency and adaptation; and reducing indoor air pollution.”