How the Inflation Reduction Act will impact Washington

A quick explainer of the most significant federal legislative action on climate in American history.
August 19, 2022

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On Tuesday afternoon, President Biden signed the Inflation Reduction Act into law, setting in motion $370 billion in federal funding to ultimately reduce greenhouse gas emissions in the U.S. 40% by 2030.

This bill is going to do a lot of things, but most urgently, it’s going to help get the U.S. back on track to achieve a clean energy economy in the timeframe necessary to combat the worst impacts of climate change.

What will that look like for us here in the Northwest?

On the super local level, it’s predicted that the average Whatcom County household will save $267 a year on their energy bills (once the programs are fully implemented), cut 116 metric tons of CO2 emissions, and create thousands of clean energy installation jobs (that can’t be automated or offshored). The biggest savings will be in the 44,000 households in Whatcom County who are currently using electric resistance, fuel oil, or propane, as well as the 46 percent of Whatcom County households who are considered low to moderate income.

The bill also extends a super important tax credit for solar and wind power operations. The main tax incentive that has allowed for massive solar industry growth in the last decade was set to expire soon, but the IRA boosted the credit and extended it for 10 more years! This creates predictability instead of the boom-and-bust cycles that have often plagued clean energy investment, allowing for central and eastern Washington’s big solar industry to continue growing and replacing fossil-derived grid electricity. As with all energy development projects, it’s important that the impacts of industrial-scale renewable projects are evaluated thoroughly for potential adverse impacts on nearby frontline communities, including Indigenous communities, as well as nearby lands, waters and wildlife. Eastern Washington may get more sun and more wind, but that doesn’t mean communities there can afford to bear the costs of haphazard development.

In full transparency though, lawmakers and state officials aren’t 100 percent certain what the specific outcomes for Washington will be from this bill, but we do know a few things:

  • $8.6 billion for state energy offices to help consumers make energy-efficiency upgrades to their homes through rebate programs, once states apply for these funds and get programs set up. That will directly translate into up to $8,000 for a heat pump for AC/heat, up to $1,750 for a heat pump water heater, up to $4,000 for a breaker box upgrad,e and up to $840 for an electric stove or heat pump clothes dryer.
  • States, municipalities, and tribal governments have the opportunity to receive up to $7 billion (in each state) to deploy clean energy technologies and help cut emissions in frontline communities through something called the Greenhouse Gas Reduction Fund (also called a “green bank”). This means Washington will have access to these funds, though officials are still working out the details of what exactly these funds will go to. It’s worth noting that 60 percent of these funds have to go to disadvantaged communities for uses in things like community solar and promoting environmental justice, so we’re likely to see development in that area.
  • States, municipalities, and tribal governments can also receive up to $5 billion (in each state) to develop and implement plans to curb emissions through something called Climate Pollution Reduction Grants. Again, it’s not entirely clear what that will directly translate into.
  • State and private forestry conservation programs can receive $2.2 billion to promote natural carbon sequestration, including planting trees.
  • Another $1 billion for states and local governments to adopt clean building energy codes.
  • Plus $5 million for states to adopt more stringent tailpipe emissions standards.

The IRA will invest in local jobs

It’s estimated that when this program is fully implemented, the IRA will generate about $9 billion in investment in the State of Washington. That includes about 10,600 additional jobs created in the next decade in wind and solar, and billions in funding for frontline communities who are already impacted by the effects of climate change.

Because Washington has done so much work already to cut emissions and transition to a clean energy economy, the IRA will work as a turbo-boost to the policies and regulations we’re already implementing. Rather than needing to get a bunch of state and local governments on board to utilize this money fully, here in the Northwest, we’re basically shovel-ready.

Climate-heating emissions from homes and buildings are growing faster than any other source of carbon pollution in Washington, largely due to the use of methane gas for space and water heating. Our state recently secured the strongest clean energy building codes in the nation for our commercial and large multifamily buildings (like apartment complexes). And this fall, the State Building Code Council could set similar energy- and utility bill-saving standards for new homes. IRA funding will help crack one of the most challenging climate puzzles: retrofitting existing homes with efficient electric heat pumps (which also provide A/C) instead of gas furnaces, supporting community solar projects, and more. It’s a perfect complement to work already underway on new construction, since most methane pollution is from existing buildings.

If you’re feeling inspired by this historic bill and want to keep in the loop on where these funds go and how they’re being implemented, make sure you’re signed up for our action alerts and join us in taking the 100% Northwest pledge to ensure Northwest Washington achieves a 100% clean energy economy by 2030 (yeah, we’re going to be ahead of the rest of the country). We have actions, events, and community-building opportunities coming your way!

If you missed RE Sources’ previous post offering our initial impressions of the Inflation Reduction Act, its significance, its limitations, and our concerns around frontline communities and what comes next, you can read that here.

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