By Chris Clayton
After more than a year and a half of negotiating with members of his own party, President Joe Biden got his signature climate legislation when Congress approved the $739 billion Inflation Reduction Act back in August.
The act includes a historic investment of $369 billion for climate initiatives, including about $19.5 billion for USDA conservation programs meant to champion climate-smart practices. The climate provisions in the law are expected to help lower greenhouse-gas emissions in the U.S. economy 40% below 2005 levels by 2050.
For a long stretch it appeared a bill meant to incentivize renewable energy could not clear Congress because of infighting among Democrats, especially in the Senate where Democrats could not afford to lose any votes. After months of talks, the bill finally passed both chambers of Congress along party lines as Republicans pointed to high inflation facing Americans and used the bill as a campaign talking point against Democrats.
CLIMATE-SMART AG
The IRA is the biggest climate act in the country’s history, but USDA also moved in 2022 to jumpstart climate-smart incentives for farmers. After initially announcing plans for a $1 billion grant program, the Partnership for Climate-Smart Commodities, Agriculture Secretary Tom Vilsack expanded that funding last fall to top $3.1 billion. USDA has announced more than 140 climate-smart project grants. The goal of those programs is to help incentivize farmers and ranchers to lower emissions and sequester carbon in the soil.
“This is a really, really important day for American agriculture,” Vilsack said in September. “I just hope people understand the significance of what we’re doing here.”
All told, the Partnership for Climate-Smart Commodities will involve more than 60,000 farmers and 25 million acres. USDA projects the project will amount to more than 60 million metric tons of carbon dioxide or equivalent sequestered. That’s about the same as removing 12 million vehicles from the road for a year.
IRA DETAILS
Americans will start to see tax credits for heat pumps, rooftop solar panels and electric cars. The tax credits for EVs could go as high as $7,500, though more likely will average about $4,000. Companies will also get tax credits to install more EV charging stations nationally.
While biofuel groups continued to raise concerns over the Biden administration’s fixation with electric vehicles, the Inflation Reduction Act also is a big deal for the renewable fuels industry. The law extended tax credits for biodiesel and also created a new renewable fuels infrastructure grant program. The law also opens up biofuels to create Sustainable Aviation Fuel (SAF) through new tax incentives. The SAF tax credits, in the short-term, could run as high as $1.75 a gallon. A new Clean Fuel Production Credits will run from 2025 to 2027.
“When it comes to ethanol and other renewable fuels, this bill represents the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded by Congress in 2007,” said Geoff Cooper, president and CEO of the Renewable Fuels Association when the bill passed Congress in August.
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