House Approves Landmark $700B Climate and Tax Bill

Abstract

August 12, 2022 Pam McFarland and Tom Ichniowski KEYWORDS climate change bill / energy efficiency / renewable energy Order Reprints No Comments Democrats in the House of Representatives pushed through a sweeping climate, health care and tax package that includes billions of dollars in tax incentives and authorized funding for projects set to reduce greenhouse gas emissions across the U.S. economy. The bulk of the nearly $700-billion package is $369 billion in funding and tax-credit extensions aimed at reducing carbon emissions through a broad range of projects in the energy, transportation, water, buildings and manufacturing sectors. Dennis Truax, president of the American Society of Civil Engineers, which last year recommended energy-policy steps in areas such as carbon reduction, renewable energy, distributed generation and affordable rates, said the bill "Addresses these recommendations at a never-before-seen scale, providing additional funding to develop transmission lines to connect to new sources of renewable energy." Provisions in the measure dealing with labor requirements drew praise from construction unions but criticism from some major contractor groups. Among the bill's many climate components are provisions to extend federal tax credits to spur solar, wind and other renewable energy projects, an expansion and extension of the 45Q credit for carbon capture, utilization and storage and direct air-capture projects favored by industry, and a credit to keep nuclear power plants operating. For the first time, energy storage projects would also qualify for an investment tax credit. "It's going to take time to build the up that infrastructure, and make sure that business models within industry are in place to be able to take advantage of it."Split Views on Labor ProvisionsAn analysis by the Labor Energy Partnership, a joint project of The Energy Futures Initiative and the AFL-CIO, says the Inflation Reduction Act could add 1.5 million jobs and $250 billion to the economy by 2030, and decrease overall energy consumption. The bill "Tackles climate change while also taking a common sense approach to our energy needs rather than setting unrealistic goals for an abrupt energy transition," said Terry O'Sullivan, general president of the Laborers' International Union of North America, in a statement.