The climate and fiscal deal announced by Senate Democrats on Wednesday would inject hundreds of billions of dollars into programs designed to accelerate the country’s transition from an economy largely based on fossil fuels to cleaner energy sources. .
The legislation, called the Inflation Reduction Act of 2022, is a far cry from the ambitious multi-trillion-dollar domestic policy and tax proposal that President Biden has been seeking and Congressional Democrats have put more effort into. a year to adopt.
What remains is a scaled-down but still significant package, born of a compromise between Democratic Sen. Joe Manchin III of West Virginia and Senate Majority Leader Chuck Schumer, Democrat of New York.
Here’s a quick rundown of the contents of the bill, which Democrats hope will defeat Republican opposition in the Senate as early as next week.
Tax credits for zero-carbon power plants
The deal would provide billions of dollars in tax credits over 10 years to companies that build new emission-free sources of electricity, such as wind turbines, solar panels, storage batteries, geothermal power plants or nuclear reactors advances. Previously, Congress had offered short-term appropriations for wind and solar that often expired after a year or two. The new bill’s credits cover any carbon-free technology and would last for at least a decade, giving businesses more certainty.
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The bill also expands a tax credit for companies that capture and store carbon dioxide from natural gas-fired power plants or other industrial facilities before the gas escapes into the atmosphere and warms the planet – a technology rarely used today due to high costs. It would also provide tax breaks to keep existing nuclear power plants in operation. More than 13 reactors have shut down across the country since 2013, and emissions often rise when they do, as they tend to be replaced by fossil fuels. It would also provide grants and tax credits to states and electric utilities to reduce carbon dioxide emissions.
Incentives for electric vehicles
The agreement extends a popular consumer tax credit of up to $7,500 for the purchase of new electric vehicles and provides for the first time a $4,000 credit for used electric vehicles.
Only people who earn $150,000 per year or less (or $300,000 for co-filers) are eligible for the new car credit and those who earn a maximum of $75,000 (or $150,000 for co-filers ) for used cars. The program would run until the end of 2032. The credits would be available for new cars priced up to $55,000 and new pickup trucks, SUVs and vans priced up to $80,000 . Another billion dollars in the bill would fund zero-emission school buses, heavy trucks, transit buses and other commercial vehicles.
Help for individuals to reduce their energy costs
The bill aims to cut energy costs by investing $9 billion in rebates for Americans who buy and retrofit their homes with electric and energy-efficient appliances. It also includes a decade of consumer tax credits that would reduce the cost of heat pumps, rooftop solar, water heaters and electric heating, ventilation and air conditioning technologies.
Investments in domestic manufacturing
The package sets aside $60 billion for clean energy manufacturing in the United States, including $30 billion in production tax credits for solar panels, wind turbines, batteries and critical mineral processing and 10 billions of dollars in investment tax credits to build electric vehicle and renewable energy manufacturing facilities. energy technologies.
These provisions are intended to halt and reverse the migration of overseas clean energy manufacturing to countries like China. The bill would also invest $500 million through the Defense Production Act for heat pumps and critical mineral processing.
The bill would also earmark $27 billion for a “green bank” aimed at rolling out clean energy projects, especially in disadvantaged communities.
Fight against methane
The bill would also impose a levy on excess methane that leaks from oil and gas wells, pipelines and other infrastructure. Methane is a particularly potent greenhouse gas: although it dissipates faster than carbon dioxide, it is much more potent when it comes to warming the atmosphere. Polluters would pay a penalty of $900 per metric ton of methane emissions that exceed federal limits in 2024, rising to $1,500 per metric ton in 2026.
Investments in low-income communities
The bill would invest more than $60 billion to support low-income communities and communities of color who are disproportionately burdened by the environmental and public health effects of climate change. This includes grants for technology and zero-emission vehicles, as well as funds to mitigate the negative effects of highways, bus depots and other transport facilities, as well as construction projects located near disadvantaged communities. .
Agriculture and forestry
An additional $20 billion would be set aside for programs to reduce emissions from cows and other livestock, as well as agricultural soils and rice production. Agriculture generates about 11% of the greenhouse gases emitted by the United States, according to the government. The bill would also fund grants to support forest conservation, the development of fire-resistant forests and increased urban tree planting, as well as the conservation and restoration of coastal habitats.
Brad Plume contributed report.