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Decarbonization: The Inflation Reduction Act and its impact on business

September 15, 2022

The Inflation Reduction act focuses on clean energy and decarbonization, which will likely impact businesses across the country.

Decarbonization strategies, environmental justice, agricultural resilience and domestic manufacturing of clean energy technology are only a few of the themes that emerge within this bill.



Last month, The Inflation Reduction Act was signed into law delivering a multi-faceted approach to spur economic growth and ease rising inflation

Within the bill, a handful of themes emerge. These include a large focus on Americas’ energy independence, domestic manufacturing of clean energy technology and decarbonization strategies. There is also environmental justice, agricultural resilience, and conservation efforts in forest and coastal habitats.

Aside from consumer incentives to increase energy efficient appliances, and cleaner fuels vehicles, this bill invests over 60 billion Dollars for on shore, clean energy manufacturing. Organizations with manufacturing facilities in the US may qualify for production tax credits. This will happen if they focus in solar panel manufacturing, wind turbines, batteries and electric vehicles. There is also a significant investment towards the development of new manufacturing facilities. Additionally, automobile manufacturers may qualify for grants to retrofit their facilities for the purpose of manufacturing these cleaner fuel vehicles.

This bill includes funding towards decarbonization strategies with 30 billion available for states. Utility companies looking to invest in clean energy technologies can also benefit. It offers grants and tax credits for organizations looking to apply cleaner fuel vehicles to their commercial fleets, carbon reduction strategies for industrial manufacturing, and methane reduction efforts. It also includes a significant portion of funding for a “clean energy technology accelerator” program.

This bill aims to make headway within disadvantaged communities and environmental justice through multiple grants and initiatives. The grants include Environmental and Climate Justice Block Grants, Neighborhood Access and Equity Grants, and for reducing air pollution at ports. Additionally, it includes 1 billion for clean heavy-duty vehicles as well as clean energy tax credits to further drive economic development in disadvantaged communities.

Moreover, this bill affirms the central role agricultural and forest landowners play in Americas decarbonization strategy. “Climate-smart agricultural practices”, fire resilient forests, forest conservation, and urban tree planting include funding. Tax credits will contrubute to the domestic production of biofuels and the essential infrastructure to support their production and distribution. Lastly, nearly 3 billion dollars are offered in grants to conserve and restore coastal habitats.

This Act will affect multiple business sectors, but most specifically those relating directly to Americas transition to cleaner energy. It appears to be the substantial driving force behind the Presidents earlier executive actions on climate change. It will hopefully be a tipping point to move the United States towards more sustainable practices.


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