Produced by EDF in collaboration with Deloitte

The Inflation Reduction Act: A Snapshot for Business

The Inflation Reduction Act (IRA) positions the US to cut greenhouse gas emissions by up to 42% by 2030, putting the target of 50% below 2005 levels within reach

Key Sectors for Abatement

Power
Acceleration of clean electricity from solar, wind, geothermal, and nuclear

Transportation
Deployment of electric and fuel cell vehicles, commercially and individually

Industry
Industrial efficiency upgrades and carbon capture

Buildings
Electrification and efficiency improvements in commercial and residential buildings

Agriculture & Land Use
Conservation and carbon sequestration in forest and agricultural lands

Net US Greenhouse Gas Emissions

(Billions metric tons CO2-equivalent)

Sources: Princeton REPEAT Project, New York Times, Deloitte Analysis

Businesses and community partners can act now to benefit from IRA incentives, many of which took effect in January 2023

How can I get started?

Download guide

Identify relevant provisions

Learn more about the credits, grants, and loans applicable to your organization
Check eligibility criteria such as location and labor requirements
Speak with external experts to validate research and fill in knowledge gaps

Engage stakeholders

Connect with Finance, Procurement, Tax, and Government Relations to gain buy-in and build the business case
Participate in Treasury and Executive Agencies’ RFIs to drive efficient, effective, and equitable IRA implementation

Move quickly

Lock in domestic, low-emission suppliers to access IRA credit adders tied to geography, wages, apprenticeship, and more
Start preparing now to be able to meet incentive caps for grant programs and capitalize on first mover advantages

With $369 billion in climate and clean energy investments, the IRA is the largest, most ambitious climate legislation ever passed by Congress

IRA Climate Spend by Category

based on Congressional Budget Office (CBO) Data

Sources: Deloitte Analysis, CBO, CPC Center, Credit Suisse

The Congressional Budget Office’s estimate of $369 billion is conservative. Others project over $800 billion in federal spending and up to $1.7 trillion in total spending including private-sector investment over the next decade.

Five sectors are likely to benefit most directly from the IRA’s climate-related provisions. Buyers and Producers in key abatement sectors may benefit from IRA credits, incentives, grants, and loans to advance their climate goals

Power

Sample Relevant Provisions

Sec. 45/45Y: Renewable electricity production credit modification and extension
Sec. 48/48E: Renewable energy investment credit modification and extension

Projected Sector Impact

Accelerated renewable energy production
Lowest levelized cost of clean electricity in world
Cost competitiveness of green hydrogen with blue
Increased nuclear power production

Producer Benefits

Increase deployment of renewables such as solar and (offshore) wind (Sec. 45/45Y, 48/48E)
Secure additional federal funding from adders for specific labor, location, and sourcing practices (Sec. 45/45Y, 48/48E)
Secure domestic input material suppliers for wind and solar to mitigate supply chain bottlenecks

Buyer Benefits

Shift portfolio of purchased electricity to renewable energy though PPAs, VPPAs, RECs, and/or green tariffs to lower costs and emissions
Build decentralized, on-site energy systems that combine solar, wind, and battery storage to decrease price volatility, avoid outages, and sell excess back to grid (bundle Sec. 48/48E)

Transportation

Sample Relevant Provisions

Sec. 45W: New commercial vehicle credit for electric and fuel cell vehicles
Sec. 30C: Reinstated credit provides 30% tax credit for EV chargers (up to $100,000) in qualifying areas

Projected Sector Impact

Accelerated EV adoption by several years as price parity with ICE approaches
Decreased TCO for electric trucks, likely below that of diesel trucks for most light and medium duty truck usage cycles

Producer Benefits

Utilize federal funding to accelerate domestic clean vehicle manufacturing, production, and assembly (incl. components) to become eligible for demand side incentives (Sec. 45X)
Offer smart charging as a service to increase EV uptake and generate additional revenue (Sec. 30C)

Buyer Benefits

Electrify commercial fleets, especially light and medium duty trucks to decrease costs and emissions (Sec. 45W)
Install charging infrastructure to support EV fleet conversion (Sec. 30C)
Convert to biofuels, SAF, and/or fuel cells where electrification is not feasible or viable

Industry

Sample Relevant Provisions

Sec. 45X: Production credit for the manufacture of wind, solar, battery and electroconductive materials
IRA Sec. 50161: Project-based grant funding for upgrading and retrofitting manufacturing plants to reduce emissions

Projected Sector Impact

Boost in domestic production of key energy and EV components
Improved economics for carbon capture and DAC
Accelerated timeline for emerging clean tech in hard-to-abate sectors

Producer Benefits

Utilize federal funding to expand domestic production of clean technology components to meet increased demand (e.g., solar, wind, battery, EV, hydrogen) (Sec. 45X)
Utilize federal funding to upgrade or retrofit manufacturing facilities to decarbonize and electrify production (IRA Sec. 50161)

Buyer Benefits

Source from domestic, low-emission suppliers to reduce indirect emissions and build supply chain resiliency
Consider strategic alliances with suppliers (e.g., joint ventures) to benefit from domestic manufacturing incentives (Sec. 45X)

Buildings

Sample Relevant Provisions

Sec. 179D: Enhanced deduction for energy efficiency improvements in commercial buildings
Sec. 48/48E: Enhanced investment tax credit continues to support geothermal heat pumps and solar for commercial energy efficiency

Projected Sector Impact

Significant expected increase in commercial building EE retrofits
High expected demand for residential demand-side EE products incl. lighting, HVAC, and building envelope

Producer Benefits

Source from green construction materials such as low carbon cement and steel, leveraging emissions labeling programs (IRA Sec. 60112, 60116)
Integrate smart charging into building design to benefit from enhanced charging credit (Sec. 30C)

Buyer Benefits

Improve energy efficiency through HVAC and lighting upgrades, heat pumps, hot water systems, or building envelope upgrades to qualify for up to $5/sq-ft. deduction or investment tax credit (Sec. 179D, 48/48E for heat pumps)
Eliminate on-site fossil fuels and build decentralized, on-site energy systems (bundle Sec. 48/48E)

Agriculture & Land Use

Sample Relevant Provisions

EQIP, ACEP, CSP and RCPP: Additional funding for working lands grant programs that help agricultural producers implement climate-smart agricultural practices
IRA Sec. 22003: Funding for biofuel infrastructure and market expansion

Projected Sector Impact

Advancement of climate-smart and organic farming and conservation practices
Improved climate change adaptation and resilience of agricultural production

Producer Benefits

Utilize federal funding to adopt climate-smart farming practices
Increase renewables and electrification for farm operations/vehicles (REAP)
Produce agricultural feedstocks for sustainable biofuels (provided no negative impact on land use) (Sec. 40, Sec. 45Z, IRA Sec. 22003)

Buyer Benefits

Source agricultural inputs from suppliers using climate-smart practices, providing financial incentives where possible, to reduce upstream emissions

Resources, forms and descriptions of IRA tax credits and deductions.

Learn more

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Credit: Environmental Defense Fund and Deloitte
This document was produced by Environmental Defense Fund in collaboration with Deloitte Consulting LLP. The views within the report are that of Environmental Defense Fund, and do not necessarily reflect the views of report partners or collaborators.

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