What’s on the IRA menu for Ashland? A lot
By Diarmuid McGuire
Whew. The U.S. Congress just approved the biggest climate smorgasbord ever. The IRA (Inflation Reduction Act, not to be confused with your Individual Retirement Account or the Irish Republican Army) may be the climate legislation we have been hoping for since Dr. James Hansen hit the global warming alarm button in testimony to a Senate committee in 1988.
This historic bill has been passed by both chambers (a miracle in itself) and, on Tuesday, was signed into law by President Joseph Biden. (When you put your name on something this big, you are no longer just Joe.) Normally calm pundits are giddy. “Did Democrats Just Save Civilization?” asks economist Paul Krugman, who seems to think the answer is “Yes, maybe.”
But what’s on the table for you, me and our Ashland community?
First of all, there is stuff that has nothing to do with climate, like lower drug costs for Medicare recipients, financial assistance for people enrolled in Obamacare and more money for the IRS to collect more money. Think of the IRA as a big climate banquet with a side of healthcare.
The banquet itself is sumptuous indeed. It includes serious investments in the supply side of renewable energy: $30 billion in tax credits to stimulate production of solar panels, wind turbines, batteries, and processing of critical minerals; another $10 billion in credits for factories to manufacture electric vehicles and solar panels; another $500 million (via the Defense Production Act
) to produce heat pumps and process critical minerals like lithium for batteries.
For those of us at the consumption end of the energy economy, this may mean a larger share of renewable energy when we flip a light switch and possibly lower electricity bills down the road. Such indirect benefits are good, but they don’t exactly make our hearts beat faster.
So where is the beef in this sandwich?
Those of us who wish to shrink our personal carbon footprints sooner rather than later will find tasty items on the menu. If you have been following the climate change discussion here in Ashland, you know that most of our individual contributions to the global warming problem come from two sources: home heating (including interior spaces, water and food) and transportation. Basically, we are talking about “natural” gas (methane) and gasoline/diesel.
To support home electrification, IRA architects included two rebate and incentive programs totaling $9 billion. One of these measures, the High-Efficiency Electric Home Rebate Act (HEEHRA), had been gathering dust on the Congressional loading dock. Based on a Rewiring America plan, it’s aimed at quickly helping low- and moderate-income households afford not just electric heat pumps and other devices, but the broader home electrical upgrades needed to support them.
Low-income households, defined as those earning 80 percent or less of area median income, will be eligible for a rebate of up to $8,000 to cover the full cost of equipment and installation for a heat pump for space heating; up to $1,750 for a heat-pump water heater; up to $840 for an electric stove or electric clothes dryer; and up to $1,600 for insulation, ventilation and sealing. Those that need to upgrade their household electrical system can receive up to $4,000 for an upgraded electrical panel and up to $2,500 for upgraded electrical wiring. Moderate-income households earning between 80 and 150 percent of area median income will receive the same rebates but capped at no more than half of their total costs.
Here in Ashland, these programs will add a meaningful step toward equity as we move toward a sustainable future. Unfortunately, they will not kick in immediately. The plan is for the U.S. Department of Energy to distribute the funds via state energy offices. Oregon may need to create such an office along with the necessary rules and procedures. This process is likely to require several years. For updates as the process unfolds, check out Electrify Ashland Now! which provides information and support to help local homeowners switch off “natural” gas and go 100% electric.
How about that other big piece of your personal carbon profile, the automobile? Again, there are substantial items on the menu but they may not be available immediately. For new electric vehicles (EVs), a $7,500 tax credit could be applied at the point of sale. Those who purchase used EVs could be eligible for up to a $4,000 credit. The legislation would also do away with a previous limit that kept EV manufacturers from being able to offer tax credits once they sold 200,000 vehicles.
But there are catches. New electric vehicles must be assembled in North America using critical components and minerals that are sourced domestically or acquired from free-trade partners, i.e. not China. Also the EV cannot be too expensive. Vans, SUVs or pickup trucks can’t exceed $80,000, while other types of vehicles can’t cost more than $55,000. Used EVs could be eligible if they cost no more than $25,000. High end Model S Teslas and Rivians need not apply. Tesla, the leading EV manufacturer, is far from out of the game: the Model 3, which retails for $48,440, is well under the price cap and is mostly made by domestic suppliers from domestic materials. Several other EV manufacturers — Ford, GM, Nissan, and others being made in the U.S. — have models available beneath the $55,000 price cap.
More great news is that Congress has made EV incentives long term. This program is scheduled to continue until 2032. This commitment should help move us past current supply chain difficulties. If you are fortunate enough to afford current EV prices, go for it! For everyone else, patience and persistence will be needed while supply chain issues are resolved. For local EV intel and resources, check out the Siskiyou and Oregon Hybrid & Electric Vehicle Association (SOHEVA.net).
Home electrification and EV purchases are individual and family options available to people who can afford them. But what about neighbors who do not have the means to exercise those options? The bill does include $3 billion in block grants for community initiatives that could include addressing pollution and urban heat, funding climate resiliency projects and investing in clean energy, such as community solar. This sounds very much like the mission of Ashland Climate Collaborative and other local climate organizations.
Would Ashland qualify for a block grant? Like much else in the IRA basket, that remains to be seen. Our local elected officials need your encouragement to stay on top of this funding stream to make sure that IRA programs become available to Ashland residents.
What we do know is that, buried somewhere in the 730-page Act that Joe Biden signed Tuesday, are guidelines and requirements for states that wish to claim funding for incentives and block grants. This ball is now in Salem’s court. Note to legislature: Let’s start this ball rolling.
Email Ashland.news contributing writer Diarmuid McGuire at firstname.lastname@example.org. McGuire is married to state Rep. Pam Marsh.