In 2022, Congress passed the Inflation Reduction Act (IRA)—a historic piece of legislation and the first federal bill to tackle climate change directly. The IRA is a sweeping package designed to put the United States on track to reduce carbon pollution by 40% by 2030. Among its many provisions, the IRA offers significant incentives for clean energy, which form the backbone of its emissions reduction strategy. According to the Citizens’ Climate Lobby (CCL), the clean energy tax credits included in the IRA are responsible for the majority of its potential climate benefits.

The IRA passed through Congress using a legislative process called “reconciliation.” This process allows budget-related bills to pass the Senate with a simple majority rather than the usual 60-vote threshold needed to overcome a filibuster. It’s an important tool for passing major legislation when the political divide is tight, like it was in 2022.

Beyond its broad focus on reducing inflation, the IRA includes a number of programs aimed at cutting emissions, investing in communities, and promoting energy security. These initiatives include investments in domestic clean energy production, support for electric vehicles and charging infrastructure, funding for energy-efficient building improvements, and incentives for carbon capture and storage technologies.

Each of these programs opened up possibilities for a major shift toward a more sustainable economy. Central among them are clean energy tax credits, which are key to expanding renewable energy in the United States.

Clean energy tax credits lower the cost for businesses and individuals to invest in renewable energy solutions like solar, wind, and battery storage. Essentially, they allow taxpayers to claim a credit—a dollar-for-dollar reduction—on their tax bill for clean energy investments.

These credits make clean energy more affordable and accessible, driving widespread adoption in states and creating jobs across the country. Some examples of these credits include the following:

• Investment Tax Credit: For installing solar panels, battery storage, and other clean
  technologies.
• Production Tax Credit: For generating clean electricity from wind, solar, and other
  renewable sources.
• Clean Vehicle Credit: For purchasing new and used electric vehicles.
• Energy-Efficient Home Improvement Credit: For upgrading home insulation, windows,
  and heating/cooling systems.

These incentives are designed to last over the next decade, providing the stability businesses and consumers need to plan clean energy investments.

The IRA’s benefits have already been felt in Iowa, where we have seen substantial new investments leading to clean energy projects generating thousands of jobs and bringing in millions of dollars in federal support.

Here, the clean energy sector has seen a major increase in new projects, ranging from wind farms to carbon capture initiatives. The controversial carbon capture pipeline project, for instance, has been advanced in part because of the incentives the IRA offers for carbon
management technologies.

Currently, clean energy tax credits are being threatened at the federal level. A bill to reduce and eliminate clean energy tax credits is working its way through Congress, despite a notable history of bipartisan support. If this bill passes through both the House and the Senate, incentives for a more sustainable future will be cut, along with the jobs and benefits that accompany them.

Supporting the IRA’s clean energy tax credits means supporting a future where young people, including young Iowans, can thrive in a more prosperous, sustainable world.