A microgrid tax credit became a long-sought climate deal struck this week by Senate Majority Leader Chuck Schumer, DN.Y., and Sen. Joe Manchin, DW. Virginia.
The details of the proposal, known as Inflation Reduction Act of 2022 (HR 5376), are still emerging. The staff of California Congressman Jimmy Panetta (D-Carmel Valley), architect of the credit, confirmed today that the microgrid tax credit is in the bill.
Part of the previous Build back better, which stalled due to Manchin’s opposition, the 30% tax credit applies to microgrid controllers. To be eligible, microgrids must supply at least 4 kW and no more than 20 MW, according to a Disorganized of the Inflation Reduction Act circulating.
In total, the law directs $369.75 billion toward climate and energy, $300 billion toward deficit reduction, and $64 billion toward reducing costs associated with the Affordable Care Act.
The bill supports the manufacture of a range of energy and decarbonization technologies, many of which are often found in microgrids, such as solar panels and energy storage. Funding measures include:
— $30 billion in production tax credits to accelerate U.S. manufacturing of solar panels, wind turbines, batteries, and critical mineral processing
—Investment of $10 billion in tax credits for manufacturers of electric vehicles, wind turbines and solar panels
—$500 million for heat pumps and critical mineral processing
— $2 billion in grants to retool existing auto manufacturing facilities to build clean vehicles, ensuring auto manufacturing jobs stay in the communities that depend on them
—Up to $20 billion in loans to build new clean vehicle manufacturing plants across the country.
— $2 billion for National Labs to accelerate advanced energy research.
Electrification, an effort increasingly tied to microgrid development, is also getting a boost. The bill provides consumers with a tax credit of $4,000 for used electric vehicles (EVs) and $7,500 for new vehicles. The US Post is getting $3 billion for vehicle electrification, and another $1 billion is for heavy-duty electric vehicles, such as dump trucks and school buses.
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The bill’s authors say it will reduce energy costs, while reducing carbon emissions by about 40% by 2030. They predict the legislation will not require any new taxes for small businesses or families earning $400,000 or less, but will be funded largely by closing corporate tax loopholes.
President Joe Biden praised Schumer and Manchin for closing the deal. Some experts had deemed climate legislation dead for this year after Build Back Better lost support from Manchin.
“If signed into law, this legislation will be historic, and I urge the Senate to pass this bill as soon as possible, and the House to follow as well,” Biden said in a statement released by the White House.
US PIRG, an environmental organization, characterized the deal as a compromise between fossil fuel and renewable energy interests that is less aggressive in addressing climate change than Build Back Better. In particular, the organization criticized the bill for creating roadblocks to offshore wind expansion and supporting continued offshore drilling.
However, it could still be a game-changer, according to US PIRG.
“Even if this bill is passed, there is still work to be done. Not everything is perfect in the bill, but the clean energy tax credits in particular will inject a jolt of (renewable) energy into state and local efforts to reduce emissions and clean the air. They will help make it affordable for Americans of all stripes to switch to electric vehicles, put solar panels on their roofs, and buy cleaner, healthier electrical appliances that don’t pump pollution into our homes and communities.” , said Matt Casale, Director of US PIRG Environmental Campaigns. “Funding in the bill will help electrify the U.S. postal fleet and help communities clean up toxic Superfund sites, while forcing polluters to bear the cost.
The bill has been submitted to the Senate parliamentarian and could be put to a vote in the coming weeks, according to US PIRG.
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