The milestone bill – known as the Inflation Reduction Act – includes $369bn for energy security and climate change programs over the next 10 years, and marks the largest investment on the issue in US history. By making such a significant commitment to financing and incentivizing climate action, the authors of the bill hope to achieve an estimated 40% reduction in greenhouse gas emissions by 2030.
LRQA is prepared to help international clients place ESG (Environmental, Social and Governance) issues at the top of their economic agendas and transition to a cleaner, more sustainable world.
The company’s sustainability experts recently spoke at a logistics/transportation conference in San Diego, California on the topic, where the move to electric vehicles was an example of just one area where financing was identified as the biggest obstacle, both in relation to the vehicles themselves and the infrastructure to support them.
The Inflation Reduction Act should help address such financing issues, focusing on financing renewable energy sources, alternative fuels for both mobile and aviation, clean hydrogen, and electric vehicles. It will make the business case for moving to cleaner energy more financially attractive, compared to maintaining current practices using fossil fuels.
The bill will also support energy efficiency projects in commercial buildings. One example, the Energy Efficient Commercial Buildings Deduction would allow tax deductions for specific energy efficiency projects in commercial buildings like upgrades on interior lighting systems, heating, cooling, ventilation, or hot water systems, plus the building envelope.
As companies like FedEx, Pepsico, and Amazon set carbon neutral goals and investors realize that climate risk is a significant consideration, it is good to see federal support stepping up. Though the bill will not get the US to net zero on its own, it is a first move towards financing a carbon-free future.