Environmental Justice in the Inflation Reduction Act

The Inflation Reduction Act of 2022 (IRA) works to advance environmental justice (EJ) by building on  regular engagement with EJ leaders from across the country to identify environmental justice  priorities in the Build Back Better Act, and now the IRA.  

The IRA makes investments in low-income individuals and disadvantaged communities to promote: 1. Legacy pollution reduction

2. Affordable and accessible clean energy for disadvantaged communities 3. Better quality of life and good jobs

Legacy Pollution Reduction

The IRA also includes several new grant programs that address air pollution, greenhouse gas  emissions, and other legacy pollution:

∙ The Environmental and Climate Justice Block Grants, funded at $3 billion, invest in  community led projects in disadvantaged communities and community capacity building  centers to address disproportionate environmental and public health harms related to  pollution and climate change.

∙ The Neighborhood Access and Equity Grants, funded at $3 billion, support  neighborhood equity, safety, and affordable transportation access with competitive grants to  reconnect communities divided by existing infrastructure barriers, mitigate negative impacts  of transportation facilities or construction projects on disadvantaged or underserved  communities, and support equitable transportation planning and community engagement  activities.  

∙ Grants to Reduce Air Pollution at Ports, funded at $3 billion, support the purchase and  installation of zero-emission equipment and technology at ports, as well as the development  of port climate action plans, with a focus on ports in nonattainment areas.

∙ The IRA addresses legacy toxic pollution by reinstating the Superfund tax, raising over  $11 billion. This ensures that Superfund cleanups will have a guaranteed stream of funding  for years to come, reducing the pollution in our communities that is disproportionately felt  by low-income and disadvantaged communities.  

∙ A new program at the Environmental Protect Agency, the Clean Heavy-Duty Vehicles program funded at $1 billion, will cover the incremental cost of zero-emission school buses,  garbage trucks and transit buses with a specific focus on vehicles serving communities  located in nonattainment areas.

∙ $60 million for the Diesel Emissions Reduction Act grants will address diesel emissions  from goods movement facilities – like airports, railyards, and distribution centers – and from  vehicles servicing those facilities.

∙ $281 million for Air Pollution Monitoring, through air quality monitoring that will  particularly benefit disadvantaged communities exposed to areas with persistent air pollution.  ∙ $50 million to Address Air Pollution at Schools by monitoring and reducing air pollution  at public schools in low-income and disadvantaged communities.

∙ $87 million for the Low Emissions Electricity Program to support low-income and  disadvantaged communities, and offer technical assistance to industry, as well as state and  local governments, as they work to reduce greenhouse gas emissions.

∙ $25 million for Enforcement Technology and Public Information program will upgrade  the Environmental Protect Agency’s Integrated Compliance Information System and for  states and Indian Tribes to make similar upgrades.

The IRA also includes over $1 billion for implementation of the National Environmental  Protection Act (NEPA) across the Federal Government, so that executive agencies have the  resources to properly review proposed infrastructure projects. Additionally, the IRA includes  funding for the Office of Management and Budget Oversight and the Governmental  Accountability Office Oversight, each funded at $25 million, to provide transparency on how the  larger package is enacted and allow the public to ensure it delivers on EJ priorities.  

Affordable and Accessible Clean Energy for Disadvantaged Communities

The largest single investments across the climate title of IRA is in the Greenhouse Gas Reduction  Fund, a clean energy and sustainability accelerator funded at $27 billion with at least 60 percent of those funds focused on disadvantaged communities. The funding is provided to non-federal  governments, as well as state or regional green banks, and is allocated across three buckets:

∙ $7 billion for zero-emission technology deployment – including rooftop and community  solar –in low-income and disadvantaged communities.

∙ $8 billion for a general fund making broad investments in reducing greenhouse gas emissions  and promoting environmental justice, exclusively allocated to low-income and disadvantaged  communities.

∙ $11.97 billion for a similar general fund but available to all Americans and communities.

In the same vein, the IRA creates a new grant program for Improving Energy Efficiency or  Water Efficiency or Climate Resilience of Affordable Housing, funded at $1 billion, that helps  cover the cost of energy efficiency upgrades – including electrification of systems and appliances – as well as installation of renewable energy, and improvements to property resiliency.  

In addition, two new home energy rebate programs help low- and moderate-income households  increase their efficiency: the Home Energy Performance-Based, Whole House Rebates and Training Grants, and the High-Efficiency Electric Home Rebate Program. Funded at $9  billion equally split across the two programs, these investments provide single-family and  multifamily energy efficiency retrofits and electrification.

The IRA also includes a tax credit for low- and moderate-income individuals to make Used Clean  Vehicles affordable. This credit can be taken as a point-of-sale rebate making used electric and  hydrogen cars increasingly affordable for low- and moderate-income households by reducing the  price by up to $4,000.

Better Quality of Life and Good Jobs  

The IRA also makes investments to improve the quality of life and bring good jobs to disadvantaged  communities through targeted grant programs like:

∙ Over $2 billion to plant trees, establish community and urban forests, and expand green  spaces in cities, which combats climate change and provides significant community benefits  by increasing recreation opportunities, cooling cities, lowering electric bills, and reducing  heat-related death and illness.

∙ $50 million for investments in Urban Parks through competitive grants to localities for  acquisition of land or interests in land, or for development of recreation facilities to create or  significantly enhance access to parks or outdoor recreation in urban areas.

∙ Over $420 million for four programs aimed at building resilience across Tribal governments:  The Tribal Climate Resilience program, the Tribal Electrification program, an  Emergency Drought Relief for Tribes program, and the Native Hawaiian Climate  Resilience program.

∙ $550 million to ensure disadvantaged communities have the resources needed to plan,  design, and construct water supply projects, particularly in communities and households  that do not currently have reliable domestic water supplies.

The IRA makes major reforms to the existing tax code to promote clean electricity deployment, so  that future investments bring clean energy and good jobs to disadvantaged communities. Within the  Investment Tax Credit and Production Tax Credits for renewable energy, there is a new bonus  10% credits for projects built within legacy energy communities. This helps ensure cheap, reliable,  clean energy resources are available, and that the economic benefit of these investments will be felt  by all Americans.

This is further bolstered by the Increase in Energy Credit for Solar and Wind Facilities Placed  In Service In Connection With Low-Income Communities which creates a further bonus credit  within the Investment Tax Credit that provides either a 10% bonus credit for projects installed in a  

low-income community or on Indian land, or 20% bonus for projects that are a part of an eligible  low-income building or low-income economic benefit project. A low-income economic benefit  project is defined as a projected where at least 50% of the financial benefits need to flow to  households with less than 200% poverty line income or less than 80% an area’s gross median  income. Specifically earmarked for solar, solar plus storage, and wind projects, the credit is limited to  1.8-gigawatts per year, although any unused portions of the allocation can be rolled over into the  following year.  

The Extension of the Advanced Energy Project Credit, also known as the 48C tax credit,  supports industrial manufacturing retrofits to make these facilities more efficient and to incentivize  the domestic manufacturing of clean technologies. This $10 billion credit includes a $4 billion set aside to build new clean technology manufacturing facilities in legacy coal communities.