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• Data to defend the IRA training page: https://community.citizensclimate.org/resources/item/19/566

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Data to Defend the Inflation Reduction Act

January 16, 2025

Presentation Slides: cclusa.org/defend-IRA-slides

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About Our Speaker

Dana Nuccitelli

Research Coordinator for

Citizens’ Climate Lobby

Environmental Scientist

Climate Journalist for

Yale Climate Connections

2022 SEAL Award

2016 NCSE Friend of the Planet Award

Three Learning Goals

What does the political climate look like for the IRA in 2025?

Which provisions in the IRA are the most important to preserve for the climate?

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What climate policies were included in the Inflation Reduction Act?

1

2t

3

What’s in the IRA?

Paris

Target

27% cut

Business as Usual

Business as Usual

Inflation Reduction Act

27% cut

40% cut

What’s in the IRA?

• Clean electricity tax credits
• Electric vehicle incentives
• Methane pollution fee
• Building electrification and efficiency incentives
• Natural climate solutions
• Carbon capture and storage
• … and more!

The New Political Climate

The Political Climate in 2025

• Republicans hold very slim majorities in both the House and Senate
• Every Republican MOC holds a lot of power, faces a lot of pressure
• Last time in 2017, their signature bill was the Tax Cuts and Jobs Act
• Many of those tax rate cuts for individuals are set to expire in 2025

The Political Climate in 2025

• Cost to extend the Tax Cuts and Jobs Act another decade: $4 trillion
• Many Republican MOCs want to pay for some of that budgetary cost
• IRA repeal would pay for some
• IRA-funded projects have created a lot of revenue and manufacturing jobs
• Many Republican MOCs want to preserve some IRA provisions

On the Chopping Block

900 Clean Tech Executives Survey

Letter from 18 Republican MOCs

“Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing. A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”

Guiding the Scalpel

"You’ve got to use a scalpel and not a sledgehammer, because there’s a few provisions in there that have helped overall."

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- Speaker Mike Johnson (R-LA)

Which IRA Provisions are Most Important for Climate?

Clean Electricity Tax Credits

These apply to power generation:

• Clean electricity investment tax credit (48E) for investments in clean electricity facility deployment
• Clean electricity production tax credit (45Y) for facilities that produce clean electricity

Clean Electricity Tax Credits

• Advanced manufacturing production tax credit (45X) for domestic manufacturing of components for solar and wind energy, inverters, battery components, and critical minerals
• Advanced energy project investment tax credit (48C) for projects that re-equip, expand, or establish an industrial or manufacturing facility for:
• the production or recycling of clean energy equipment and vehicles;
• the processing, refining, or recycling of critical materials; or
• installing equipment designed to reduce the facility's greenhouse gas emissions by at least 20%

Clean Electricity Tax Credits

• Would double US clean electricity generation capacity by 2035
• Repeal would result in by 2040:
• $336 billion less investment
• 237 gigawatts less clean energy
• 10% higher electricity rates
• $142 per year increase in household electricity bills

Clean Energy

Clean Energy

EV Tax Credits

• Tax credit for new EVs (30D) up to $7,500 if certain criteria are met
• Tax credit for used EVs (25E) up to $4,000 if certain criteria are met
• Tax credit for commercial EVs (45W) up to $7,500 if purchased by businesses for commercial purposes. Currently applies to vehicles purchased by car dealerships and leased to individual car buyers (the "leasing loophole")

EV Tax Credits

As with clean energy manufacturing, domestic battery & other EV component manufacturing can qualify for:

• Advanced Energy Project investment tax credit (48C)
• Advanced Manufacturing production tax credit (45X)
• Congress could keep manufacturing credits but repeal EV credits, but the latter incentivize the former

EV Tax Credits

Of the projects and facilities built/planned with IRA funds:

• 238 of 388 (over 60%) involve EV and battery manufacturing plants
• Accounting for over $126 billion out of a total $159 billion in IRA-related investments (nearly 80%)

EV Tax Credit Flaws

• Recent study estimated tax credits will only increase EV sales ~20% through 2035
• Usually used by relatively wealthy Americans who would buy EVs or efficient vehicles
• Not very economically-efficient ($310/ton of CO2 reduced)
• BUT they do reduce emissions

Manufacturing

EV Manufacturing

Methane Pollution Fee

• First federal price on a climate pollutant
• Applies to oil & gas leakage not in compliance with EPA regulations
• Generates a little revenue ($7B)
• Big oil & gas companies like ExxonMobil support methane policies
• Many small oil & gas companies and their advocates like the American Petroleum Institute oppose them

Building Electrification & Efficiency

• Tax credits & rebates to make homes and other buildings more efficient
• Heat pumps, rooftop solar & batteries, weatherization, energy audits
• CCL has lots of educational resources on these, Electrification Action Team
• A lot of the rebate funding has already been obligated; tax credits vulnerable

Climate-Smart Agriculture

• $20B over 5 years for climate-smart agriculture via USDA conservation
• These programs are very popular, oversubscribed by farmers
• Includes practices like cover cropping, low-till agriculture, and planting more trees on farms and pastureland
• We want to keep these funds directed at projects that will “reduce, capture, avoid, or sequester carbon dioxide”

Industrial Carbon Capture

• Tax credits for carbon dioxide capture and sequestration (45Q) either for:
• Capturing the carbon from a smokestack (carbon capture) or
• Removing it from the atmosphere (direct air capture)
• Not yet widely implemented
• Bipartisan appeal for reducing climate pollution and benefitting industries responsible for that pollution

CCL IRA Projects Database

cclusa.org/defend-IRA-data

• Projects in 170 congressional districts (almost 40%)
• 101 Republican MOC districts, 69 Democratic MOC districts
• Projects in 40 states
• Useful data for lobbying, grassroots, and grasstops efforts

Time For Questions

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