09/26/2022 - Biden Administration Status Update - Inflation Reduction Act

Legislation that Complements the Biden Administration’s Action on Climate

by Sara Dewey

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The 117th Congress passed three pieces of legislation that will affect federal agencies’ regulatory actions related to climate change. Taken together, the new laws represent a major investment in combating climate change and building climate resilience. The policies and funding in these laws will shift the regulatory environment for agencies by, for example, making significant investments in infrastructure, clean energy, and innovation that will change the baseline for future rulemakings and build momentum for more ambitious regulations. We discuss how each Congressional action affects rulemakings throughout these reports and provide a brief summary of each below.

The Infrastructure Investment and Jobs Act[1] (commonly called the Bipartisan Infrastructure Law), signed into law in November 2021, includes $1.2 trillion investment in infrastructure, including safe drinking water, roads and bridges, public transit, ports and airports, passenger rail, electric vehicle charging, clean energy transmission, climate resilience, and contaminated site remediation.

This law provides significant funding for infrastructure improvements that can help lay the groundwork for increasingly ambitious federal rules. For example, the law allocates $7.5 billion for electric vehicle charging infrastructure, including funding for states and competitive grants for state and local governments to build publicly accessible charging infrastructure. This will help meet the goals in EPA’s clean car rules and NHTSA’s fuel efficiency standards and support the industry as it continues a transition to electric vehicles.

The CHIPS and Science Act[2], signed into law in August 2022, invests over $280 billion in semiconductor research, development, and manufacturing; wireless technologies; and research and development for future technologies. The law creates a technology, innovation, and partnerships directorate at the National Science Foundation and reauthorizes and expands research at the Department of Energy’s Office of Science and the National Institute of Standards and Technology.

The law’s investments in technological innovation and domestic production could spur research and development that will reduce the cost of low-carbon energy and accelerate the deployment of climate solutions. Over time, these improvements could drive lower-cost climate technology solutions that support agencies in establishing more stringent emissions standards. For example, the law provides funding for US production of automotive chips, which could help to boost electric vehicle production since these vehicles require more chips than gasoline-powered cars.

The Inflation Reduction Act[3], signed into law in August 2022, allocates nearly $369 billion to clean energy and climate priorities, including clean energy tax credits, sustainable fuel incentives, residential energy and efficiency tax credits, clean vehicle tax credits, low-carbon construction material incentives, clean energy financing, and funding for some environmental justice priorities.

The law’s investments will likely bring down the cost of clean technologies enabling agencies to design rules that are both ambitious and legally durable. For example, by providing tax credits for new, previously owned, and qualified commercial clean vehicles, the law has the potential to significantly lower cost and bolster demand for electric vehicles, which will create a new baseline as EPA evaluates its regulatory options for future emission standards.

You can follow our Regulatory Tracker for updates on agency rulemakings and how these new laws are shaping them.

[1] Infrastructure Investment and Jobs Act text https://www.congress.gov/bill/117th-congress/house-bill/3684/text, White House summary https://www.whitehouse.gov/bipartisan-infrastructure-law/.

[2] CHIPS and Science Act text https://www.congress.gov/bill/117th-congress/house-bill/4346/text; White House summary https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china/.

[3] Inflation Reduction Act text https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf; White House summary https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/15/by-the-numbers-the-inflation-reduction-act/.