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What the Inflation Reduction Act's climate investment means for Mainers

Employees of NY State Solar, a residential and commercial photovoltaic systems company, install an array of solar panels on a roof, Thursday, Aug. 11, 2022, in the Long Island hamlet of Massapequa, N.Y.
John Minchillo
Employees of NY State Solar, a residential and commercial photovoltaic systems company, install an array of solar panels on a roof, Thursday, Aug. 11, 2022, in the Long Island hamlet of Massapequa, N.Y.

The Inflation Reduction Act approved by Congress last month includes $369 billion for energy security and climate change. President Biden claims it’s the biggest climate investment in American history. And doubtless it will help the companies that are producing renewable energy, heat pumps, and electric vehicles. But what does it mean for everyday Mainers?

Robbie Feinberg spoke with Maine Public climate reporter Murray Carpenter, who has been looking into this.

Robbie Feinberg: We’ve heard from a few listeners wondering what the climate elements of this legislation will mean for average Mainers. What have you been able to glean from this bill, it seems to be really sweeping, right?

Murray Carpenter: It sure is. And parts of the bill deal with prescription drugs, and with taxes. And just on the climate end of the bill, a lot of it is geared toward industrial policy–providing incentives for companies that build electric vehicles, and heat pumps and solar panels, that sort of thing. But there is also a lot in here for the consumer.

Okay, so take us through these consumer benefits. For one, I've heard that it could help people who want to install solar panels on their roof.

It does, for sure. The bill raises the tax credit for rooftop solar from 26 percent to 30 percent. That may not sound like a big jump, but it’s notable for this reason–that tax credit is now locked in for 10 years. That gives homeowners and solar installers some stability for planning.

And it’s worth noting that this tax credit is in effect now, for this year, as is a similar tax credit for geothermal heating. And then tax credits for homeowners who want to install heat pumps, or invest in energy efficiency for their homes, will kick in next year.

I spoke with Jeff Marks, of the Maine nonprofit Climate Work, and he really likes the elements of the bill that apply to residential homeowners.

“The tax credit for renewable energy like solar combined with the efficiency and the heat pump provisions in here provide incredible incentives for Mainers to save energy as well as save money," Marks says.

Marks also pointed out that the bill will go a long way toward advancing the work that’s already been started by Efficiency Maine, and the state’s Maine Won’t Wait climate plan.

Okay, so this sounds good for people who own homes. But how much is actually in here for people who might not own their homes?

The bill also provides incentives for renters to get discounts for subscriptions to community solar projects, so they can get carbon-free energy without actually owning solar panels. And this is one of the aspects of the bill that several people have mentioned to me. It’s got pro-rated benefits, so that those with lower incomes get more benefits than people with more money.

The Acadia Center, a regional nonprofit with a focus on climate change, even made a series of Instagram posts, breaking down the benefits down by income levels. The Center’s Ben Butterworth told me that the bill does more than just offer tax credits.

"The upfront discounts for low-and moderate income folks are a really critical piece of this bill and something that a lot of people are excited about," says Butterworth. "Because tax credits are one thing, but when you can actually deliver upfront discounts, it’s a total game changer for low and moderate income households.”

Butterworth says the upfront discounts will apply to heat pumps, electric stoves, weatherization projects, and even electric panels and wiring.

Okay, but I know that here in Maine we've already got a lot of these kinds of incentives, just being offered by the state incentives. So how are these federal rebates going to work in cases where a state already has similar incentives?

This is going to be a tricky area. Michael Stoddard, the executive director of the Efficiency Maine Trust, says his staff has been poring over the bill to get a handle on it, especially in cases where it could overlap with existing state policy.

“There may be some places where we’re able to stack state incentives together with federal incentives," says Stoddard. "There may be other places where that won’t really work, and we’ll have to reconcile them, and it may be one or the other, or some combination.”

Stoddard also pointed out that the law is still very new, and federal agencies still have to issue guidance on it, and do rulemaking. That process could clarify the benefits to individuals, but it will take some time.

I also want to make sure we talk about electric vehicles here, because this is one of the biggest parts of this bill that people have talked about. How will the incentives for EVs work?

Yes, there’s a lot of interest in this angle. And here, too, there is some confusion about which cars will qualify. Basically, you can get up to a $7,500 tax credit for the purchase of an EV. That tax credit, though, is really split in two: $3,750 for the vehicle, and an equal amount for the battery. Over time, these credits will become more strict, to apply only to cars built in North America, and batteries sourced from friendly nations.

But even with the tax credits, electric vehicles can still be pricey. So there is also $4,000 tax credit for buying used electric vehicles. You can qualify for this if you make less than $75,000; or $150,000 for married people filing jointly.

You’re right, there’s a lot to take in there. So what would you say that motivated consumers should do now if they want maybe add solar panels or a heat pump?

Everyone I talked to said that although many of these perks won’t kick in until next year, it’s not too soon to start planning to do some of the home improvements, or making the purchases.

Murray Carpenter is Maine Public’s climate reporter, covering climate change and other environmental news.