By Dawn Lewis
Passage of the Inflation Reduction Act (IRA) in August 2022 was great news for all engaged in Creation Care and concerned about the impacts of growing climate change. This act has the potential to help reduce America’s carbon emissions 40% by 2030. But in order to reach that goal, we need to act! That means taking advantage of the support and incentives enacted by the law should be utilized. Faith institutions can play a large role in that action, investing in green infrastructure, serving as role models for their communities in this arena, helping save God’s creation and saving money as well.
There are six primary categories of climate pollution cuts achieved by the Inflation Reduction Act:
- Tax credits for clean energy sources like wind and solar
- A fee on methane pollution that combines with EPA methane regulations
- Tax incentives for new and used EVs
- Rebates and tax credits to assist homeowners in electrifying and making their homes more energy efficient
- Funding for natural climate solutions like forests and agriculture, and
- Investments in clean technology innovation and manufacturing in the US
In the past these tax credits/incentives were not as beneficial to religious institutions as they are tax-exempt, but now for the first time they can take advantage of these benefits. In lieu of a typical tax credit, faith-based communities can receive a ‘direct pay’ tax credit. It’s as if the church paid the tax and thus gets a refund for the owed amount of the project. Projects will include investing in renewable energy projects such as solar arrays, electric vehicles and charging stations, etc.
These are some of the major areas where churches can benefit:
Solar
- IRA will cover 30% or more of the cost of a solar project and installation
- Net Metering–if a solar provider doesn’t use all of its solar energy, in most states, customers will receive a credit known as net metering.
- Extra savings are available if all steel and iron components are manufactured in U.S. (10%); Project is based in a low-income community (10%); Project is based in an ‘energy’ community that has been dependent upon fossil fuels (10%).
Electric Vehicles
- Tax-exempt organizations can purchase a qualified commercial clean vehicle which may qualify them for a clean vehicle tax credit of up to $40,000. This would include vans, small buses, etc. for church transport.
- The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) of under 14,000 pounds and $40,000 for all other vehicles.
- Vehicles must be made by government-approved manufacturers as noted here.
- Funding for half a million electric chargers established across the country by various organizations including faith institutions. Up to $100,000 for commercial usage.
- Special support for churches in rural communities.
Clean Energy Support
Depending on the region and specific initiatives in place, the IRA and BIL (Bipartisan Infrastructure Act) provide government grants, subsidies, or incentives to support energy efficiency upgrades. These programs aim to encourage organizations, including faith-based ones, to adopt energy-efficient technologies. These can include upgrades and purchase of HVAC systems, circuit systems, wiring and insulation, heat pumps, etc. Researching local or national energy efficiency programs can help organizations identify potential funding opportunities.
As Christians devoted to creation care, we are very dedicated to protecting the viability of our land, the air we breathe and the water we drink, not just for ourselves but for all of us. Climate justice is core to our work on this issue. So, we are grateful for the Justice40 initiative embedded in the IRA that dedicates 40% of this funding to communities who are most vulnerable and marginalized, and who are at higher risk of bearing the brunt of climate change. Religious institutions in these zones are eligible for higher tax credits and funding with their transformation to renewable energy initiatives.
It is important to note that the availability and nature of government incentives, acts or programs can vary by county, state and region. Consultation with local government agencies, consultants or environmental organizations is important in order to get the most accurate and up to date information on these IRA initiatives as modifications are still ongoing.
Below are some helpful links:
Department of Energy Efficiency support
IRS Tax Incentive/Credit Information Page
Interfaith Power and Light IRA Information Page
Dawn Lewis splits her time between the southwest and the southeastern U.S. A longtime United Methodist with a passion for creation, she has experience in small groups and with organizations that seek good in the world and lends her expertise to the effort.