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Breaking Down the Clean Energy Incentives in the Inflation Reduction Act

Policy
Senator Schumer discussing the Inflation Reduction Act in public

Last month President Joe Biden signed a bill that secured the largest investment in the United States’ history to combat climate change and invest in clean technologies. An analysis of the bill from Senate Democrats predicts that the bill will help the United States lower greenhouse gas emissions by about 40 percent by 2030. 

The Inflation Reduction Act is 730 pages of not-so-easy to read legislation with topics covering healthcare, energy, electric vehicles, corporate taxes and more. Keeping in mind that reading through federal legislation is time consuming and may not be easy to understand, this blog will break down the key points relating to clean energy from the Inflation Reduction Act from the information that’s available at this time. 

Changes to the investment tax credit 

The tax credit that’s received for installing clean energy technologies has now increased from 26 percent back up to 30 percent and will be in effect until 2032. The tax credit will be available for both residential and commercial projects installed this year and moving forward. The investment tax credit will decrease to 26 percent in 2033 and 22 percent in 2034. 

The biggest change relating to the tax credit is that it includes a direct pay provision for a nonprofit or a state, local or tribal government. Previously, those entities were not able to use the tax credit available so often entered into power purchase agreements or leases to utilize the tax credit. We are excited for our nonprofit Solar Moonshot Program participants, which will now be able to utilize direct pay and own their systems outright from the day their rooftop solar power systems are energized. Unfortunately, residential customers are not eligible for the direct pay provision, however, residential customers who do not have the tax appetite to make use of the tax credit, are now about to transfer or sell the credits. 

There are also a number of adders that may increase the percentage of the tax credit. An additional 10 percent is available if the system is installed in an area with significant fossil fuel extraction or a brownfield. Another additional 10 percent is available for using domestic materials, which requires all steel and iron to be sourced from the United States and 40-55 percent of the value of manufactured products to be from the United States.  Finally, an additional 10 percent adder is available for solar projects that sell their electricity via community solar to low income households. The adders are also stackable meaning if a project has the 30 percent tax credit, a 10 percent adder for domestic materials, a 10 percent adder for being located in a fossil fuel community and another 10 percent for being a community solar project, the tax credits could potentially reach up to 60 percent of the total system cost. 

Prevailing wage and apprenticeship requirements 

New employment requirements exist for large clean energy projects 1MW or more. In order to be eligible for the standard 30 percent tax credit, workers installing solar projects must be paid prevailing wages and be part of an electrical apprenticeship program. Violations will not only result in projects unable to claim up to 24 percent of the 30 percent tax credit but also heavy fines of $5,000 for each worker who is underpaid. Furthermore, if the inability to meet the wage requirements is found to be intentional, the fine will double to $10,000 per worker.  

Additional incentives and information

There are many other investments in the bill including tax credits for electric vehicles, electrical panels and more. There are also details that are not determined yet, for instance about the time it will take for direct pay to be paid out, which we’ll update you on as the information becomes available. Sign up for our newsletter to be notified when part two of this blog, which will dive into transportation investments, is available.

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Image of a garbage patch

How to Celebrate the Holidays Sustainably in the time of COVID-19

If you’re scrambling for last-minute holiday gifts (like some of us), it can be tempting to give in to Amazon Prime delivery and the holiday deals at big businesses, throw the likely unethically and unsustainably made items in a gift bag, and call it a day. But with economic losses resulting from the pandemic, and continued impacts of climate injustices,it is even more important to shop ethically and sustainably this year.

If you’re scrambling for last-minute holiday gifts (like some of us), it can be tempting to give in to Amazon Prime delivery and the holiday deals at big businesses, throw the likely unethically and unsustainably made items in a gift bag, and call it a day. But with economic losses resulting from the pandemic, and continued impacts of climate injustices,it is even more important to shop ethically and sustainably this year.


With transportation accounting for 28 percent of total greenhouse gas emissions in the U.S. by economic sector in 2018, and an increase in package deliveries around the holidays, shopping at local, small-owned businesses with sustainably made or second hand gifts is one of the best ways to resist climate change and stimulate the local economy. If you choose to leave your house for holiday shopping, walking or biking to a small owned business is encouraged. In particular, we’re considering how we can best support small businesses owned by Black folks, Indigenous friends and People of Color. If there’s one thing we took from 2020, it’s that our actions are needed to continue showing up for racial and environmental justice.


With the recent rise in COVID-19 cases, shopping in person is not considered the safest option for folks. Many small businesses have gotten creative with local delivery and if you have friends or family who will be shopping in person this year, consider reaching out to them to arrange no-contact drop offs from your favorite local shops. If neither of those options are working out, consider getting gifts delivered to your loved ones from small businesses local to them, so you can save on emissions from shipping presents to them from where you are. In these uncertain times, we’re reminded that the health of our communities and the health of the planet are interdependent. Regardless of whether or not you’re leaving your house to get gifts, there are so many other ways to celebrate sustainably this holiday season--and for good reason. The EPA estimates that the American household waste increases by more than 25 percent between Thanksgiving and New Year’s Day for an estimated additional one million tons of wasted food, shopping bags and gift wrap per week! Along with buying items that are ethically and sustainably made, here are additional tips for a more conscious holiday celebration this year:


1) Say no to plastic and paper bags when buying presents

  • This one may be a little harder while reusable bags are not allowed in some stores, but many stores will allow you to bring them in as long as you bag your items yourself.

2) Rethink gift wrapping

  • If you don’t have gift wrap or bags leftover from previous years, instead of buying new ones, you can opt to use newspaper, reusable bags, reusable gift wrap (for a gift that really keeps on giving!), any leftover shopping bags or just skip the wrapping altogether! If you’re sending packages yourself, consider looking on websites like OfferUp, Buy Nothing or Nextdoor for free shipping boxes.

3) Aim for little to no food waste

  • In San Diego, we typically throw away 40 percent of food, which is higher than the national average. Instead of contributing to that already staggering number, we can be proactive about food waste this year and prevent an increase in methane emissions from adding to over overflowing landfills. We can do this by preparing “just enough” rather than way too much, distributing leftovers to friends, family and houseless folks, freezing leftovers we’re likely to eat and composting the scraps we don’t use while cooking.

4) Get creative for gift giving

  • Do-It-Yourself (DIY) gifts are even more popular this year as we’re spending most of our time at home. Think outside the box for a meaningful, hand-made gift that uses household items. Need inspiration? Pinterest always has great DIY ideas!

5) Gift intentional quality time to your quarantine partners

  • If you’re quarantining with someone you want to spend quality time with, like a friend or significant other, consider planning a thoughtful hangout or date at a COVID-safe place like your home or a park that isn’t crowded. Make it special with energy efficient LED string lights, games, plant-based and locally sourced food (if accessible) and holiday-themed sweaters and music!

6) Gift a donation on behalf of a loved one

  • A great alternative to buying people more things they likely don’t need is donating to a nonprofit organization on behalf of the person receiving the gift. You can even symbolically adopt an animal through the World Wildlife Fund, and the funds go towards programs to help conserve and protect that species.

7) And for last minute gift ideas…


Thanks for caring and reading this post. Individual actions add up and can make an impact reducing carbon emissions contributing to the climate crisis. Happy holidays! 

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Biker riding in the city in front of shops

Biking as a Solution to the Climate Crisis

The San Diego Climate Hub hosted its second quarterly event, Biking a Solution to the Climate Crisis, on Thursday, December 10. The San Diego community engaged in an interactive discussion about how bicycling is one of many solutions to help reduce our CO2 emissions, which exacerbate the climate crisis and contribute to climate injustices. 

The San Diego Climate Hub hosted its second quarterly event, Biking a Solution to the Climate Crisis, on Thursday, December 10.  The San Diego community engaged in an interactive discussion about how bicycling is one of many solutions to help reduce our CO2 emissions, which exacerbate the climate crisis and contribute to climate injustices. 

 

The free event included a presentation with speakers from the nonprofit organizations Bike San Diego, Climate Action Campaign, SanDiego350 and Sierra Club San Diego, and the panel was moderated by Denice Williams with Black Girls Do Bike and the San Diego County Bicycle Coalition.  After the panel there was a Zoom breakout session where fellow activists were able to get to know each other and share about their interest in biking.

San Diego is the eighth largest city in the nation yet ranks sixth for having the worst air pollution. Communities of concern, surrounded by freeways in San Diego, experience higher rates of asthma and pollution related-illnesses, and have a shorter lifespan than communities in other parts of the city.  This is an example of a climate injustice. More people who bike instead of drive dirty, gas vehicles can help reduce local air pollution, which was highlighted during the event. 

 

"Communities of color need to be prioritized for all sustainable transportation improvements that will ensure that they have more access to clean air and affordable transportation options,” said Bertha Rodriguez, the Assistant Organizer at Climate Action Campaign, who presented on Thursday.  “By centering equity and looking at biking through an intersectional lens, we can start breaking down the disparities caused by race, class, gender and ability in order to promote a more inclusive climate revolution."


The San Diego Climate Hub is a center, located in Hillcrest, to strategize, collaborate and build collective power to stop the climate crisis and advance climate justice in the San Diego region. The nonprofit members include Bike San Diego, Climate Action Campaign, SanDiego350, San Diego Coastkeeper and Surfrider Foundation San Diego County, and it’s managed by Hammond Climate Solutions. The purpose of the Climate Hub is to catalyze collaborative local and regional solutions to stop the climate crisis, and quarterly events are a way to bring together activists to share education, resources and people power to create a brighter future.  

The next quarterly Climate Hub event will be in partnership with the San Diego Green New Deal Alliance on February 23 at 5:30 p.m. More details will be available at www.sdclimatehub.org.

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