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By Erica Larson, Senior Manager, Regulatory Affairs and Market Development at ICF
Climate Change & Energy
Article
June 2, 2023
Topic
The Inflation Reduction Act (IRA), passed on August 16, 2022, is by far the most significant action the U.S. federal government has ever taken to combat climate change. Between grant programs, loan and other financing programs, and tax benefits, the Congressional Budget Office estimates that the law will provide $369 billion towards climate and clean energy. Meanwhile the REPEAT project out of Princeton University models that the Act will reduce climate emissions by 42% by 2035. With respect to local governments in particular, ICF has identified approximately $17B in available grant funding for programs supporting things like GHG reductions, electric vehicles, energy efficiency, and building electrification.
So, after nine months how close are we to seeing the impacts of this major policy opportunity?
The answer is that, while there has been a lot of action, not much money has started flowing to local governments from the IRA grant programs yet. As many of us have seen, major policy changes cannot be made reality overnight, especially when several of the critical agencies still need to ensure they have all the resources and subject matter expertise that can rise to this momentous challenge of implementing this law. It doesn’t help that the agencies tasked with implementing IRA are, by and large, the same agencies that were just starting to get their feet under them in implementing the 2021 Investment Infrastructure and Jobs Act (IIJA) also known as the Bipartisan Infrastructure Law (BIL).
So what is the latest status on the key grant programs for local governments and what are we expecting to see next? Here is the status of three of the most important local government opportunities:
There are certainly a lot of steps and potential pitfalls between where we are now and getting the money into the hands of local governments, but the federal government is not standing still. Expect to see more announcements of federal funding opportunities over the next several months, as well as actual allocations later this year. 2023 seems to be shaping up to be the year of IRA paperwork for both the federal agencies and potential grantees, but hopefully the paperwork will also serve as groundwork for 2024 to be a year of progress and positive change.