The Inflation Reduction Act and Regeneration: Bridging regenerative ideas with pragmatic actions

There’s a natural, almost instinctual resistance to policies handed down by government officials. In the current US political climate, it’s easy to believe that politicians only act in their best self-interest and are distant and disconnected from the daily lives of individuals, businesses, and communities. This resistance often reflects the underlying narrative that meaningful change should not be imposed from above; it should grow from within. Bottom up. This is especially true concerning one of the most complex and existential crises of our time: climate change and the polycrisis.

However, bottom-up movements often run into roadblocks when not supported at all levels of authority, as we see in many movements that are limited by federal or State regulations.  Change is made much easier when approached at multiple scales simultaneously. 

A recent piece of US legislation shows an example of top-down support for local efforts. The Inflation Reduction Act (IRA) of 2022 provides the largest in funding for renewable energies and decarbonization in United States history. It represents a groundbreaking step towards an energy transformation by directing over a trillion dollars toward renewable energy, energy efficiency, and decarbonization initiatives. It has proven to be meaningful in incentivizing billions in investments in clean energy projects that might not have otherwise happened.

But the Inflation Reduction Act is only the first step, only the beginning of a much broader transformation. The deeper transformation requires not just a shift in how energy is generated, but a shift in our mindset from a current extractive model to a regenerative one.

From an economic and maybe even ideological perspective, the IRA’s impact cannot be overstated. Its 133 programs cross all industry and economic sectors by investing heavily tax incentives and rebates for renewable energy and renewable energy projects.  The IRA helps move diverse sectors of the economy toward a cleaner future and is also changing and questioning our innate dependency on fossil fuels. Under the IRA, if you’re doing a renewable energy project (solar, wind, geothermal, etc.) or an energy efficiency project (LED lighting, HVAC upgrades, etc.) you can likely qualify for a tax incentive, whether you are a business, individual, non-profit organization, or a State or Local government.

“Under the IRA, if you’re doing a renewable energy project (solar, wind, geothermal, etc.) or an energy efficiency project (LED lighting, HVAC upgrades, etc.) you can likely qualify for a tax incentive, whether you are a business, individual, non-profit organization, or a State or Local government.”

While some of the 133 programs are niche to a specific industry, several key programs have broad appeal for many.  Below is an outline of residential and commercial programs to get a better understanding and an idea of what may apply to them:

Personal / Residential Programs

• Energy-Efficient Home Improvement Credit (Section 25C):
  • Provides 30% credit up to $1,200 per year for energy efficiency upgrades to your home
    • Insulation / Weather Sealing: up to $1200
    • Windows: up to $600
    • Doors: $250 per door, up to $500
  • Additionally, it provides 30% up to $2,000 for heat pump HVAC or hot water systems
  • For more information, see: IRS.com – Energy Efficient Home Improvement Credit

• Residential Clean Energy Credit (Section 25D):
  • Provides a 30% tax credit on residential rooftop PV solar, with no cap on credit
  • Additionally, it provides a similar 30% tax credit on battery storage systems
  • Homeowners and certain renters are eligible
  • For more information, see: IRS.gov – Residential Clean Energy Credit

• Clean Vehicle Tax Credits (Section 30D and Section 25E)
  • New Clean Vehicles
    • Provides a credit of up to $7,500 for purchase of eligible electric vehicles and plug-in hybrid vehicles
  • Used Clean Vehicles
    • Under the IRA, for the first time ever, purchases of qualifying used vehicles are eligible for a tax credit of up to $4,000.
  • For eligible vehicles and more information, see: Energy.gov – New and Used Clean Vehicle Tax Credits

Incentives for Businesses, Nonprofits, and State/Local Government

• Clean Energy Investment Tax Credit (Section 48E):
  • For businesses investing in renewable energy (notable solar, wind and geothermal), tax credits of 30-50%, plus accelerated depreciation benefits, can make renewable energy less expensive than fossil fuel energy. 
  • Under the IRA, rooftop solar PV systems are often among the best ROI investments that a business can make, in addition to the environmental benefits from renewable energy sources.
  • For more information, see: RegenerativeShift.com – Commercial Solar Tax Incentives

• Energy-Efficient Commercial Building Deduction (Section 179D):
  • For new construction and renovations, the 179D deduction offers up to $5.65/sf (for 2024 projects) in tax deduction for energy efficient lighting, HVAC, and/ or building envelope upgrades.
  • For more information, see: Strategic Planning with Section 179D

• IRS Elective Payment
  • In the past, nonprofits and local governments couldn’t benefit directly from tax incentives as tax-exempt entities.
  • Under the Inflation Reduction Act, nonprofits can receive rebates equivalent to the business tax credits through IRS Elective Payment.  This reduces operational costs and allows them to allocate more resources to mission-driven activities.
  • For more information, see: How Does IRS Elective Pay Work?

Beyond the Inflation Reduction Act

While the IRA’s focus on reducing emissions is necessary, the mindset shift and actions need to go far beyond clean energy. The climate crisis isn’t just about the carbon in the air. Soil degradation, deforestation, the loss of biodiversity, and the looming threat of quality water scarcity are all symptoms of the polycrisis and our degenerative system. These ecological emergencies are not always directly affected by emissions but are fundamental challenges stemming from a system built on extraction and exploitation.

Whether we like it or not, to create real change, we must rethink our approach. We cannot have unlimited growth in a world with limited resources.  If we use renewable energy as a justification to consume more, whether to build out new AI datacenters, mine more Bitcoin, or to produce more bamboo toothbrushes, we still extract from the Earth and ultimately contribute to the polycrisis. 

Regeneration is a shift to put life at the center of every decision and every action.   How do we begin this regenerative shift?  For the next purchase you or your business is making, how does life factor in? 

Imagine that the next time you’re making a personal or business decision question, you consider the impact it has on life.  Is there a different choice you can make? 

One example of how this question created a change is at Raymond James Stadium in Tampa, FL, home of the Tampa Bay Buccaneers.  In 2022, stadium management was considering how to solve an issue of curb jumping out of a parking lot that impacted traffic after stadium events.  After originally considering the business-as-usual aluminum fence, they considered how to solve their problem with life at the center.  The result was that instead of an extractive, aluminum fence, they selected a living bamboo fence that will provide habitat, beauty, and carbon sequestration for many years, while still providing the physical barrier needed to stop the curb jumping. 

 To learn more about this project, here is a news story that covered it: