The Inflation Reduction Act (IRA), signed into law on August 16, 2022, is the largest climate legislation in U.S. history.
Along with fighting inflation and boosting domestic manufacturing, the IRA ultimately aims to help the U.S. achieve its goal of reaching net-zero emissions by 2050. Key drivers are to reduce emissions, boost domestic manufacturing, and address inflation.
This infographic sponsored by the National Public Utilities Council breaks down the $392.5 billion in clean energy and climate spending in the Inflation Reduction Act, based on estimates from the Congressional Budget Office.
Deconstructing the Inflation Reduction Act
The IRA’s clean energy and climate spending can be broken down into seven broader categories:
| Category | Estimated Spending (2022–2031, millions) |
|---|---|
| Clean Electricity Tax Credits | $160,940 |
| Air Pollution, Hazardous Materials, Transportation and Infrastructure | $41,870 |
| Individual Clean Energy Incentives | $36,878 |
| Clean Manufacturing Tax Credits | $36,877 |
| Clean Fuel and Vehicle Tax Credits | $35,995 |
| Conservation, Rural Development, Forestry | $34,681 |
| Building Efficiency, Electrification, Transmission, Industrial, DOE Grants and Loans | $27,270 |
| Other Energy and Climate Spending | $18,000 |
| Total | $392,511 |
Clean Electricity Tax Credits, which include the Clean Electricity Production Tax Credit (PTC) and Investment Tax Credit (ITC), account for the largest share of climate spending at 41% of the $392.5 billion.
Furthermore, the IRA mobilizes around $42 billion for programs aimed at air pollution, hazardous materials, and infrastructure. The Individual Clean Energy Incentives and Clean Manufacturing Tax Credits programs each receive $37 billion to incentivize residential clean energy use and domestic manufacturing of clean technology components.
Reference: The IRS on July 11, 2024, released 2024 production tax credit (PTC) amounts under Section 45 of the Internal Revenue Code and Investment Tax Credit (ITC).
Source: Visual Capitalist
