The new Inflation Reduction Act signed into law in August is a game-changer and has yet to see its way through the long journey from President Joe Biden’s pen to our cities. But it’s coming and the message is clear: municipalities must be prepared to eliminate these resources.
Cities can do this by having strong decarbonization plans ready, adequate staff to request the new resources, “shovel-ready” projects that leverage low-carbon solutions, and staff to manage them.
This new law has the potential to provide financial support for a wide range of infrastructure projects and in several forms. Here is an example.
The law contains a new provision that provides 30% of project costs for solar and geothermal investments through a new direct cash payment for non-taxable entities, including municipalities. Since geothermal and solar are two big tickets, this 30% off coupon (and we might be entitled to an additional 10% if we use domestically sourced equipment) will result in millions in support from the federal government.
Let’s apply this to the elementary school project underway in Amherst. When I last checked, the estimated price for the geothermal system, which will provide clean heating and cooling, was $12.1 million. With the new Inflation Reduction Act, it is my understanding that this investment will qualify for a 30% direct federal incentive, which will earn Amherst $3.6 million in financial support that it does not did not expect to receive. This is in addition to newly enriched utility incentives for $1.6 million.
In other words, changes to government support in the last month alone have unearthed $5.2 million in funding from our utility partners and the federal government for a single piece of $12.1 million. dollars from our global infrastructure puzzle. It’s massive.
With the same 30% off coupon available for solar energy, our municipal buildings have the opportunity to lead the way to a carbon-free future. We can combine investments in solar and geothermal energy so that our buildings can produce their own clean energy, then use it to keep buildings comfortable, without on-site combustion or carbon emissions.
Even with this new financial support from the government, these are still substantial investments for the communities. But with rising natural gas prices and increased extreme heat events making air conditioning in public buildings a necessity, not a luxury, do we really think we understand the cost of the status quo? Everything indicates that this moment calls for a rapid transformation and not covered half measures.
We have entered a new era where government, including our federal government, is mobilizing massive resources toward climate-smart infrastructure. Design teams, contractors and project managers across the country are just beginning to understand what the Cut Inflation Act will mean for their projects.
This change will take some time to work its way into our specific project budgets such as the currently in jeopardy Jones Library Project. But it will happen. Our job is to keep moving forward.
Sara Ross lives in Amherst.