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Inflation Reduction Act Sets New Standards on Climate Action

By Brody Garland, K&L Gates

After nearly a year of failed negotiations and legislative rewrites, President Joe Biden signed the Inflation Reduction Act (IRA) into law on Tuesday, Aug. 16, in an effort the Administration has touted as “one of the most significant laws in our history.” The $739 billion Inflation Reduction Act of 2022, which passed the Senate by a 51-50 party line vote and in the House by 220-207, has been identified as the country’s largest-ever investment in climate and energy programs. The bill has enormous implications for nearly every sector of the economy, with provisions impacting the way corporations are taxed, the way healthcare services are delivered, and the way the government regulates fossil fuel emissions.

In addition to the billions of dollars in climate and energy funding, the IRA will also:

› Impose a 15 percent corporate minimum tax rate on companies earning $1 billion or more; › Increase funding for IRS tax enforcement; › Allow Medicare to negotiate prescription drug prices; › Extend Affordable Care Act subsidies through 2025; › Permit grant leases for offshore wind projects in parts of the Outer Continental Shelf; and › Invest $369 billion in energy security and climate change programs, promising to reduce carbon emissions by roughly 40 percent by 2030.

The non-partisan Congressional Budget Office estimates the bill would also reduce deficits by about $305 billion over 10 years, in line with the $300 billion deficit reduction figure cited by the bill’s champions, Democratic Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin.

For those operating commercial vehicles, transporting goods, or even casually driving on our nation’s roads, the dramatic impact of the bill is unquestionable. Notably, the bill includes more than $40 billion in direct transportationrelated spending, and another $20 billion in loans to build new factories that manufacture clean vehicles. Some key transportation-related provisions in the bill include:

› $3 billion in grants to reduce air pollution at ports; › $60 million to reduce diesel emissions related to goods movement facilities; › Tax credits and grants for clean fuels and clean commercial vehicles; › $4,000 in tax credits to buy used electric vehicles; › $7,500 in tax credits to buy new electric vehicles; › $30 billion in tax credits related to solar panels, batteries, turbines, and critical minerals; › $10 billion in tax credits to build clean technology manufacturing facilities; › $20 billion in loans to build new factories that can manufacture clean vehicles; › $2 billion in grants to retool existing automobile factories; › $3 billion in grants for projects that address equity, safety, and affordable transportation; › $60 million to reduce diesel emissions resulting from goods movement facilities; › $3 billion for the U.S. Postal Service to purchase electric vehicles; › $2 billion for the use of low-embodied carbon construction materials; › $1 billion in grants for clean heavy-duty vehicles; and › $297 million in grants to support sustainable aviation fuel and low-emission aviation technology projects.

The result of the IRA is a sweeping reform to the way motor vehicles and emissions are regulated, with the expectation that the bill will reduce greenhouse gas emissions by about 1 gigaton in 2030, or a billion metric tons – 10 times more climate impact than any other single piece of legislation ever enacted.

While it’s too early to predict how the bill will affect the trailer industry writ large, or the potential unintended consequences to the businesses involved in either the manufacture or transport of these goods, it is safe to say the reach of the bill will be felt far and wide. As the bill shifts from concept to implementation, it will be crucial for interested stakeholders to stay engaged. The details will be left to the agencies, and how these regulations play out practically will depend upon the feedback and guidance of the affected businesses. ■