The $740 billion Inflation Reduction Act of 2022 tackles climate change with $300 billion earmarked for programs aimed at energy and climate reform.
The Inflation Reduction Act is considered the largest federal clean energy investment in U.S. history, the bill will, according to Democrats, lower greenhouse gas emissions by 40%, based on 2005 levels, by the end of the decade.
The spending bill includes grants and tax credits that may affect the bus and motorcoach industry in ways that could benefit operators and equipment manufacturers, according to Prime Policy’s Becky Weber, who works with United Motorcoach Association.
Inflation Reduction Act – a slimmed-down Build Back Better legislative package considered under the budget reconciliation process – was passed without any Republican support. President Biden signed it into law on Aug. 16.
“Both Republicans and Democrats have used the budget reconciliation process to pass major pieces of legislation over the last 40 years,” Weber said, noting the Republicans used it in 2017 to approve the Trump tax cuts.
During a recent UMA Town Hall, Weber highlighted Inflation Reduction Act’s grant and tax-credit opportunities compiled by the Prime Policy Group team for bus and motorcoach companies to consider as Members think about electrification and alternative fuel power in future vehicle acquisitions.
Here is the list:
Clean Heavy Duty Vehicles
Description: New EPA funding program for Class 6 and electric commercial vehicles, including trucks, transit, buses and school buses
Funding: $1 billion
Qualified Commercial Clean Vehicle
Description: New tax credit for qualified commercial clean vehicles of up to $7,500 for vehicles under 14,000 pounds and $40,000 for all others.
– Begins Jan. 1, 2023
– Can be used in combination with EPA grant programs
– Credit also available to tax-exempt entities
Funding: $40,000 per vehicle
DERA (Diesel Emission Reduction Act)
Description: Additional $60 million for DERA grants. Funds are to be used primarily for ports and goods movement.
Funding: $60 million
Description: Extension through 2024 of the tax credit for biodiesel, renewable diesel and alternative fuels, including propane.
Funding: $0.50/gallon or gallon equivalent used.
Alternative Fuel Refueling Property
Description: Extends for 10 years and expands tax credit for 30% of the cost of installing alternative fuel refueling property (including electricity, CNG and propane) up to $100,000.
Bidirectional charging (V26 charging) does not disqualify access to the credit.
Funding: Up to $100,000
Greenhouse Gas Reduction Fund
Description: New EPA Greenhouse Gas Reduction Fund to provide financial assistance for the deployment of zero-emission technologies in cooperation with eligible public and nonprofit entities to fund direct or indirect “qualified projects,” defined to include projects that would reduce or avoid greenhouse gases.
Some of the funding could be used to support electric bus deployment and underlying utility upgrades needed to support additional electric school bus deployment.
Requires partnering with governmental or nonprofit entities.
Funding: $27 billion
State Greenhouse Gas Funding
Description: New EPA state grant program under the Clean Air Act for the development of greenhouse gases pollution reduction grants, with 5% of the funding to states for the development of plans and 95% for implementation of those plans.
Similar to the Greenhouse Gas Fund, the state plans and implementation could focus on commercial and school electric buses.
Funding: $5 billion
Investment in Clean Energy Manufacturing and Energy Security
Description: Extends Sec. 48C Advanced Energy Project Credit for qualified investment credits of up to $10 billion, 60% of which must be in areas that had not received credits previously.
– Qualified projects include industrial or manufacturing facilities in the production or recycling of electric vehicles.
– Also creates a new Advanced Manufacturing Production Credit for manufacturing certain energy-related products such as thin film photovoltaic material, battery cells and modules and critical minerals.
– Limits credit available for non-union facilities to 6%.
Funding: $10 billion
Advanced Technology Vehicle Manufacturing
Description: Additional funding in direct loans under a Department of Energy program for advanced technology manufacturing of vehicles that emit low and zero GHGs.
Funding: $3 billion
Domestic Manufacturing Conversion Grants
Description: Additional funding for the Department of Energy; 50% of grants for domestic production of efficient hybrid, plug-in electric hybrid, plug-in electric drive, and hydrogen fuel cell vehicle manufacturing.
Funding: $2 billion
Some participants in the UMA Town Hall “Overdrive” indicated they use biodiesel. Currently, biodiesel purchasers may be eligible for a tax credit. To check eligibility, review the following links and/or have your accountant/tax-preparer review: https://www.irs.gov/pub/irs-pdf/p510.pdf and https://afdc.energy.gov/laws/396.
A recording of UMA Town Hall is available by clicking here.