The new climate bill’s rebates and incentives will pay you to decarbonize your home.
We all want to do what we can to reduce global warming and leave our children and grandchildren a livable planet. Most of our homes use fossil fuels. I have a gas stove and a gas furnace. Sam Calisch of Rewiring America says, “If you add it all up – all the decisions we make about energy at our kitchen tables – something like 42% of U.S. energy emissions are tied to those decisions.” And Rewiring America estimates as we electrify our houses, we will save an average of $1,800 a year per household in energy bills.
The good news is the recently passed Inflation Reduction Act (IRA) climate bill is full of rebates and tax incentives to help homeowners, renters and landlords make money-saving greener choices.
There are two types of rebates that will be available. One is called The Homes Rebate Program. This program provides rebates based on the energy savings the upgrade will provide. If you are likely to cut energy use by 35% you could get up to $8,000 in rebates.
The other rebate program is the High-Efficiency Electric Home Rebate Act (HEEHRA). Under this program each middle- and lower-income homeowner can get up to $14,000 for upgrades that decarbonize their homes. Those tax credits and rebates include:
- Up to $8,000 for heat pumps that both heat and cool a home
- Up to $4,000 to upgrade your electrical panel – to prepare for an all-electric home, which will require more 240-volt outlets than many homes have.
- Up to $1,750 for a heat pump water heater
- Up to $2,500 for new wiring
- Up to $1,600 for insulation, air sealing, and ventilation, including windows and doors
- Up to $840 for an electric stove, oven, or electric heat pump dryer
As Adele Peters of Fast Magazine explains, “these rebates can nudge people to make greener choices when they are going to replace old equipment.” And they are upfront discounts. Some of the rebate program details are not yet in place and will be administered at the state level. It may be a year or two before they are widely available.
The new tax credits expand existing programs so they will be available starting Jan. 1, 2023. Alisa Peterson of the Rocky Mountain Institute says “those tax credits will allow homeowners to get heat pumps and other energy saving devices installed for less than half of what they would cost today.”
Unlike a rebate, which you will get at the time of purchase, you receive the tax credit when you file your taxes. One of these credits called the Energy Efficient Home Improvement Credit covers 30% of the cost of energy upgrades, and you can claim it year after year.
It might be smart to start with an energy audit. Contact your utility company, and they will send someone out to help you determine where to add insulation and stop energy leaks. You may also want to start talking to contractors now. They are going to be very busy once these rebates and incentives are available. To help meet demand the IRA includes millions for state-run training programs to help contractors learn about energy-efficient options.
Even if you do not own a home, you may be eligible for some of these incentives. You can get rebates and discounts on fossil-free appliances like dryers and stoves. If your landlord does not want to participate, you may be able to buy your own appliances and take them with you when you leave. If you live in an area with a community solar project, you may be able to invest in solar panels in a nearby field and get a tax credit. In addition, renters who care about climate change can educate their landlords about the incentives and rebates available. It’s a win-win.
The Rocky Mountain Institute’s analysis finds the bill could result in 2.4 million electrical upgrades on existing homes and the installation of over 7.2 million heat pumps. Princeton University forecasts the bill’s impact will lead to a reduction of 360 million metric tons of emissions per year by 2030.
Sadly, no Republican senator supported the IRA, an essential bill that will change the trajectory of climate change, even though it will help millions of their constituents. Fortunately, tax incentives and rebates are available to all, regardless of party affiliation. You do not even have to believe in climate change to cash in.
Published on October 10, 2022, in the Albuquerque Journal.
© Judith Polich. All Rights Reserved. May be republished with the author’s written consent and proper attribution.