News

Author: Matthew H. Brown

The recent government passage of the Inflation Reduction Act (IRA) will stand as a momentous advance in our battle with climate change. And for many of us it also represents a leap forward in meeting the challenge of improvements in energy efficiency.

Passed in early August, the IRA designates nearly $370 billion to climate spending by the end of the decade. This spending will support the development and build-out of new and efficient clean energy technologies. It will help not only solar and electric vehicle manufacturers, but also individuals who receive tax credits and rebates for qualified electrification projects. The latter is especially important for contractors because the
covered projects include converting to heat pumps for HVAC systems and water heaters, upgrading electric appliances and electric panels, insulation, wiring, and more.

The National Energy Improvement Fund (NEIF) joins many others in support of the Inflation Reduction Act, as it represents one of the largest investments in climate and energy efficiency funding in U.S. history.

NEIF, a certified B Corp, was organized to bolster the affordability of energy efficiency improvements such as those listed above. Many of these initiatives — funding of energy programs, financing support, training grants, other rebate programs — mirror NEIF’s goals.

So, Greener? 

The new U.S. act aims to cut carbon emissions and make electricity less expensive. Research shows consumers across the country should save on their electricity bills — as much as $200 billion through the coming decade as a result of the IRA. 

Because of the IRA, cleaner power does not equate with higher energy costs for U.S. homes and businesses. In fact, the act requires government support for companies that invest in and produce carbon-free power, cutting costs and enabling them to pass savings through to their customers. 

IIJA

There is another political component to consider in efforts to “Go Greener.” The Infrastructure Investment and Jobs Act (IIJA) has designated $73 billion for power infrastructure and clean energy transmission and $7.5 billion to build a national network of electric vehicle recharging stations.

Both acts offer substantial amounts of money to states, manufacturers, homeowners, and businesses to help move energy efficiency forward. When you look at the combination of the new legislation, what the federal government has done over the past few months is immense. 

The government’s efforts are making energy efficient products more affordable. In particular, the IRA is focused on greenhouse gas reducing products involved with electrification (particularly as it pertains to reducing methane).

Proper electrification efforts will result in increased use of heat pumps, more efficient HVAC systems, electric vehicles, recharging stations, and in turn go a long way toward meeting greenhouse gas emission reducing targets.

With the two acts in play, contractors installing and consumers buying electrification products will find it much easier to sell and more affordable to buy high efficiency products.

From a value proposition for contractors’ customers, the high efficiency products look more expensive. However, with tax credits, grants, or rebates from the government as well as support for the kind of financing that NEIF offers, the greener energy efficient products will often end up less expensive than their energy consuming competitors. 

Change the Discussion

The effects of the IRA will drastically expand the market and create what some would call economic justice.

Organizations who want to benefit from the IRA need to help people understand that huge lifestyle changes aren’t necessary. It’s the incremental improvements — electrification, high efficiency oil and gas products — and simple adjustments anyone can make that will help us tackle climate change.

Of course, the discussion shouldn’t be limited to new equipment or saving energy or reducing emissions. It should spotlight the new affordability of energy efficiency and electrification.

One hurdle to clear: How to convince consumers that going greener can now be an affordable alternative. They no longer have to choose between the least expensive model or the most efficient one. Contractors and manufacturers will be important cogs in this conversation.

The hope is that the IRA will help make the decision to ‘go greener’ simple: like a “Greener Button” that “switches” the contractor and customer to higher efficiency and “turns on” carbon reduction. 

Matthew Brown is the Co-Chair and Founder of NEIF. With more than 25 years of experience in the energy finance and policy field, he provides strategic direction for the overall activities of NEIF, co-leads all capital raise activities to satisfy loan and other capital needs, and leads the implementation of the firm’s commercial and rebate advance product activities. Mr. Brown can be reached at mbrown@neifund.org.