By James McCurdy
To the great—but not too great—satisfaction of the rational American, the Inflation Reduction Act (IRA) has officially passed. To celebrate, the green building community is partaking in the cherished Liberal pastime of inquisition. Our main inquiry: What can it do for us? The answer to this politically potent and complex question is, broadly, quite a bit.
Most importantly, the IRA expands the tax deduction for energy efficiency improvements in commercial buildings (Sec. 179D) from its current $1.80 per square foot rate to a sliding scale of $2.50 to $5.00 per square foot. But to achieve this updated rate, architects, advisors, and builders must surpass the ASHRAE 90.1 guidelines last updated in 2019. Those hoping to reap the maximum $5.00 per square foot rate must achieve energy performance 50% better than the goals outlined in ASHRAE 90.1, and those wishing to write off $2.50 per square foot must exceed the regulations by 25%. Energy reduction rates landing between 25 and 50 percent will be adjusted accordingly on tax write offs. Recognizing the importance of eliminating the energy emissions of older buildings, the IRA offers the same Sec. 179D deduction for buildings five years or older that outline a pathway towards reducing energy use by 25 to 50 percent. But boons to the private sector are only the beginning.
Along with billion-dollar investments in greener federal, state, and local government buildings intended to strengthen the sustainable construction market, the IRA also invests billions of dollars into low-income and marginalized communities to prevent and mitigate climate threats. Some of the investments include $7 billion in grants to low-income communities for zero-emissions technology; $3 billion in investments seeking to augment neighborhood walkability, safety, and accessible transportation; and $3 billion for coastal communities preparing for damage from increasingly extreme storms and floods exacerbated by climate change. To support, facilitate, and oversee these public investments the EPA earned $250 million in funding and $5 million for oversight of sustainable corporate projects.
The IRA—while being far more than subsidies and grants for sustainable building—invigorates public and private sector investments in green construction to build a greener world. With the ink barely dry on Biden’s most remarkable achievement in office to date, the green building community has billions more federal dollars to leverage towards the technologically possible goal of widespread access to sustainable homes, offices, and stores. The IRA offers a helpful boost, but it’s up to us to maximize the impact of these investments in greener communities.