Mayor's Office

I usually expect good news on climate in April, as everyone announces their big accomplishments and new ambitions for Earth Day. But this year, the biggest climate win has come in August. Passage of the Inflation Reduction Act is by far the best news on climate in the U.S. in a long time, perhaps ever. So what is the Inflation Reduction Act, what does it have to do with climate, and why does it matter for Madison?

At a time when the global inflationary crisis is driving up the cost of everyday goods and services, federal lawmakers designed the IRA to combat inflation by making historic investments in climate action and healthcare that will lower energy and healthcare costs for households and businesses while drastically cutting climate pollution. These investments in clean energy and transportation, in making homes and businesses more energy efficient, and in expanding green domestic manufacturing will put the U.S. on track to decrease greenhouse gas emissions by an estimated 40% below 2005 levels by 2030.

The IRA will help Madison reach our climate goals by providing funding directly to local households and businesses to take actions that reduces their energy costs and carbon footprints.

The IRA will make clean energy and transportation more accessible for everyone in our community by providing support for:

• Home Energy Efficiency Upgrades – The law includes rebates for energy efficient, electric heat pumps, water heaters, stoves, ovens, or other home appliances with more energy efficient and electric appliances for low- and moderate-income households. And, any household can receive tax credits covering 30% of the cost of home construction projects on windows, doors, insulation, or other weatherization measures that reduce energy waste. These upgrades can lower home energy bills by at least $350 per year.
• Home Energy Systems – Households can also receive tax credits to cover 30% of the cost of installing solar panels or battery storage. The average family installing solar using this credit would save $9,000 on their electricity bill over the life of the system, or about $300 per year.
• Electric Vehicles – The IRA makes electric vehicles more affordable by providing up-front discounts up to $7,500 for new and $4,000 for used electric vehicles, helping families save as much as $950 per year on fuel costs.

The new law also provides support for local businesses to make climate-smart investments and grow our green economy, through:

• Commercial Building Energy Upgrades – Commercial building owners can receive tax credits up to $5 per square foot for energy efficiency improvements that deliver lower energy bills for new and renovated buildings, such as improvements to a building’s envelope, HVAC systems, lighting, and controls. Non-profits and educational institutions, as well as local and tribal governments, are also eligible to receive this benefit under the new law.
• Commercial Energy Systems – Businesses can also receive tax credits covering 30% of the costs of installing solar power and battery storage, which lower energy costs and protect against changing energy prices.
• Electric Vehicles – Businesses can receive tax credits of up to $40,000 for commercial electric vehicles and a $100,000 tax credit for installing EV charging infrastructure in qualified census tracts.
• Growing Wisconsin’s Green Economy – Between now and 2030, the IRA will bring estimated $4 billion of investment that would boost our manufacturing industry, which employed an average of 472,000 workers and accounted for more than 18.8% of total output in Wisconsin in 2021.

These federal investments will complement and accelerate Madison’s Climate Forward Agenda by providing much needed funding to reduce greenhouse gas emissions from the building and transportation sectors. IRA incentives will help increase the reach of City programs that support energy efficiency upgrades to naturally-occurring affordable housing and rooftop solar for homes and businesses through MadiSUN, and accelerate the transition of the City’s fleet to low- and no-carbon fuels, among other ongoing initiatives. The timing is fortuitous for new programs as well. The City is working to develop a new Building Energy Savings Program that aims to help large commercial buildings owners identify opportunities to increase their energy efficiency and save money. IRA incentives will make these investments even more affordable.

Not to be overlooked – the IRA also makes historic investments in healthcare, environmental justice, accelerating large-scale renewable energy and decarbonizing the electric grid, and improving climate resilience. While it will take some time for the full effect of this landmark climate law to be felt, I am sure that we won’t need to wait until April to see the new accomplishments and ambitions that this unprecedented federal investment in our climate will unlock.

Thank you to Representatives Mark Pocan, Gwen Moore, and Ron Kind and Senator Tammy Baldwin for your leadership on climate action and supporting this critical investment in a healthy clean energy future for Wisconsin.