Using Unprecedented Alignment between IRA and State & Local Law to Jump-Start Emissions Reductions in Buildings
By: Arthur Pearson, Regulatory Lead at Blueprint Power
Buildings are responsible for 30% of global CO2 emissions, (over 70% in New York City), making them a crucial focus for efforts to combat climate change at the federal, state, and local levels. Recognizing the importance of reducing carbon emissions, an unprecedented alignment has emerged between the U.S. Inflation Reduction Act (IRA) and state and local laws aimed at jump-starting emissions reductions in buildings. Here, we explore how this alignment can be leveraged to accelerate the transition of the built environment to a more sustainable landscape.
The IRA has been touted as the most significant climate legislation in American history, and it includes incentives (tax credits and grants) and critical funding to catalyze movement toward a clean energy economy and the deployment of renewable energy projects. In effect, the IRA gives organizations more tools to make meaningful progress towards their energy transition.
Many state and local governments have also enacted laws and regulations to address energy efficiency and emissions reduction in the built environment. These measures often include requirements for energy-efficient building design, construction, and retrofits. They may also provide financial incentives, tax credits, and grants to encourage the adoption of sustainable practices and technologies in buildings. Others have added to that by implementing emission reduction mandates. One example is New York City’s Local Law 97, which mandates increasingly strict carbon reductions over the coming years and implements substantial penalties for noncompliance.
Jump-Starting Renewable Energy Projects by Leveraging State, Local, and Federal Incentives
The alignment between the IRA and state and local laws targeting building emissions stems from their complementary objectives and overlapping interests. All aim to achieve long-term economic stability, enhance energy efficiency, reduce operating costs, and promote sustainable development. These policies can synergistically accelerate the energy transition of the built environment, and many building owners stand to benefit from leveraging a combination of programs. For example, by utilizing state and local incentive programs and the tax incentives offered in the IRA, companies could potentially recover more than 50% of new equipment and system costs almost immediately. See examples below from New York, Massachusetts, and Texas.
*All figures are estimates based on current regulations and projected costs.
Leveraging the alignment between the IRA and state and local laws can lead to additional positive outcomes, such as stimulating economic growth and job creation by promoting investments in sustainable building practices, technologies, and workforce development. The construction and retrofitting of energy systems in buildings can generate employment opportunities and foster innovation in the green building sector.
The unprecedented alignment between the IRA and state and local laws provides a unique opportunity to jump-start emissions reductions in buildings, while also greatly enhancing the returns on these investments. By leveraging this alignment, stakeholders can stimulate economic growth, foster job creation, and make significant strides in combating climate change. The alignment between the IRA and state and local laws demonstrates that addressing emissions from the built environment is not only feasible, but also crucial for creating a resilient and lower-carbon future.
