What the new federal climate and clean energy law means for cities

The Inflation Reduction Act ( H.R. 5376) was signed into law Tuesday after a year of negotiations.

On Tuesday, the federal Inflation Reduction Act was signed into law. The budget bill includes critical investments to support renewable energy and reduce greenhouse emissions. These investments will complement many of the programs provided through the bipartisan Infrastructure Investment and Jobs Act that seek to mitigate the effects of climate change and create more resilient communities.

The new law will put the U.S. on a path to reducing greenhouse gas emissions by 40% by 2030, making it the most significant climate investment in U.S. history. The measure includes $369 billion in tax credits and additional funding to help lower energy costs, increase energy reliability, and support decarbonization. Many of the programs will benefit disadvantaged and rural communities.

The Inflation Reduction Act provides funding for several key programs that help local governments advance their climate and clean energy goals, such as:

• $1 billion for improving energy efficiency, water efficiency, or climate resilience of affordable housing.
• $1 billion to update to the latest building energy code and zero energy/stretch codes.
• $3 billion for loans to build new clean vehicle manufacturing facilities and $2 billion in grants to retool existing auto manufacturing facilities to manufacture clean vehicles.
• $3 billion for Environmental and Climate Justice Block Grants for community-led projects in disadvantaged communities and community capacity-building centers to address the disproportionate environmental and public health harms caused by pollution and climate change.
• $5 billion in grants to support healthy, fire resilient forests, forest conservation, and urban tree planting.
• $4 billion for drought mitigation.
• $1.8 billion for hazardous fuels reduction projects on National Forest System land within the wildland-urban interface.
• $27 billion for a Greenhouse Gas Reduction Fund to support the rapid deployment of low- and zero-emission technologies, with 40 % allocated for low-income and disadvantaged communities.

The League of California Cities and the National League of Cities have long called on Congress to invest in actions that combat climate change and its impacts. The climate and clean energy provisions included in the Inflation Reduction Act align with the Cal Cities 2022 Action Agenda, which seeks to secure additional resources and support to mitigate the effects of climate change, including catastrophic wildfires, drought, and sea level rise.

While the climate and clean energy provisions are a step in the right direction, more work remains given the scale of the climate crisis. 

In addition to the climate and clean energy provisions discussed, this bill also includes non-climate items. A full summary of the major provisions can be found here. A California-specific fact sheet is also available.