On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, which includes climate protection measures, into law. We will begin to see the implementation of the authorized programs throughout the next year. The legislation will attempt to tackle climate change by investing over $300 billion into climate and energy reform, making it the largest investment into clean energy in U.S. history.
A push for the government to take a stronger approach in addressing climate change has been long overdue. And while the Inflation Reduction Act is not a complete fix to the ongoing climate crisis, it will address ongoing issues including working to lower greenhouse gas emissions by 40% from 2005 levels.
Here we have broken out the important aspects of the law as it pertains to climate change and our efforts at Scope 5.
Corporate Reporting
- EPA funding to support the standardization and transparency of corporate climate action commitments and GHG reduction plans (Sec. 60111)
- EPA funding to develop standardized reporting criteria for environmental product declarations (similar to UK green claims code), with a specific focus on embodied carbon emissions (Sec. 60112)
GHG Reduction Incentives
- Financial assistance for industrial facilities seeking to deploy technologies that will reduce GHG emissions (Sec. 50161)
- Financial assistance to support replacement of heavy-duty vehicles with zero-emission vehicles in clean air act non-attainment areas (Sec. 60101)
- Financial assistance to reduce air pollution at marine port facilities through electrification of equipment (Sec. 60102)
- Grants to implement zero-emission technologies, with a designated fund for low income and disadvantaged communities (Sec. 60103)
Alternative Energy / Grid Resilience
- Funding allocation for offshore wind and interregional electricity transmission to better integrate the intermittent nature of renewables into the grid, as well as to evaluate the impacts of climate change on grid resilience (Sec. 50153)
- Funding for national laboratory infrastructure to support research into particle physics, fusion energy, and nuclear power (Sec. 50172)
- Authorization for offshore wind leases off the coasts of FL, GA, SC, and NC (Sec. 50251)
Oil and Gas
- Development of a ‘waste emissions charge’ for GHG emissions in excess of limits set within the legislation by industry for facilities subject to the EPA MRR program (ex. Fees on fugitive emissions from natural gas pipelines in excess of 0.11%). Prices are on a progressive scale at $900 per metric ton CO2e for 2024, increasing to $1,500 per metric ton by 2026 (Sec. 60113)
- Royalties from production in Federal jurisdiction to increase from 12.5 to 16.67-18.5 percent (Sec. 50261)
- Royalties are to be paid for methane produced, including methane used for powering production equipment and methane lost through flaring, venting, or fugitive emissions. Royalties were historically paid for methane produced and sold (Sec. 50263)
Environmental Review Streamlining
- Allocations will be provided to the Dept. of Energy (DOE), the Federal Energy Regulatory Commission (FERC), Dept. of Interior (DOI), and Environmental Protection Agency (EPA) to enhance and streamline Federal and regional environmental review processes (Secs. 50301, 50302, 50303, 60115)
As corporations large and small take advantage of the climate reduction investments from the Inflation Reduction Act, it is imperative that we will continue to adapt and work to demonstrate a sustainability process as much as we can. At Scope 5, we have been working toward these initiatives long before this law was drafted. We have helped many companies get a head start on many of the aspects outlined above.
Sustainability reporting is an important part of combating climate change. Let’s chat about how Scope 5 can help your organization accelerate on your sustainability journey.