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There has never been a better time to get into the climate space.
Whether you are looking to build a sustainable business or going green to attract new customers, three key pieces of legislation can help you make the leap.
First, the Infrastructure Investment and Jobs Act (IIJA), passed in November 2021, increases infrastructure spending by about $550 billion over the next decade. IIJA targets roads, ports, internet, public transit, passenger rail, electric vehicles, power infrastructure, resilient infrastructure, and environmental remediation.
Second, the Inflation Reduction Act (IRA), passed in September 2022, allocates $369 billion towards energy security and climate change over the next decade.
Finally, the CHIPS and Science Act strengthens American manufacturing, supply chains, and national security by investing in research and development.
How do you capitalize on these new policies?
Related: How to Get Funding and Grants for Green Startups
1. Switch to low-cost solar at a discounted rate
Small businesses are eligible for a tax credit to cover 30% of the cost of switching over to low-cost solar power. With fossil fuel prices becoming more erratic, investing in solar ensures your business will have a consistent energy supply with a more predictable price point. Not only will your expenses be more predictable, but solar can cost you less in the long run.
2. Electrify your commercial vehicles with a tax credit
If you’re investing in solar, you may as well start investing in your vehicles, too. Commercial trucks and vans are also eligible for a tax credit to cover 30% of the cost. With increased investment in electric vehicle (EV) infrastructure and domestic EV manufacturing, electric vehicles are more accessible and more reliable. For example, the new Class 8 semi-trucks claim ranges between 186 miles and 500 miles. Meanwhile, electric vans drive between 100 and 400 miles.
As with solar energy, investing in EVs can save money in the long run because electricity prices are lower and more stable than any other fuel. To further increase efficiency, you can invest in managed charging, which times charging to avoid using energy during peak hours–i.e. the most expensive hours–or vehicle-to-grid integration, which means your vehicle can take power from the grid and give power to the grid, possibly for a profit. If you want to double down on your investments, you can even pair your EVs with your renewable energy and maximize the benefit from both tax credits.
Related: The 5 Most Luxurious Electric Cars on the Market That Will Make You Want To Skip On Gas
3. Use tax credits to increase building efficiency
The DOE estimates that homes and commercial buildings spend about $2,000 annually on energy, and anywhere from $200 to $400 of those costs could be going to waste from outdated systems. The IRA increases the 179D tax deduction so that small business building owners can receive up to $5 per square foot to support improvements in energy efficiency.
These improvements could include new lighting, better heating, cooling, ventilation or hot water systems, and building envelopes, which separate air-conditioned and unairconditioned parts of buildings. With the new tax credit, upfront costs will be lower, and your utility bill go down as efficiency improves.
4. Get involved in the clean energy supply chain
One of the IRA’s goals is to boost American manufacturing for materials like batteries, solar and wind parts, and carbon capture systems. Twenty companies have already received grants, many of which focus on lithium, one of the key materials for battery production.
The legislation not only includes tax credits but also includes domestic sourcing requirements. These domestic sourcing requirements will help ensure that any business in the clean energy supply chain has clients in the US.
If you’re looking to get involved in some more cutting-edge technology, the CHIPS and Science Act provides funding for research and development needed to help these industries take off. Also, these grants are targeted at rural areas, so you don’t need to live in an established technology center like New York or San Francisco to start an innovative company.
5. Become part of a hydrogen hub
The Department of Energy kicked off an $8 billion program to develop regional clean hydrogen hubs across the US. Hydrogen hubs help jumpstart the industry by bringing together equipment manufacturers, hydrogen producers, and hydrogen users to create clean energy centers in different geographic regions nationwide.
The new grant funds 6 to 10 hubs that will be announced in the fall of 2023. Keep an eye on these projects both for opportunities to get involved and for ideas on where to set up new enterprises.
6. Stay on the lookout for additional grants
As this money moves from law to implementation, new programs will emerge and new money will flow. For those interested in applying directly for federal money, search for “discretionary or competitive grants.” These grants are competitive based on fixed criteria. While they often go to federal agencies, they can also be awarded to private companies, nonprofits, labor unions, and individual people, depending on the program.
Similarly, “project grants” are meant to fund specific projects, initiatives, or services and can go to government agencies, nonprofits, or private companies.
Much of this funding will come through the Department of Transportation, Department of Energy, and the Environmental Protection Agency, so keep a lookout on those sites. Funding will also funnel down to state and local programs, so look into opportunities from your local agencies. You can also consider following groups like the Blue Green Alliance or try some of these tips and tricks.
Whether you’re looking to invest in clean energy and clean vehicles for your existing enterprise or you’re interested in transitioning into the rapidly growing clean energy industry, this recent legislation sets you up for success. There will only be a short window where this level of funding is available, so take advantage of it while you can to ensure your business will be part of the net-zero future.