Americans now have thousands of dollars to make their homes climate-friendly
You and every American were essentially just given an electric bank account to swap out your aging fossil-fueled machines for new, clean electric ones. These funds, good for a decade, contain thousands of dollars and basically renew every year. These are the provisions in a new law, the Inflation Reduction Act (IRA), that directly benefit you and other Americans.
Beyond these benefits, you get a bonus: You save money every year by locking in the lower energy bill prices that come from going electric. Plus, this new law comes with a pretty decent perk: It is one of the most effective ways to address the climate crisis. This is why we need every household in America to know about the perks of the IRA and how to use them.
In fact, 42 percent of energy-related emissions in the U.S. come from decisions we make around the kitchen table: the cars we drive, how we heat our air and water, cook our food and dry our clothes and where we get the energy to power all of these machines. There are 1 billion machines across 121 million households that need to be replaced or installed as electric over the next two decades. There is simply no path for us to stay inside of 1.5 degrees Celsius warming (to avoid the worst impact of climate change) unless we do so.
President Biden is celebrating the Inflation Reduction Act on Tuesday for good reason. The new law puts all of us at the center of U.S. climate policy and recognizes that electrifying our lives is not just a good deal for the planet, but for our pocketbooks. Households that go electric save an average $1,800 a year per household — every year. That is incredibly important in a country where 49 percent of Americans don’t have $400 in emergency savings. Going electric also protects us from the inflationary shocks that come from megalomaniac dictators and profit-thirsty fossil fuel corporations because we no longer have to rely on them to power our lives.
The Inflation Reduction Act will offer as much as $858 billion in benefits to Americans through a combination of rebates, tax credits and low-cost financing — if we maximize its full electric potential. This will offer up a well of money for Americans to draw upon as they replace their aging machines with new, clean electric ones. It represents what will be the largest wealth transfer from energy producers to American households in history — but only if we make it so.
That’s because the key thing about these benefits is that if you don’t spend this free money, you lose it — and worse, life gets more expensive.
Let’s say I have a fossil fuel-powered furnace, and it conks out next year. I could access some tax credit dollars to get a heat pump. If I didn’t know that was an option, however, I might instead replace my gas furnace with another gas furnace. But because those machines last for approximately 15 years, I would then lose the money offered by the new law designated for a heat pump, because the Inflation Reduction Act spending window is currently 10 years, and it would not make a ton of sense for me to go out and replace a machine I just bought. Instead of reaping the benefits of a cleaner, cheaper, more efficient and better machine, I’d also have to pay for a fossil-fueled appliance that is only going to cost more over that same window of time, as economies begin to price in the increasingly untenable costs of a gas-powered world.
So, how do we make sure Americans don’t miss out? We need to make this policy come alive in our collective hearts and minds. The idea of going electric is new for many. Only one-quarter of Americans report being familiar with heat pumps. This means at most one-quarter of Americans know that a heat pump is the best, and now most affordable, choice for heating or cooling, regardless of where you live in this country.
Americans need to plan to electrify, to get “rewiring ready” — upgrading their panels and wiring as necessary — and the Inflation Reduction Act helps them do this. My organization, Rewiring America, built a calculator to help people understand the funds available to them, and to start thinking about what they’ll do to maximize the benefits. The powerful thing about these new benefits is that the money gets more valuable over time. Because as more households go electric, the cost of these electric machines will come down, while the value of the rebates and other incentives remains constant. Year after year, our buying power will just get stronger.
These new benefits give Americans a chance to play their part in a turnaround tale for our communities, country and planet. Electrifying your home is the contemporary victory garden — a thing you can do to free America from fossil-fueled dependence, a way to contribute to bringing our emissions down and an opportunity to help build out American supply chains and encourage the creation of good-paying jobs here at home.
But the critical thing to understand about the Inflation Reduction Act is that it is a statement of potential, not a guaranteed outcome. Its success depends on people accessing these benefits. If they don’t, less will be spent on electrification and the resulting emission reductions, household and community savings and benefits will be lower. Conversely, there is almost no cap on the amount of money that can be accessed through these new benefits. If the United States successfully ramps up to 100 percent electric adoption by the end of the IRA, this $858 billion in residential electrification benefits will have been invested across every community in the country, saving more money for families as a result.
The Inflation Reduction Act is the largest climate investment in our nation’s history, a once-in-a-lifetime opportunity to tackle affordability and the climate crisis, as well as rewrite the story from here on out. If Americans knew they had thousands of dollars to spend toward making their homes cheaper to run, healthier to inhabit and more comfortable, they’d use that money. It’s up to those of us that know to tell them.
Ari Matusiak is the co-founder and CEO of Rewiring America, co-founder of Purpose Venture Group and a former special assistant to President Obama and the administration’s director of private sector engagement.