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How the 2022 Climate Bill Can Help You Save on Energy Costs

Updated Oct 10, 2022

Updated Oct 10, 2022

Home > Maintenance & Renovation > How the 2022 Climate Bill Can Help You Save on Energy Costs

The Biden Administration implemented the Inflation Reduction Act of 2022 to battle rising inflation rates, invest in U.S. clean energy production, and decrease carbon emissions drastically by 2030.

The administration currently aims to invest over $400 billion toward the project, with nearly $370 billion going toward energy security and climate change reduction efforts. The goal is to reduce U.S. carbon emissions by 40% in the next eight years. As the biggest federal climate investment in the country’s history, this bill signifies the U.S. government’s push to slow global warming and adopt sustainable energy practices for good.

What the Energy Security and Climate Change Investments Bill Means For America

Among the Fed’s objectives for the Inflation Reduction Act are prescription drug pricing reform, IRS tax enforcement, and Western drought resiliency programs. Perhaps the plan’s most wide-scale – and expensive – objective is the Energy Security and Climate Change bill. This proposal is a huge step toward carbon footprint reduction and clean energy reliance for the United States.

Here are some key highlights and objectives of the bill:

  • Help households lower energy bills by over $1,000 per year.
  • Invest in climate change efforts that reduce CO2 emissions by roughly 40% by 2030.
  • Create millions of clean energy jobs across the country.

Why Is the Government Shifting So Much of Its Focus to the Climate?

Global warming is an ominous and real threat looming in the near future, and we must act now to prevent dire consequences. At the same time, high energy costs – largely produced by unsustainable practices – pose a current financial threat to Americans, many of whom struggle to afford the systems and appliances they use daily. Biden’s climate change bill aims to address these issues and lessen the threat and burden on the American people.

Plans for Increased Energy Security

The bill is positioned to decrease America’s dependence on other countries for energy supplies. This investment in domestic energy production will reduce the burden of supply chain bottlenecks caused by off-shore production – thus, reducing the effects of inflation and improving energy manufacturing resources for the long term.

According to the official bill summary, energy security efforts will also reduce the likelihood of future price spikes by creating a reliable, renewable supply chain within the United States.

The bill will increase America’s energy security by:

  • Investing around $30 billion in manufacturing tax credits to amp up the production of solar panels, electric batteries, wind turbines, and mineral processing.
  • Putting $10 billion in tax credits toward building new clean energy manufacturing facilities.
  • Granting $500 million to help existing automobile manufacturers produce clean vehicles instead of outsourcing the jobs elsewhere.

How the Bill Aims to Lower Energy Costs Nationwide

Energy and utility costs are rising for American households. Utility bills were up 8% year-over-year in January, the largest increase in over a decade. Gas prices also spiked rapidly and have just started cooling off. Until early August, the national average gas price had settled above $4 per gallon for nearly four months.

These price increases are undoubtedly stressful for many Americans trying to juggle rising costs across the board or simply trying to make ends meet. The Inflation Reduction Act aims to reduce these stressors while encouraging clean energy practices in residential settings. The bill will offer tax and energy incentives to American consumers to ease the monthly bill increases.

Meanwhile, it will incentivize consumers to invest in energy-efficient and “green” appliances, vehicles, etc. A considerable portion of the funding will go to low-income households to help bridge the gap in energy affordability.

The bill will lower energy costs by:

  • Investing $9 billion in home energy rebate programs to help American consumers – especially disadvantaged/low-income families – improve their homes’ energy efficiency.
  • Implementing a decade-long tax credit program to improve the affordability of electric systems, appliances, and solar panel installation.
  • Providing a $4,000 tax credit to help lower and middle-class families purchase electric vehicles.
  • Granting $1 billion toward residential energy efficiency affordability.

What the Energy Bill Means for Homeowners

A major perk for all homeowners is the bill’s potential to lower inevitable expenditures like monthly appliance and utility costs. Consumers who take advantage of these incentives won’t just be helping the Fed – they’ll be taking steps toward cheaper energy. By investing in efficient appliances, electric vehicles, and rooftop solar panels, consumers can save over $1,000 on yearly energy bills.

How Solar Can Help You Save

Residential solar power production lowers energy costs for homeowners by allowing them to rely less on the power grid and more on the Sun’s endless supply of light. Although solar panel installation may seem unaffordable for many homeowners, the technology’s cost has plummeted in recent years, from around $53,000 per system installation in 2012 to $20,000 today.

Plus, solar incentives like the federal tax credit can help you save nearly 30% on systems and installation. With incentives, a complete solar panel system might cost around $14,000. If the system saves you $1,000 to $2,000 per year on energy costs, it’ll more than pay for itself in its 25 to 30-year lifespan.

How Energy-efficient Appliances Can Help You Save

The bill encourages folks to install energy-efficient home systems and appliances. The Department of Energy estimates that major appliances and systems account for 90% of the average home’s energy consumption. This percentage may seem daunting, but it actually illuminates the great potential for cutting back and saving big.

Efficient systems, such as these from Energy Star, use less energy to operate – thus, saving homeowners money and producing fewer fossil fuels. The energy bill encourages homeowners of all income levels to install such models to improve the overall efficiency of nationwide energy consumption. The government aims to meet this goal by offering appliance upgrades and replacement credits.

It will provide tax incentives that potentially cover up to $1,200 per year to install highly efficient appliances and $2,000 for electric-powered heat pumps. The program will provide credits for breaker box upgrades for homeowners afraid of overloading their systems with high-tech equipment.

With inflation driving up prices on most consumer goods, you may be reluctant to invest even a cent of your money in new systems and appliances. However, most home devices require replacement every couple of decades, making the expenditure inevitable. If your systems are dying out or lacking efficiency, now is the perfect time to replace or upgrade them with incentivized, energy-efficient models.

Electricity nonprofit Rewiring America suggests households can save around $1,800 per year by using electric heat pumps, installing solar panels, and driving an electric vehicle. These changes will take investments, but the environmental benefits and savings are well worth the initial costs.

Closing Thoughts

Climatologists often say aggressive policy change and widespread efforts are the most effective ways to reach carbon emission reduction goals. Although we’re just beginning to understand the true threat of climate change to the U.S. and the world, these Federal implementations are a good place to start.

Increased implementation of clean, renewable energy across the commercial and residential sectors will move the environment toward a safer, greener future. Meanwhile, tax credits and energy savings will lessen the burden of inflation, helping Americans thrive with less financial strain.

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