Inflation Reduction Act Opens New Doors for Growth of Renewables
President Biden signed the Inflation Reduction Act (IRA) into law on Tuesday, marking what some are calling the biggest climate legislation move in American history. It is the first time the U.S. has passed legislation specifically aimed at lowering carbon emissions and will have a sweeping impact across everything from renewable projects and electric vehicles to crypto mining and beyond.
Here is a closer look at the environmental implications of the Act and what it could mean for the energy and crypto mining spaces.
Historic Environmental Investment
Lawmakers have stated that a top goal of the IRA was to create a new framework paving the way for more clean and sustainable energy sources – and the budget certainly backs that up. The Act invests a historic $370 billion toward combatting climate change over the next decade.
This includes the offer of tax credits and funding for renewable energy, electric vehicles, pollution cleanup, and energy-efficient improvements. Tax credits are available to companies for investments in wind, solar, geothermal, nuclear, and hydrogen energy, biofuels, and technology that captures carbon from fossil fuel power plants.
The Act also includes $80 billion in rebates, including as much as $14,000 in money back, helping companies and individuals pay for green-energy upgrades. Companies can even receive a 30% credit for installing solar panels, heat pumps, and wind energy systems through 2032.
It is an unprecedented level of incentivization toward clean energy from the government, and one that will undoubtedly change the way countless industries and the energy grid as a whole operate across the next decade-plus.
Advanced Energy Project Credit
Among the tax credits included within the Act is the Advanced Energy Project Credit, which provides a 30% credit for investments in projects that re-equip, expend, or establish certain domestic manufacturing or industrial facilities to support the production or recycling of renewable energy properly.
Examples of such facilities include those producing or recycling components for grid modernization equipment.
The Act also makes $10 billion available for qualifying advanced energy projects. The Treasury Secretary will establish a program to award credits to qualifying advanced energy projects, and applicants awarded credits will have two years to place the project in service. The provision goes into effect on January 1, 2023.
Shutting Down Coal in the U.S.
Another major focus of the IRA is its initiative to move the U.S. completely off coal in the next decade, meaning the last 172 coal plants in the country will have to be shut down.
This includes $10 billion in direct payments to rural electric co-ops that pay for the cost of a clean energy transition. The USDA will administer direct payments for these co-ops to retire their coal-fired power plants.
State Grants for Cutting Carbon Emissions
A new incentive was also issued for reducing carbon emissions on the state level. As part of the Act, each state is now eligible to compete for one grant to cut carbon pollution – a grant that will be administered by the EPA.
What This Means for the Energy Grid and Crypto Mining
The IRA represents a historic investment in the future of our planet and in modernizing the power grid through the energy transition. Of course, this means it has colossal connotations for everyone from crypto investors and miners to energy providers and beyond.
Sustainability has long been a primary concern within the crypto space, with growing concern around how much energy/fossil fuel is required to power mining efforts. Industry observers expect the IRA to open a gaping door for a much broader scope of renewable projects that can continue the drive to a more sustainable and lower-cost reality for crypto mining. Some believe this is excellent news for the crypto space and for the overall outlook of the market.
For energy providers, this should clear the runway for a new horizon of infrastructure enhancements and renewable pursuits. Many investors previously uninvolved or uninterested in the sector now have a world of incentive to get involved in renewable projects throughout the country. With this Act, leaders anticipate the creation of new renewable energy sources, data center projects, and more.
For Compute North customers, this should create new opportunities to mine sustainably as we find ways to expand our offerings in the light of this new and historic legislation. Through our TIER 0™ data center model, we have taken a leading role in the industry. From minimizing water use, to utilizing renewable energy, our aim is to build and operate the most sustainable and cost-effective data center infrastructure in the world.