You and every American have just been given an electric bank account to replace your old fossil fuel machines with new, clean electric machines. These funds are good for a decade, hold thousands of dollars and basically replenish each year. These are the provisions in a new law, Inflation reduction law (IRA), which directly benefits you and other Americans.
In addition to these benefits, you get a bonus: You can save money each year by locking in the lower energy bill rates that come from switching to electric. In addition, this new law comes with a good advantage: it is one of the most effective ways to tackle the climate crisis. This is why we need every family in America to know the benefits of the new law and how to use it.
In fact, 42 percent of energy-related emissions in the United States come from the decisions we make around the kitchen table: the cars we drive, how we heat air and water, cook our food and dry our clothes, and where we get the energy for it. Run all these machines. There are a billion machines in 121 million homes that need to be replaced or installed as electricity over the next two decades. There is simply no way for us to stay within 1.5°C of warming (to avoid the worst impact of climate change) unless we do.
President Biden celebrates the Inflation Reduction Act Tuesday for good reason. The new law puts all of us at the center of American climate policy and recognizes that electrifying our lives is not just a good deal for our planet, but for our financial books. Electricity-powered families are saved An average of $1800 per year per family – every year. This is very important in a country where 49 percent of Americans don’t have $400 in emergency savings. Electricity use also protects us from inflationary shocks that come from paranoid dictators and profit-hungry fossil fuel companies because we no longer depend on it to power our lives.
The Inflation Control Act will provide nearly $100 billion in benefits to Americans through a combination of the Inflation Reduction Act As much as $858 billion in interest to Americans through a combination of rebates, tax credits, and low-cost financing — if we maximize its full electric potential. This will save a significant amount of money for Americans to cash in when they replace their old appliances with new, clean electrical machines. It represents the largest transfer of wealth from energy producers to American households in history – but only if we make it work.
This is because the main thing about these benefits is that if you don’t spend this free money, you lose it – and worse, life becomes more expensive.
Let’s say I have a furnace that runs on fossil fuels, and it’s coming out next year. I could access some tax credit dollars to get a heat pump. If I didn’t know this was an option, I would have replaced my gas oven with another gas oven. But since these machines last about 15 years, I’m going to lose money from the new heat pump law, because the inflation cut law spending window is currently 10 years, and it wouldn’t make 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 will also have to pay for a fossil-fueled machine that will only cost more over the same time period, as economies begin to price the increasingly unaffordable 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 to many. Just A quarter of Americans report being familiar with heat pumps. This means that a quarter of Americans know that a heat pump is the best, and now more expensive, option for heating or cooling, no matter where you live in this country.
Americans need to plan for electricity, prepare to “rewire” — upgrade panels and wires as necessary — and the Inflation Reduction Act helps them do so. My organisation, Rewiring America, built a calculator To help people understand the money available to them, and start thinking about what they would do to maximize the benefits. The strong thing about these new benefits is that the money increases in value over time. As more homes become electrified, the cost of these electrical machines will fall, while the value of rebates and other incentives remain constant. Year after year, our purchasing power will become stronger.
These new benefits give Americans an opportunity to play their part in a story of transformation for our communities, our country, and our planet. Powering your home is the garden of contemporary victory — something you can do to free America from dependence on fossil fuels, a way to contribute to reducing our emissions and an opportunity to help build American supply chains and encourage the creation of good-paying jobs right here at home.
But the important thing to understand about the law to limit inflation is that it is a statement of potential, not a guaranteed outcome. Its success depends on people getting these benefits. If they don’t, less electricity will be spent and the resulting emissions reductions, savings, and household and societal benefits will be lower. On the contrary, there is almost no cap on the amount of money that can be accessed through these new benefits. If the United States succeeds in increasing electricity adoption by up to 100 percent by the end of the IRA, that $858 billion in residential electrification benefits will be invested in every community in the countrywhich saves more money for families as a result.
The Inflation Control 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 now on. If Americans knew they had thousands of dollars to spend in order to make their homes cheaper to manage, healthier to inhabit and more comfortable, they would use that money. It’s up to those of us who know to tell them.
Ari Matusiak is the co-founder and CEO of Rewiring America, the co-founder of the Purpose Venture Group and a former Special Assistant to President Obama and the Department’s Director of Private Sector Engagement.