Inflation Reduction Act: Summary and Policy Analysis

Earlier this month, President Joe Biden signed a $750 billion Inflation Reduction Act (IRA) into law. The IRA may be the most significant climate change legislation in U.S. history so far. It will provide funds and opportunity for communities to tackle climate change and transition to cleaner energy options along with measures to reduce inflation and rising costs. Read more for noteworthy transportation and urban policy items in the legislation, as well as one policy that did not make it but that would reduce transportation-generated carbon emissions. 

Neighborhood Access and Equity Grants

$3 billion in aid is on the way for economically disadvantaged neighborhoods disconnected by highways built through them. Neighborhood Access and Equity Grants are an extension of the piloted Reconnecting Communities Program, but unlike Reconnecting Communities, these grants cannot be used to add more travel lanes to roads. Instead, funds can be used for initiatives like covering a highway, turning a highway into a boulevard, adding trails and bike lanes, installing sound barriers, providing better connections to transit, using “green infrastructure” to handle storm runoff, reducing heat island hotspots, building safety features, and curbing air pollution. 

Reconnecting communities for some cities will mean removing highways; however, the removal of highways will likely face opposition and proponents will need to address what should happen with the space the highways currently occupy and where extra funds will come from to help communities most impacted by environmental racism reach their full potential. 

Environmental Justice Investments

$1 billion is allocated for U.S. Environmental Protection Agency to run a clean heavy-duty vehicles program. States can use this money to purchase zero-emission school buses, garbage trucks, and transit buses. Senators want to see the electrification of vehicles used in everyday service to reduce overall pollution. The IRA will provide $281 million for community-led air quality monitoring in overburdened communities — improving polluter accountability and increasing transparency in neighborhoods experiencing environmental racism. 

Infrastructure construction

$6 billion supports efforts to reduce emissions by identifying low-carbon materials for federally funded projects such as steel and cement (see: How States and Cities Can Benefit From Climate Investments in the Inflation Reduction Act). $250 million is allocated for developing and standardizing Environmental Product Declarations for construction materials, with grants and technical assistance for manufacturers. 

Electric Vehicle (EV) Tax Credits

$370 billion is allotted for energy programs and tax incentives. The IRA extends the current $7,500 tax credit for a new electric vehicle (EV) and a $4,000 tax credit off a used EV. The IRA also allows buyers to receive an immediate discount at the dealership instead of waiting weeks or months for their tax credit. These tax credits only apply to EVs with final assembly in North America and whose battery components are from North America or a free trade partner.

Electric Bike (E-bike) Tax Credits

E-bike Incentive Programs in North America: New Online Tracker

Congress cut the proposed $4 million tax credit on e-bike purchases, which would have created $900 refundable credit for each consumer purchasing an e-bike. The e-bike credit was a part of the Build Back Better Act, which passed the House last year. Cutting the e-bike tax credit displays our legislators’ inability to see biking as a transformative form of transportation with the potential to improve our climate and daily lives. E-bikes have the potential to replace car trips: a 2021 study found access to e-bikes reduced people’s driving trips by 21%. Why? E-bikes reduce time spent in travel, especially important in sprawled areas like Atlanta, overcome hills, and make biking more accessible.

Recently, Propel ATL met with Matt Alexis, a staffer for Congresswoman Nikema Williams, at Edison Bicycles to discuss the many benefits of e-bikes and the number one challenge to more people accessing them: affordability. 

We’re interested in e-bike incentive programs being implemented across the U.S. that provide greater access to e-bikes for sustainable transportation, especially for individuals and communities most impacted by ongoing racial injustices, systemic oppression, lack of economic opportunity, and racial disparities. 

E-bikes are changing mobility in cities. Please take a minute to tell us about your interest in e-bikes. CLICK HERE to take a brief survey.