T4America Blog

Here’s what you need to know about the Inflation Reduction Act

The Senate passed the Inflation Reduction Act, a budget reconciliation package that includes some portions of President Biden’s Build Back Better agenda. This is the largest climate investment in U.S. history, and programs in it will help Americans save money and stay safe on our streets. Here’s what you need to know as the bill awaits the President’s signature.

It’s a surprise that we even got a bill

It’s been a while since we wrote about the Build Back Better Act, the previous attempt to pass some of these provisions, so here’s a quick recap:

Congress removed climate-focused investments when the new infrastructure law passed with the hope of including these funds in a reconciliation bill, the Build Back Better Act. However, once those investments were cut from the infrastructure law, those in favor lost any leverage they had to include them in separate legislation, especially since there are restrictions that bar Congress from approving multiple programs that accomplish the same task. 

When the Build Back Better Act finally made it to the Senate floor, Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) refused to vote in favor of it. As negotiations stalled repeatedly, it became clear that the Build Back Better Act was dead.

However, in late July, new legislation appeared seemingly out of nowhere. The Inflation Reduction Act was a deal struck between Senator Chuck Schumer and Senator Manchin. Noticeably lacking the transit, biking and walking investments climate advocates had hoped to see, this reconciliation package still carried some portions of the Build Back Better Act. Though this package largely preserves the car-based status quo, there are a few wins for transportation, which we note in the section below.

Support for safety, access, equity, and reducing emissions

$3 billion in this package goes to a brand new program called Neighborhood Access and Equity Grants, which help mitigate the danger of overbuilt arterial roadways, especially in underserved areas. This is by far the biggest win.

These grants can be used to redesign roadways to make them safer, providing more mobility options for community residents. In addition, these changes can help alleviate the negative health impacts of living near heavily-trafficked roads by diverting travel to other, less polluting modes of transportation like walking, biking, and rolling. Unlike the Reconnecting Communities Program, these funds can go beyond connecting across highways and railroads to allow redesigning big roadways that create division due to the danger in crossing.

As we said in our statement after the Inflation Reduction Act was released: “By providing funds to redesign these roadways, these grants can help to connect the community, support local economic development, save people money on gas by allowing them to get out of their cars, close an obstacle to economic opportunity and, in the process, save lives.”

Safe, walkable communities are in high demand, and their scarcity makes them expensive places to live. To help ensure that the people who live near divisive or dangerous infrastructure will be able to benefit from any improvements, these grants also help fund anti-displacement efforts in economically disadvantaged communities impacted by redesign projects. $1.1 billion of these grants are specifically designated for economically disadvantaged communities, and to qualify for funding, the areas must have an anti-displacement policy and a community land trust or community advisory board in effect. After decades of making infrastructure decisions without substantial community input, the program encourages decision-makers to involve community members in the planning process. Decision-makers must also include a plan to employ local residents in the redesign process.

Because these grants are embedded in U.S. Code, they go beyond the temporary pilot programs (like Reconnecting Communities) introduced in the infrastructure law to address safety, access, climate, and equity, helping to ensure that these issues can be addressed for years to come.

Additionally, the budget reconciliation package includes clean vehicle tax credits to encourage the transition to electric vehicles. The existing clean vehicle credit is now amended to include not only plug-in electric vehicles but fuel cell vehicles as well. The credit applies to new, used, commercial, and heavy-duty vehicles. Unfortunately, the amended credit adds restrictions on eligibility based on vehicle and battery assembly, which would make many current U.S. electric vehicles ineligible for the credit and make them all ineligible in the coming years (unless EV manufacturers make significant changes). $3 billion is available to support the manufacturing of these vehicles.

The tax credit also extends to USPS vehicles, both purchasing an electric fleet and infrastructure to support the new vehicles. We’ve been advocating for the electrification of heavy-duty vehicles and USPS vehicles with the CHARGE Coalition because these vehicles are responsible for a significant portion of transportation emissions.

Unlike the infrastructure law’s investments, the Inflation Reduction Act’s funds go beyond infrastructure. Keep an eye on Smart Growth America’s blog for more information on the land-use investments that will further help tackle the climate crisis.

The status quo strikes again

This bill will be the largest climate investment in U.S. history. However, when it comes to transportation, overall the bill does almost nothing to counter the infrastructure law, which provided more funding for the same broken status quo approach that led to such high transportation emissions in the first place. Transit is entirely absent. While there are billions for new electric cars, there are no tax credits for e-bikes, which currently outsell electric cars and trucks and have incredible potential to replace car trips entirely and expand who can ride a bike. Yet Congress is still focusing entirely on vehicles, and electric vehicles alone will not dig us out of our current climate crisis. We need electric vehicles, and we need to allow people to drive less overall. The Inflation Reduction Act invests heavily in the former while mostly ignoring the latter.

Let this be a lesson to our Congressional leaders. We can’t continue treating transportation as separate from climate. The infrastructure bill is a climate bill, whether it helps or hurts. And if Congress wants to reduce transportation emissions, they can’t cave at the slightest possibility that some infrastructure programs could be included in future legislation. The next time Congress passes a surface reauthorization or any significant infrastructure investment, they must advocate for the full package outright, not only in rhetoric.