Clean Energy
Breaking Down Clean Energy Funding in the Inflation Reduction Act
The following content is sponsored by the National Public Utilities Council
Breaking Down Clean Energy Funding in the Inflation Reduction Act
The Inflation Reduction Act (IRA), signed into law on August 16, 2022, is the largest climate legislation in U.S. history.
Along with fighting inflation and boosting domestic manufacturing, the IRA ultimately aims to help the U.S. achieve its goal of reaching net-zero emissions by 2050.
This infographic sponsored by the National Public Utilities Council breaks down the $392.5 billion in clean energy and climate spending in the Inflation Reduction Act, based on estimates from the Congressional Budget Office.
Note: The figures in the graphic and article refer to the IRA’s estimated spending for each program. Spending estimates tend to be lower than the total amount of funds allocated by the act.
Deconstructing the Inflation Reduction Act
The IRA’s clean energy and climate spending can be broken down into seven broader categories:
Category | Estimated Spending (2022–2031, millions) |
---|---|
Clean Electricity Tax Credits | $160,940 |
Air Pollution, Hazardous Materials, Transportation and Infrastructure | $41,870 |
Individual Clean Energy Incentives | $36,878 |
Clean Manufacturing Tax Credits | $36,877 |
Clean Fuel and Vehicle Tax Credits | $35,995 |
Conservation, Rural Development, Forestry | $34,681 |
Building Efficiency, Electrification, Transmission, Industrial, DOE Grants and Loans | $27,270 |
Other Energy and Climate Spending | $18,000 |
Total | $392,511 |
Clean Electricity Tax Credits, which include the Clean Electricity Production Tax Credit (PTC) and Investment Tax Credit (ITC), account for the largest share of climate spending at 41% of the $392.5 billion.
Furthermore, the IRA mobilizes around $42 billion for programs aimed at air pollution, hazardous materials, and infrastructure. The Individual Clean Energy Incentives and Clean Manufacturing Tax Credits programs each receive $37 billion to incentivize residential clean energy use and domestic manufacturing of clean technology components.
Below, we’ll unpack the IRA’s clean energy spending in further detail.
Clean Electricity Tax Credits
Of the $161 billion of funding for Clean Electricity Tax Credits, $132 billion is for just three programs.
Program | Estimated Spending (2022-2031, millions) |
---|---|
Credit for Electricity Produced From Renewable Resources* | $51,062 |
Clean Electricity Investment Credit | $50,858 |
Zero-Emission Nuclear Power Production Credit | $30,001 |
Energy Investment Credit* | $13,962 |
Clean Electricity Production Credit | $11,204 |
Credit for Carbon Oxide Sequestration* | $3,229 |
Other | $624 |
Total | $160,940 |
*Indicates extensions or modifications of existing credits.
The Credit for Electricity Produced from Renewable Sources is a PTC that provides from $5 to $25 per megawatt-hour (MWh) of electricity generated from renewable facilities. Wind, solar, geothermal, marine, biomass, hydro, and landfill gas facilities are eligible for this credit.
The Clean Electricity Investment Credit is an ITC with a base credit of 6% (rising to 30% if other requirements are met) on the total cost of installed equipment for a zero-emissions power generation facility. Besides renewables, nuclear, fuel cells, and battery storage systems qualify for this credit.
Nuclear is set to get a $30 billion boost through the Zero-Emission Nuclear Power Production Credit, which offers from $3 up to $15 per MWh of electricity generated from nuclear reactors. This is applicable for all reactors in service in 2024 and continues through 2032.
Clean electricity projects can either claim the PTC or the ITC (not both). Projects with high capital costs are likely to benefit from the ITC. On the other hand, projects with high capacity factors could benefit from credits per unit of electricity from the PTC.
Air Pollution, Hazardous Materials, Transportation and Infrastructure
Nearly half the spending for programs in this category–around $20 billion—is for the Greenhouse Gas (GHG) Reduction Fund.
Program | Estimated Spending (2022-2031, millions) |
---|---|
Greenhouse Gas Reduction Fund | $19,980 |
Climate Pollution Reduction Grants | $4,050 |
Hazardous Materials | $3,000 |
Grants to Reduce Air Pollution at Ports | $3,000 |
Neighborhood Access and Equity Grant Program | $2,900 |
Use of Low-Carbon Materials | $2,150 |
Low-Carbon Transportation Materials Grants | $1,700 |
Clean Heavy-Duty Vehicles | $1,000 |
Other | $4,090 |
Total | $41,870 |
The GHG Reduction Fund, managed by the Environmental Protection Agency (EPA), aims to provide grants for clean energy and climate projects that reduce GHG emissions, with a focus on low-income and disadvantaged communities.
Similarly, other policies in this category provide the EPA with funding for grants to reduce various kinds of air pollution and curb hazardous material usage.
Individual Clean Energy Incentives
The IRA provides various tax credits to incentivize clean energy use and energy efficiency in American households.
Program | Estimated Spending (2022-2031, millions) |
---|---|
Residential Clean Energy Credit | $22,022 |
Nonbusiness Energy Property Credit* | $12,451 |
New Energy Efficient Home Credit* | $2,043 |
Energy Efficient Commercial Buildings Deduction | $362 |
Total | $36,878 |
*Indicates extensions or modifications of existing credits.
The Residential Clean Energy Credit, accounting for $22 billion in spending, provides a 30% credit on the cost of residential clean energy equipment. This includes rooftop solar panels, geothermal heating systems, small wind turbines, and battery storage systems.
The Nonbusiness Energy Property Credit, now known as the Energy Efficient Home Improvement Credit, offers up to $3,200 annually for energy efficient home upgrades, including insulation, heat pumps, efficient doors, and more.
Clean Manufacturing Tax Credits
Besides energy generation, the IRA incentivizes domestic manufacturing of clean technologies with the following credits:
Program | Estimated Spending (2022-2031, millions) |
---|---|
Advanced Manufacturing Production Credit | $30,622 |
Extension of the Advanced Energy Project Credit | $6,255 |
Total | $36,877 |
The Advanced Manufacturing Production Credit is a tax credit for the domestic production of solar and wind energy components, inverters, battery components, and critical minerals. The credit for critical minerals is permanent, unlike credits for other items, which will phase out in 2032.
Other Climate Funding in the IRA
In addition to the policies above, the IRA sanctions another $116 billion for clean energy and climate programs.
This includes incentives for clean hydrogen production, electric vehicle purchases, and alternative fuels. Furthermore, the Department of Energy receives around $9.8 billion for clean energy innovation and infrastructure loan and grant programs.
The act also invests in environmental conservation and rural development. It includes an estimated $9.6 billion in assistance for rural electric cooperatives, along with other incentives for energy efficiency and renewable energy.
With billions in climate funding, the Inflation Reduction Act is set to provide a significant boost to America’s clean energy plans. According to an assessment by the Department of Energy, the IRA could help reduce economy-wide GHG emissions to 40% below 2005 levels by 2030, marking a major milestone on the road to net-zero.
Clean Energy
Charted: Progress on 2030 Renewable Energy Targets by Country
In this graphic, we visualize whether major electricity-consuming countries are on track to meet their 2030 renewable energy targets.

Progress on 2030 Renewable Energy Targets by Country
The International Energy Agency states that the global installed capacity of renewable energy must triple by 2030 to limit global warming to 1.5°C above pre-industrial levels.
This makes the next six years critical in the climate fight, with the upcoming United Nations COP28 event in Dubai representing a great time to assess the progress of countries toward achieving their 2030 targets.
Checking in on Progress
As set out by their Nationally Determined Contributions in the Paris Agreement, many countries, including major electricity consumers such as the U.S., European Union, China, India, and the UK, have set ambitious targets for increasing their solar and wind power generation capacities by 2030.
The data, however, suggests that many are struggling to keep pace with the required annual capacity additions that will allow them to hit these targets.
Currently, China stands out as the only nation on track to meet its 2030 target. In 2022, it not only met but significantly exceeded its required capacity additions to remain on track, adding 168% of the required 101 GW.
Let’s now take a closer look at how each of these countries are faring, comparing how much wind and solar capacity they needed to add with how much they actually did in 2022.
Country / Region | 2030 Target | Annual Average Wind and Solar Capacity Additions Needed to Hit 2030 Target | Actual Capacity Additions in 2022 | ||||
---|---|---|---|---|---|---|---|
Wind | Solar | Total | Wind | Solar | Total | ||
India | 40% zero-carbon generation by 2030 (includes nuclear) | 16 GW | 19 GW | 35 GW | 2 GW | 18 GW | 20 GW |
China | 28% renewables by 2030 | 57 GW | 44 GW | 101 GW | 55 GW | 115 GW | 170 GW |
United States | 739 GW of wind and solar by 2030 to reach zero-carbon electricity by 2035 | 34 GW | 35 GW | 69 GW | 11 GW | 21 GW | 32 GW |
United Kingdom | 60% renewables by 2030 | 4 GW | 3 GW | 7 GW | 4 GW | 1 GW | 5 GW |
European Union | REPowerEU: 42.5% renewables by 2030 | 38 GW | 48 GW | 86 GW | 16 GW | 38 GW | 54 GW |
Overall, the U.S. and India were the furthest off from their targets in 2022, adding only 46% and 57% of what was needed, respectively. European countries, on the other hand, made progress but still need substantial annual additions to meet their targets by 2030.
Playing Catch-Up: The Path to 2030
Collectively, the U.S., European Union, China, India, and the UK account for more than 60% of global electricity consumption, underscoring their profound responsibility in decarbonizing their electricity sectors.
Investments in research and development, policy support, and infrastructure development are all crucial pieces of the puzzle when it comes to achieving 2030 targets.
With swift and bold action, these nations have an opportunity to transform the global energy landscape and move the needle toward achieving net-zero on a global scale.
Learn more about how electric utilities and the power sector can lead on the path toward decarbonization here.
Clean Energy
Breaking Down the $110 Trillion Cost of the Clean Energy Transition
The clean energy transition will cost $110 trillion in global capital investments between 2021 and 2050. Here’s that sum broken down by sector.

The $110 Trillion Cost of the Clean Energy Transition
The Energy Transitions Commission estimates that achieving net-zero by 2050 requires an average annual investment of $3.5 trillion globally between 2021 and 2050.
That’s a total of $110 trillion in capital investment, or 1.3% of projected global GDP, over the next three decades.
The question then arises: where should this substantial sum of money be allocated?
In collaboration with the National Public Utilities Council, this graphic delves into the answers to that question utilizing data from the Energy Transitions Commission.
How Much Will the Clean Energy Transition Cost?
Of the $3.5 trillion dollars that needs to be invested annually into a net-zero economy, around $2.4 trillion should flow into the electricity sector, according to the Energy Transitions Commission. This accounts for 70% of the annual investment.
Decarbonizing the electricity sector holds significant importance as it can serve as a catalyst for the decarbonization of all other sectors, including:
- Buildings, which are becoming increasingly electrified through the growing use of heat pumps
- Electrified road transportation
- Electricity-intensive industrial activities, such as cement, steel, and chemical production
- Green hydrogen production
Now, let’s take a collective look at the avenues of investment needed to reach net-zero by 2050 in more detail.
Sector | Subsector | Average Capital Investment Needed Per Year 2021-2050 | Total Sector Investment Needed Per Year 2021-2050 |
---|---|---|---|
The Power Sector | Zero-Carbon Power Generation | $1300B | $2400B |
Power Networks | $900B | ||
Power Storage and Grid Flexibility | $200B | ||
Buildings | Retrofits | $230B | $500B |
Heat Pumps | $130B | ||
Renewable Heating | $140B | ||
Transport | Road Charging Infrastructure | $130B | $240B |
Aviation | $70B | ||
Shipping | $40B | ||
Carbon Removal | Natural Climate Solutions (NCS) | $100B | $130B |
Hybrid and engineered carbon removal solutions | $30B | ||
Clean Hydrogen | Production | $40B | $80B |
Transport and storage | $40B | ||
Industry | Chemicals | $40B | $70B |
Steel | $10B | ||
Cement | $10B | ||
Aluminum | $10B |
All figures are in real 2021 U.S. dollars
Overall, the diversity of the table above underscores the multifaceted approach required for a low-carbon transition.
Is the World on Track to Reach Net-Zero?
In 2022, the global capital investment in the clean energy transition totaled $1.1 trillion—approximately one-third of the required annual average to reach net-zero.
With that said, it’s important to note that the $3.5 trillion figure is an average across 29 years. Opportunities to catch up still exist, although the window is closing quickly.
According to the Energy Transitions Commission, investments must double from their current levels to around $2 trillion by 2025 and peak at around $4.2 trillion by 2040.
To remain on track to net-zero, therefore, we must make significant and rapid investments in all sectors, with a primary focus on the power sector.
Learn more about how electric utilities and the power sector can lead on the path toward decarbonization here.
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