H.R 5376 – The Inflation Reduction Act

H.R. 5376, The Inflation Reduction Act of 2022, represents the largest energy efficiency legislative package in history, with over $369 billion of incentives to promote new energy efficency technologies. This bill represents an essential first step toward slashing energy waste in all sectors and decarbonizing the country's building portfolio featuring prevailing wage and registered apprenticeship standards. With passage, the bill heads to President Joe Biden's desk for final signature.

The language within H.R. 5376 will help develop technologies such as carbon capture and sequestration, hydrogen fuel cells, and small nuclear reactors. Experts believe these tools will be needed to get the U.S. to net-zero emissions by 2050.

H.R. 5376 includes several of SMACNA’s energy efficiency priorities, such as expanding the highly effective 25C tax credit for homeowners. H.R. 5376 will also incentivize building owners to upgrade their structures with current indoor air quality (IAQ) systems needed in pandemic-era buildings. SMACNA believes that improving overall building IAQ is a top priority for public and private sector stakeholders.

SMACNA-supported energy efficiency and decarbonization incentives in H.R. 5376 include:

• 179D: Temporarily expanding the 179D permanent deduction for ten years, lifting the lifetime limit for a three-year cap, including tax-exempt entities. Providing an increased base deduction when meeting prevailing wage and registered apprenticeship standards.
• 25C: Extending the 25C tax credit for ten years, eliminating the lifetime cap, and expanding the value of the credit to 30% up to at least $1,200 without limitation on energy property
• 45L: Extending the 45L credit for ten years for single-family and manufactured homes.
• Grants and tax credits to reduce emissions from industrial manufacturing processes, including almost $6 billion for the largest industrial emitters like chemical, steel, and cement plants.
• Hope for Homes: $9 billion in rebates for energy-efficient residential technologies.
• Investment tax credits to build clean technology manufacturing facilities.
• Tax credits: Tax credits for clean sources of electricity and energy storage and roughly $30 billion in targeted grant and loan programs for states and nuclear power plants and electric utilities to accelerate the transition to clean electricity as well as provides incentives and financing for hydrogen energy, biofuels plants and technology that captures carbon from fossil fuel plants.
• Grants to Reduce Air Pollution at Ports, funded at $3 billion, support the purchase and installation of zero-emission equipment and technology at ports.
• Retrofit Financing Bank: Financing for competitive grants to charitable or public-funded non-depository financial services non-profits for quick deployment of HVAC efficiency upgrades, low and zero-emission products, technologies, and services.
• Critical Facility Modernization: Formula grants to states to provide improved energy efficiency and increase the resiliency of important public buildings, including schools, libraries, museums, and many other local and state building facilities.
• GSA Energy Efficiency: Support for the purchase of high-efficiency technology, efficiency related goods and energy efficiency upgrade contracting services.
• Comprehensive permitting reforms designed to help contractors and consumers alike with fewer steps to gain approval with proposed time limits to consider high priority projects.
• Additional language on school efficiency standards and IAQ retrofit support from federal, state, and local agencies assisting grant and program implementation.

Final passage of H.R. 5376 represents a major victory for SMACNA members. Through this single piece of legislation, SMACNA’s commercial, residential, and industrial efficiency tax agenda will now become law after more than a decade of work by our chapters, staff, and members in every market segment. SMACNA and several other organizations successfully urged lawmakers to support the final passage of H.R. 5376. SMACNA now looks forward to the President's signature and the final enactment of H.R. 5376 into law.