Two years ago, on August 16, 2022, President Biden signed into law the largest investment in climate action and clean energy in American history. The federal Inflation Reduction Act (IRA), came on the heels of Illinois’ historic 2021 Climate and Equitable Jobs Act (CEJA) and the 2021 federal Bipartisan Infrastructure Law (BIL). Illinois has been uniquely able to take advantage of federal investments because of the similar, stackable incentives created by CEJA.
Let’s explore some of the ways that individuals, businesses, communities, and the state are benefiting from federal Clean Energy Investments in Illinois.
1) Clean Energy Tax Credits for YOU:
Thanks to the IRA, it just got easier to reduce your energy use and your electricity bill. The IRA bumped existing tax credits for geothermal and solar back up to 30% and extended them through 2032. Electric Vehicle Tax credits were also extended and new credits for used vehicles and EV chargers were created. Additional new tax credits were also created for weatherization upgrades, like windows and insulation, as well as air conditioners, battery storage, and others. Many of these new opportunities can be paired with other state incentives for energy efficiency and solar. Learn more in our “Clean Energy for YOU” blog.
2) MORE Energy Efficiency and Electrification Funding for YOU
The IRA also created the Home Energy Rebate Program that will provide rebates on purchases and upgrades like insulation, air sealing, electric heat pumps for heating and cooling, electric stoves/ovens, electric wiring, and more. Upgrades like these help improve energy efficiency and reduce the use of fossil fuels in our homes. The rebate program will be managed by our State Energy Office at the Illinois Environmental Protection Agency and should be available in early 2025. In July, the IEPA released some details about eligibility, including their plan to allocate 100% of rebate funds to low-income households (i.e., households with less than 80% of the area median income.)
3) Solar for Nonprofits, Schools, and Local Units of Government
Federal tax credits for clean energy are now available as Direct or Elective Pay thanks to changes in the IRA. This means that tax-exempt entities, like nonprofits, schools, and municipalities, can now own their own solar projects and benefit from the 30% federal tax credits for clean energy projects. Prior to this change, tax exempt entities typically went solar through lease agreements or third power ownership. “Adders” that increase the value of this tax credit are available for low-income communities, energy communities, and when domestic components are used. The Champaign-Urbana Public Health District (CUPHD) recently went solar, and plans to take advantage of the “direct or elective pay” tax credit along with state renewable energy credits,” and together the incentives will reduce the cost of the system by 60%!
4) Rural Energy for America
In the second half of 2023 alone, more than 200 Illinois farms and rural small businesses received the Rural Energy for America Program (REAP) grant. The REAP grant received a huge boost in funding from the IRA for renewable energy projects for rural small businesses and agricultural producers. While the individual projects are small, the impact for a rural business or farm is great, and collectively the REAP grant is expanding clean energy and lowering emissions. Alto Vineyards, in southern Illinois, was one rural small business that has benefited from the REAP grant.
5) Solar for All
In April, the Climate Bank was awarded a $156 million grant from the IRA’s Greenhouse Gas Reduction Fund Solar for All program. Illinois has an existing state Solar for All programs administered by the Illinois Power Agency with funding from CEJA. The new federal award will be used to expand the existing program’s efforts to bring affordable solar to low-income communities, as well as expand community engagement, and clean energy workforce development.
6) Climate Pollution Reduction Grant
In July, the IEPA was awarded $430 million in Climate Pollution Reduction Grants to improve air quality and advance environmental justice. Climate Pollution Reduction Grant funds will support projects in building and industry decarbonization, freight electrification, and renewable energy. This funding was just announced, and the opportunity and impact for individuals and communities to benefit from this investment is yet to come!
7) Energy Community Reinvestment
The IRA took special care to increase clean energy investment in communities that historically relied on fossil fuels for economic opportunity. In particular, much of Illinois (see map) is eligible for the “energy communities tax credit bonus” which increases the tax credit by 10% for clean electricity investment and production in “Energy Communities.” These prioritized investments seem to be working and according to a 2023 report from the U.S. Department of the Treasury, “It is well-established that clean investments grew meaningfully after the [Inflation Reduction Act] passed. But we find that clean investments grew especially quickly in ‘Energy Communities,’ areas with a history of fossil fuel production, where clean industry potential exists but opportunity has been scarce.”
Figure 1. After the IRA passed, clean investments grew broadly, but they grew especially quickly in Energy Communities.
8) Clean Energy Development on Mined Lands and Brownfields
A combination of state and federal investments for cleaning up legacy pollution and redeveloping that land into clean energy has great potential in Illinois. Funding from the Bipartisan Infrastructure law is reclaiming abandoned mine lands and brownfields in Illinois. And the energy community tax credit bonus and other programs are driving clean energy projects to those sites. The City of Urbana redeveloped their capped landfill into solar and we explored the potential of solar development on brownfields and mined lands in Illinois in a recent webinar.
9) Environmental Justice Grantmaking Opportunity Coming Soon
A partnership of Midwest organizations has received $50 million in IRA funding under the new Environmental Justice Thriving Communities Grantmaking program. Beginning as early as September 2024, this grantmaking program will award environmental justice grants to organizations working in and for underserved communities throughout the Great Lakes region, including Illinois. Different tiers of funding will be available, from small grants for assessment to larger grants for project development. More information can be found on the Minneapolis Foundation’s website.
10) Technical Assistance is available to help disadvantaged communities navigate energy and environment funding opportunities
The Biden Administration is committed to ensuring that communities with environmental justice concerns have access to IRA investments. The administration’s Justice40 Initiative aims to deliver 40 percent of the overall benefits across several federal programs, including clean energy, transportation, housing, water, and more, to disadvantaged communities that are marginalized, overburdened and underserved (see map of Justice 40 communities here). As part of that ongoing commitment, the IRA launched 16 Thriving Community Technical Assistance Centers (TCTAC) across the country aimed at supporting communities and organizations on navigating funding opportunities for clean energy, pollution clean-up, and green workforce development. The two TCTACs serving Illinois include the Great Lakes TCTAC and the BIG Justice TCTAC. Prairie Rivers Network is bringing the work of the Great Lakes TCTAC to Illinois communities through a partnership with TCTAC partner University of Illinois Extension.
With The Good Comes the Bad
Unfortunately, not everything that has been boosted by recent federal investments is good for the climate and communities. The IRA increased tax incentives for carbon sequestration (called 45Q) to $85/metric ton. This has led to an industry gold-rush in Illinois, as industry giants like ADM and BP look at Illinois as a target for their carbon waste. Geological features deep underground in Illinois make it an appealing place to sequester carbon. While this technology may one day have a place in the clean energy future, the massive scale that it is proposed now will largely prop up fossil fuel power plants and ethanol, instead of decarbonizing the hard to decarbonize industries (like concrete). In East Central Illinois, we’re fighting to protect our Mahomet Aquifer from the risks of leaks due to sequestering carbon for profit.
Prairie Rivers Network is working to ensure climate change is mitigated in a just and equitable way. Ensuring that rural, disadvantaged, and coal communities understand and have access to the support they need to navigate the energy transition is critical to our mission.
