The Clean Energy Provisions of the Inflation Reduction Act is the Right Move at the Perfect Time

By Basil Karampelas

The Inflation Reduction Act which was passed by both houses of Congress and expected to be signed into law shortly by President Biden is landmark legislation for the Cleantech industry. What makes this legislation different from Cleantech measure before it is that it provides benefits that go across three essential dimensions, specifically Scope, Stability and Security.

When viewed through this integrated lens, we are excited not only for our company, but for the myriad of firms that are aiming for a carbon-zero future.

Let’s look at each dimension in more detail.


This legislation is different in terms of its sweeping scope; a nod to the “all of the above” approach that will need to be taken when it comes to tackling our climate challenges. The broad scope of the Act and the activities that it is encouraging demonstrate a desire to tackle our climate issues with application of overwhelming force from all directions.

The Act has an impact that is multi-faceted. Both the investment tax credit and the production tax credit are extended. However, that is not all. There are additional tax credits for other technologies (such as solar, hydrogen and carbon capture) and for manufacturing of energy equipment to encourage use of domestically produced materials, along with terms that facilitate the monetization of the credits. The Act takes steps to broaden the benefits of these technologies by offering incentives to encourage development in low-income communities and includes prevailing wage requirements. The Act has elements that encourage purchase of not only electric vehicles, but single-family and multifamily residential programs targeting purchase of energy efficient appliances.


The Act also tackles what has been a lingering problem with much Clean Energy legislation, specifically with respect to the Renewable Fuels Standard: duration. Previously, legislation had near-term sunset provisions that limited the financial visibility of projects, which discouraged investment given the relatively short time horizon that participants could be certain of government support. The Act has tackled this issue head-on. The manufacturing tax credit has a term of ten years. The carbon capture tax credit is extended through 2033 and the investment tax credit is increased to 30% through 2032, and then steps down to a still-relevant 22% by 2034 and beyond.

The implications of these extensions are tremendous, for two reasons. First, the long runways afforded by the extensions provide the impetus for green companies to continue long-term product development and improvement, thus allowing for better products to be offered at lower prices and for a wider range of uses. Additionally, these extensions allow for more deployment at the greenfield level. For example, in the case of my company, we are selling solar windows to building owners whose cycle from planning to construction to occupancy might span three to five years. Many in the Cleantech space are cheering  the stability of a long-term incentive program.


Because of the Act’s breadth and depth with respect to its scope and duration, it is paving the way for a secure energy future for both the United States, as well as any countries who deploy the technologies whose development is facilitated by the Act. This benefit cannot be underestimated. In a world beset by a pandemic, extreme weather events, and a land war in Europe, there is a frightening amount of potential for energy disruptions on a global scale, both naturally occurring and man-made. The Act, by encouraging not only development but deployment of both energy producing and conserving technologies will help bend down the curve of damage that can be caused by energy supply disruptions, regardless of their cause.

When product is delivered through building materials, it has the ability to contribute significantly in this regard through products that can withstand severe weather, such as hurricanes, but which can also provide power during blackouts and can also be part of the solution when a significant number of structures need to be rebuilt, such as the case with the Ukraine.

We know what the major threats have been to our energy security over the last decade but given that we don’t have a crystal ball to see into the future, it’s encouraging to see the elements of the Act have the dimension and scope to address a large portion of what those threats are likely to be.


After so many stalled efforts for true, beneficial change, it is truly encouraging to see that legislation as comprehensive and far reaching as the Act was able to be passed by an often-contentious Congress. Perhaps this is a reflection of how the current climate and energy crisis cuts across party lines and geographic boundaries. Legislation, of course, is just the first step in what will be a decades-long climate journey for those of us in the Cleantech space.

The next set of challenges will be how each participant sets out to achieve the goals that have now been made possible (but not certain) by the act. This will require dedication to purpose, responsiveness to the market (both customers and investors), and a laser-like focus on execution.

Basil Karampelas is the North American CEO of ClearVue, a global developer and producer of solar windows