Recovery From Pandemic Prompted Federal Funds For P3 Approach 

Welcome back to the Sunstone Way. 

In recent months, I have focused on how strongly California backs Public-Private Partnerships (P3), especially regarding clean energy and climate change-related innovations. 

This week, I’d like to talk about the federal government. No, I’m not talking about the recently passed 940-page spending bill except peripherally. Instead, I want to talk about the amazing impact the 2022 Inflation Reduction Act has had on our state. 

 Bill of Necessity 

In 2022, the nation was struggling to get back on its collective feet after the devastating COVID-19 pandemic. Inflation was rising, businesses were on the brink of collapse and concern about impacts from global warming and climate change were reaching crisis levels. 

President Joe Biden and Congressional leaders proposed the Inflation Reduction Act (IRA) early in 2022, as COVID subsided and the country tried to start doing business again. By the time it passed in August, it authorized $891 billion in spending over 10 years That amount pales compared to the 2020 CARES Act that approved $2.2 trillion for COVID relief, but still stands as the largest climate investment in U.S. History. 

While authorizations stretched out for a decade, the last two years of the Biden administration accounted for significant spending. California benefited significantly, using the financing to grow clean energy and climate change initiatives already underway. 

California Leverages Financing 

According to Gov. Gavin Newsom’s office, the IRA has already sent billions of dollars to California’s clean energy sector, creating thousands of jobs. The bill anticipates $21.2 billion in federal investment through 2030, although it is uncertain how efforts to cut spending in the 2025 federal appropriations act recently approved will impact that number. 

A significant portion of the money in the bill was designated to help low- and moderate-income households cope with rising energy costs – there was more than $1.6 billion in tax breaks to boost energy efficiency in homes in 2023 alone. Millions more went through various government agencies to subsidize solar and other clean energy installations, and $168 million was earmarked for installation of 2,600 electric vehicle charging stations in rural and disadvantaged areas across the state. 

Small businesses were another emphasis for the IRA – again, with a focus on clean energy and climate change responses. Commercial building owners were offered a tax credit of up to $5 per square foot for energy efficiency improvements. Other tax credits included 30% of the costs of installing solar power and purchasing clean trucks and vans for commercial fleets. 

Winds Of Change 

As I’m sure you are aware, the last six months have brought uncertainty to a number of the IRA programs. President Trump has signaled he will try to end many of the tax credits and other incentives in the IRA, particularly in regard to clean energy. 

Some of these eliminations are the subject of lawsuits by California and others. Others have been discussed, but not implemented. For example, the IRA provided upfront discounts up to $7,500 for new Electric Vehicles and $4,000 for used EVs. The current federal administration has threatened to eliminate those discounts, but has not done so yet. 

It says something about the California approach that Gov. Gavin Newsom has pledged to maintain the discounts in the state even if the federal government eliminates them. Other clean infrastructure projects are being protected as well. 

Maintaining Momentum 

When the Inflation Reduction Act was passed in 2022, it was a huge example of government being the catalyst for positive change, with the private sector – helped by state and local governments – implementing those changes. 

That is the very definition of a public-private partnership, and the successes of the first two years of the IRA are proof that the P3 approach works. While the uncertainty of the current situation can cause worry, I’m confident that the need for clean energy will ultimately overcome policy shifts back and forth. 

It is a matter of working for the greater good, and I believe it will prevail. Because that is the Sunstone Way! 

And remember, always be a Sunstone.