3 Things You Need to Know About the IRA
By Syoni Revollo
Companies and developers at the nexus of commercial real estate (CRE) and sustainability are all asking the same question: “What does the Inflation Reduction Act (IRA) mean for me?” CRE developers are well-positioned to save thousands of dollars annually while also benefiting the environment through the IRA. Here are three main takeaways regarding the IRA. The IRA:
1. Provides Tax Credits, Making Sustainability More Lucrative
Sustainability will be less costly because of the tax credits available for the installation of energy conservation and renewable energy assets. In addition, property owners could receive extra incentives for U.S. manufactured products. CRE developers could save millions of dollars annually while also reducing energy use. Developers will see benefits from solar installations, HVAC) upgrades, etc.
2. Gives Funding for Local Governments to Update Building Codes
The IRA gives billions of dollars in funding to states and local governments to update building codes as well as establish and implement greenhouse gas reduction plans. Updated building codes will require developers to renovate existing buildings to a higher standard or build new buildings more sustainably. C-PACE can finance these costs.
3. Accelerates the Domestic Clean Energy Workforce
The IRA expands and requires some technologies like solar panels, heat pumps, batteries, and other clean technologies to be manufactured or assembled in North America to qualify for incentives. Not only will these investments strengthen and reduce costs in the clean energy manufacturing sector, but they will also result in fewer supply chain issues for CRE developers.
In summary, the IRA will result in more sustainable buildings through tax credits, stronger building codes, and fewer supply chain issues. As a CRE developer, the IRA will result in significant operating savings on projects, and C-PACE financing should be a part of all these capital stacks.