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How will the Inflation Reduction Act impact the AEC Industry

Well this changes things!

One of the key topics on everyone’s mind this year at the EFCG Annual CEO Conference will be the 10 year+ tailwinds anticipated for our industry from the recent passing of the $1.2T Infrastructure Investment and Jobs Act (IIJA) and now, the highly anticipated $433B Inflation Reduction Act (IRA), which passed the Senate over the weekend and is expected to pass the House later this week. $550B of the IIJA will be going toward “new” investments and programs and the IRA bill allocates nearly $370 billion to climate and energy-focused investments and incentives.

To put this into context, the total revenue of the engineering design and consulting market in the US is about $186B per year.

What specifically are we paying attention to in the IRA?

  • Tax credits are extended for energy production and investment in technologies including wind, solar and geothermal energies. The investment tax credit also now applies to battery storage and biogas.

  • Tax credits would be created or extended for additional technologies and energy sources including nuclear energy ($30B), hydrogen energy ($13 billion over 10 years) coming from clean sources, biofuels and technology that captures carbon from fossil fuel power plants.

  • A new program aims to reduce emissions of the planet-warming gas methane from oil and gas by both providing grants and loans to help companies reign in their emissions and levying fees on producers with excess methane emissions.

  • $27 billion would go to a green bank that would provide more incentives for clean energy technology.

  • $3 billion would go to environmental justice block grants — community-led programs addressing harms from climate change and pollutants, including $20 million for technical assistance at the community level, through fiscal 2026.

  • More than $3 billion is allocated to funds for air pollution monitoring in low-income communities. Nearly half of the funds — $117 million — would specifically go to communities in close proximity to industrial pollutants.

  • An excise tax on imported petroleum and crude oil products to fund the cleanup of industrial disaster sites increases from 9.7 cents to 16.4 cents per barrel. The reinstatement of the tax is projected to raise $11 billion.

We look forward to the discussions in New York in September and the next 10 years!

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