The passage of the Inflation Reduction Act (IRA) has been anything but a straight road. Originally put forward by the Biden administration as the Build Back Better plan, the democratic party saw obstacles at nearly every turn, even within their own ranks. What started out as an unprecedented $2 trillion proposal, is now, all said and done. Big spending for climate programs, health subsidies, and drought relief comes in at just under a quarter of that bill ($437 billion) while raising about $740 billion in new revenue over the next decade. President Biden announced his intention on signing the final version of the bill into law as soon as possible, while saving a more ceremonial event for sometime in September.
While the IRA attempts address a sprawling number of issues facing the country including deficit reduction, health care, tax revisions, environmental justice, and domestic energy production--the provisions that are of greatest concern to the asphalt industry are in regards to climate change and emissions reduction. There are 7 of these key funding opportunities with billions of dollars in incentives for the industry. And while the IRA does set clear targets for these incentives, it doesn't include carbon-taxes or penalties for exceeding these targets. Instead, it opts for broad investments in carbon-reducing technologies through grant programs.
Once H.R. 5376 is signed into Public Law, the implementation phase will officially begin. The next step for agencies will be to meet with stakeholders, issue guidance and rules, and publish notices of funding opportunities (NOFOs) on these new programs. Federal funding for developing and procuring low-embodied carbon of construction materials as provided for in IRA is both significant and unprecedented. IRA provides the industry with an opportunity to accelerate emissions reduction initiatives by individual member companies as well as support industry wide initiatives such as NAPA's The Road Forward.
Sections Impacting The Asphalt Pavement Industry
Section 60112, Environmental Product Declaration Assistance
Amount: $250 million to remain available until September 30, 2031.
Agency: Environmental Protection Agency (EPA)
Purpose: To support the development, enhanced standardization and transparency, and reporting criteria for EPDs that include measurements of the embodied greenhouse gas emissions of the material or product associated with all relevant stages of production, use, and disposal, and conform with international standards for construction materials. Grants will also be used to developing and verifying EPD’s and providing technical assistance.
Eligible Recipients: Businesses that manufacture construction materials and products, states, and nonprofit organizations.
Section 60116, Low-Embodied Carbon Labeling for Construction Materials
Amount: $100 million to remain available until September 30, 2026.
Agency: Environmental Protection Agency in consultation with the Federal Highway Administration (transportation projects) and the General Service Administration (buildings).
Purpose: To identify and label construction materials and products that have a substantially lower levels of embodied greenhouse gas emissions associated with all relevant stages of production, use, and disposal, as compared to estimated industry averages of similar materials or products as determined by EPA based on EPDs, or as verified by State agencies as verified by EPA.
Eligibility: EPA for administrative costs
Section 60503, Use of Low-Carbon Materials
Amount: $2.15 billion to remain available until September 30, 2026.
Agency: General Services Administration (GSA) Federal Building Fund.
Purpose: To procure and install materials and products used in construction or alteration of buildings under the jurisdiction of GSA that have substantially lower levels of embodied greenhouse gas emissions associated with all relevant states of production, use, and disposal as compared to estimated industry averages of similar materials or products, as determined by EPA.
Eligibility: GSA Contractors
Section 60504, General Services Administration Emerging Technologies
Amount: $975 million to remain available until September 30, 2026.
Agency: General Services Administration Federal Building Fund.
Purpose: For emerging and sustainable technologies and related sustainability and environmental programs.
Eligibility: GSA Contractors
Section 60506, Low-Carbon Transportation Materials Grants
Amount: $2 billion to remain available until September 30, 2026.
Agency: Federal Highway Administration
Purpose: To reimburse or provide incentives for the use, in projects, of construction materials and products that have substantially lower levels of embodied greenhouse gas emissions associated with all relevant stages of production, use, and disposal as compared to estimated industry averages of similar materials or products, as determined by the EPA. The amount of reimbursement shall be equal to the incrementally higher cost of using such materials relative to the cost of using traditional materials. The incentive amount shall be equal to 2 percent of the cost of using low-embodied carbon construction materials and products. The total federal payable share of a project for which a reimbursement or incentive is provided shall be up to 100 percent.
Eligible Projects: Projects on a Federal-aid highway, tribal transportation facility, Federal lands transportation facility, or Federal lands access transportation facility. Funds cannot be used for projects that result in through travel lanes for single occupant vehicles.
Eligible Materials: FHWA shall use the low-embodied construction materials and products identified by EPA and select from that list materials and products appropriate to use in projects eligible for reimbursement or incentives.
Eligible Recipients: States, local governments, political subdivision, territory, or Metropolitan Planning Organization
Section 50161, Advanced Industrial Facilities Deployment Program
Amount: $5.812 billion to remain available through September 30, 2026.
Agency: Department of Energy (DOE)
Purpose: To award grants on a competitive basis for projects designed to accelerate greenhouse gas emissions reduction progress to net-zero at eligible facilities that (1) purchase, install or implement advanced industrial technologies or (2) retrofits, upgrades, or operational improvements at an eligible facility, or (3) engineering studies and other work need to prepare the facility for such a project. The grant may be up to 50 percent of the cost of the project. The DOE shall give priority for projects on the basis of expected greenhouse gas emissions reductions to be achieved, the extent to which the project would provide the greatest benefit for the greatest number of people within the area, and whether the eligible entity participates or would participate in a partnership with purchasers of the output of the eligible facility.
Eligible entities: owner or operator of a domestic, non-Federal, nonpower industrial or manufacturing facility engaged in energy-intensive industrial processes as determined by DOE.
Section 70006, FEMA Build Materials Program
Amount: Existing Budget, No New Funding
Agency: Federal Emergency Management Agency (FEMA)
Purpose: To provide financial assistance for the cost of using low-carbon materials and incentives that encourage low-carbon and net-zero projects.
Eligible Recipients: A state, territory, tribe, local government, or private nonprofit organization.
Additional Resources
Final Text of the Inflation Reduction Act (IRA):
https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376eas.pdf
Senate Democrats Summary of IRA and other information:
https://www.democrats.senate.gov/inflation-reduction-act-of-2022
Senate Environment and Public Works summary of IRA provisions and other information:
https://www.epw.senate.gov/public/index.cfm?p=inflation-reduction-act-of-2022
Summary of key impacts sourced from NAPA: Inflation Reduction Act Clears Congress, Impacts Asphalt Industry
