During the Great Depression, Robert Rich (R-Woolrich) represented North Central Pennsylvania in Congress. Whenever a New Deal spending bill came up in the House of Representatives, Congressman Rich would ask a question. Others soon joined in a larger, louder chorus of “Where do we get the money from?”
The recently passed Inflation Reduction Act (IRA) answers the rich question: from revenue sources like a new minimum tax of 15% on corporate profits and enforcement of the tax law for the rich. These sources should easily cover the $363 billion portion of the IRA earmarked for energy security/climate change. But many individuals and families, homeowners and renters may be asking Congressman Rich’s question as they pay the mounting bills for heating their home or business this cold season.
The IRA was designed to deal with this costly trend because there is a world of far cheaper energy ahead if the world spends enough money to get there. It’s a difficult goal to imagine. But when you look frankly at the price the world is paying just for the healthcare costs caused by our fossil-fuel based economy, things get easier.
The IRA’s money is distributed over 10 years to any state that accepts its share. That’s nowhere near enough money per state per year. Is there any way states could build on this leg to sustain needed jobs, needed state budget money, needed budget savings, etc.?
Depending on your income, either tax refunds or direct payments are available to support the purchase and installation of qualifying weathering products and heat pumps to improve energy efficiency where weathering is a task.
Why heat pumps? They are 3 to 5 times more energy efficient than most heating systems in use today. They are superior in terms of cost efficiency when running in specific temperature ranges.
Heat pumps can heat or cool your home very efficiently to an outside temperature of at least 32 degrees. They can be from less efficient to far less efficient in extreme weather. Unlike previous models, today’s heat pumps operate at very low temperatures, whether ducted or ductless (mini-splits), but at a higher cost in extreme heat or cold. In cold temperatures they can be switched on with a gas heater instead of running inefficiently.
How does a heat pump work? By transferring heat instead of generating it. It may be difficult to understand, but there is warmth in cold air. A heat pump transfers heat from cold outside air to your warmer home. Or transfers heat from your cooler home to outside.
If this sounds like questionable technology, look no further than your refrigerator or air conditioner for an example of using electricity and a refrigerant gas to transfer heat from a cool room to a warmer room. It’s been around for a while, and as technology seems to be doing, it just keeps getting more innovative and better.
The IRA is not a perfect plan to launch a smooth energy transition. But it’s a good start. When the funds become available in 2023, Americans need to see proof that the promises of job creation are real, while supply and demand for inputs, equipment, etc. keep it making economic sense.
The good news for heat pumps: Households earning less than 80% of their Area Medium Income (AMI) can get 100% of the heat pump cost up to $8,000. Middle-income households (those from 80% to 150% of the AMI) can receive up to 50% of the cost. Those under 80% AMI can be paid directly at the point of sale.
But first the program has to be set up, then the states can apply for federal grants to make the payments. It may take a while, but if you can afford it, go ahead, be a pioneer.
Most of you are probably familiar with the Low-Income Energy Assistance Program (LIHEAP). If not, find your way to www.dhs.pa.gov or your County Assistance Office. LIHEAP can provide households with a qualifying low income with $300 to $1,000 to cover heating costs. LIHEAP offers even more to deal with a crisis: an imminent shutdown, defective heaters or a fuel supply of less than 15 days.
Ralph Kisberg is the Energy Policy Advisor to the Williamsport-based Responsible Decarbonization Alliance (www.rdapa.org).