Energy Industry Grapples with How to Profit from $500B+ in Funding and Incentives

On August 16, 2023, the $500B+ Inflation Reduction Act (IRA) marked its first anniversary, promising federal funding aimed at lowering carbon emissions and healthcare costs around a beefed-up Internal Revenue Service charged with improving taxpayer compliance.

The Act seeks to invigorate domestic manufacturing projects through clean energy technology investments, environmental justice priorities, and American innovation and productivity initiatives. Included in the IRA are the Bipartisan Infrastructure Law (BIL), providing funding for US transportation, broadband, and public works projects, and the CHIPS and Science Act, designed to encourage US semiconductor investment.

In all, the industrial sector, including power generation, chemicals, refining, steel, cement, automotive, and other enterprises, will broadly be affected by the legislation for years to come. Indeed, front-runners in the race to secure IRA funding are already knee-deep in navigating the complex and often confusing application process. Those who qualify will only begin their journey under the scrutiny of federal auditors requiring detailed compliance reports affirming progress within the narrow gates of the IRA and greater National Environmental Policy Act (NEPA), through which the money flows.

Those who don’t participate in the race for funding still stand to profit from the Act, which is laden with tax incentives for decarbonization efforts – provided such efforts are appropriately documented and proven. Again, qualification for the tax credits is tied to completing the right forms and validating any claims with scientifically verifiable data.

Nothing is easy when it comes to the government. But for those who endure the journey, the benefits can be significant. Renewable energy technologies, energy-efficient infrastructure, and sustainable operations translate to lower operating costs, expanded global contract flexibility, improved productivity, worker safety, and public acceptance, which leads to growth. The question is, how do you position yourself to make the best of it within the confines of your firm’s available resources?

A Quick Overview of the Hurdles

When federal agencies issue funding opportunity announcements (FOAs) or Notice of Funding Opportunities (NOFO), such as those afforded in the IRA, responding firms must comply with the legislation and policies defined by the funding agency. Those agencies can include the Department of Energy (DOE), Office of Clean Energy Demonstrations (OCED), and Chips Program Office (CPO). For starters, all applicants must have active SAM.gov and Grants.gov registrations in order to apply. From there, depending on what grants you hope to secure and for what reasons, the requirements canvas the map.

Three general categories are in order: advancing environmental justice, delivering cleaner air, and tackling climate pollution. For instance, under the climate pollution category, 11 initiatives are earmarked for funding, ranging from $5M in grants for supporting state GHG and zero-emission transportation standards (on the low end), to $5B in climate pollution reduction grants for states, tribes, cities, and agencies implementing strong, local greenhouse gas (GHG) reduction strategies (at the high-end).

If you’re in the oil and gas business, the Methane Emissions Reduction Program (MERP) is providing up to $1.55B in grants, rebates, contracts, loans, and technical assistance for reducing methane as a GHG from petroleum and natural gas systems – an extremely complex and data-intensive process to qualify and maintain under the funding guidelines.

Expert Counsel Paves the Way

Clearly, navigating the FOA concept paper and application process is not for the faint-hearted. But with some seasoned, expert help, many IRA applicants are advancing toward funding, with solid strategies in hand concerning program compliance and reporting.

A competent regulatory assistance expert should be able to provide a proven, data-intensive FOA framework attuned to the IRA guidelines that can streamline your qualification and reporting process for funding. Look for a partner with experience in environmental permitting, carbon life cycle assessments (LCAs), and community benefits planning. These are the matters funding will be tied to, both in the IRA application process and validation of ongoing contract renewals.

As well, because the IRA falls under the NEPA umbrella, look for a partner with experience in NEPA projects. Funding decisions flowing from both BIL, and the CHIPS and Science Act represent Major Federal Actions which require NEPA review and disclosure. Any projects under NEPA will require that Environmental Assessments (EAs), Environmental Impact Statement (EISs), and possibly Categorical Exclusions (CXs) be filed with regard to AQ, water, waste, biological, cultural, archeological, noise and visual, and other social and economic impacts, including traffic and land use.

LCAs will be needed to clarify and quantify environmental effects all across your value chain, with appropriate science-based environmental metrics included for evaluating and measuring climate change impacts start to finish.

Lastly, a community benefits plan may be required to steer efforts around positive community and labor engagement, diversity, equity, inclusion, and accessibility (DEIA), and other Justice40 initiatives.

Getting the funding is the first hurdle. Accounting for your adherence to the provisions of the grant is ongoing.

Of course, you may only want to participate in the tax incentives associated with the IRA. In this case, a qualified environmental partner can still add value to your effort.

IRA tax incentives cover a long laundry-list of credits and deductions, from alternative fuel vehicle refueling and carbon oxide sequestration, to second-generation biofuel, sustainable aviation fuel, and cost recovery for clean energy facilities, properties, and technologies. Ask your preferred consultant to advise you on the best place to start. There is much low-hanging fruit to be had either way. Having an expert to guide you will maximize the payback.

Trinity Consultants Can Help

Since 1974, Trinity Consultants has been helping energy-intensive organizations worldwide overcome complex, mission-critical challenges in EHS, engineering, and science through expertise in consulting, technology, training, and staffing. Our history of helping clients secure federal funding and support critical regulatory permitting, compliance, and safety tasks is well-established.

While all of our clients are committed to regulatory compliance, many strive to go beyond the norm, to maximize the benefit of government initiatives and position themselves as industry leaders. If you are considering participation in any IRA funding or tax incentive program, get an expert, third-party opinion before going further. Visit Trinity Consultants to learn more.