US co-ops react to passage of Inflation Reduction Act

WASHINGTON DC-Co-operatives in the USA have welcomed the recent adoption of the Inflation Reduction Act by the House of Representatives on 12 August.

Passed with 220 votes to 207, the bill aims to reduce inflation while tackling climate change and represents the nation’s most significant climate legislation to date.

Rural electric co-operatives welcomed two provisions in the bill on Direct Pay Tax Incentives and Grants for Clean Energy Systems. The first grants electric co-operatives direct access to energy innovation tax credits, and parity with other industry actors when they deploy new energy technologies, including carbon capture, nuclear, energy storage and traditional renewables.

The second sets up a voluntary US$ 9.7bln grant and loan programme designed for electric co-ops that purchase or build new clean energy systems. The grants could cover up to 25 percent of their project cost, with a maximum amount of US$ 970mln for any one entity.

National Rural Electric Cooperative Association [NRECA] CEO Jim Matheson said: “Electric co-operatives are leading the charge to reliably meet America’s future energy needs amid an energy transition that increasingly depends on electricity to power the U.S.A economy. As co-ops continue to innovate, access to tax incentives and funding for investments in new energy technologies are crucial new tools that will help reduce costs and keep electricity affordable for consumers.”

Outdoors retail co-op REI applauded the the bill as a “historic opportunity to harness the power of the outdoors”.

The co-op also called on Congress to continue to pass legislation that will benefit future generations, including stronger incentives for utilities to transition to renewable energy.

The National Association of Federally Insured Credit Unions [NAFCU] also welcomed the bill for omitting a provision that would have required new account information reporting by financial institutions.

Agricultural co-ops are expected to also benefit from the act, which stipulated investments of US $40bln in agriculture and rural communities.

“The passage of the Inflation Reduction Act is cause for optimism for farmers and ranchers across the country, with historic investments in voluntary, incentive-based conservation programmes that are critically underfunded,” said Rob Larew, president of the National Farmers Union, whose members include agricultural co-ops. “NFU is proud to see investment in biofuels infrastructure that will help farmers’ bottom line and help consumers save at the pump. The inclusion of financial support for economically distressed farmers and ranchers is also a welcome addition that will help keep farmers on their land for years to come.

The National Cooperative Business Association [NCBA-CLUSA] also backed the bill, adding that it had “significant ramifications for the co-operative community.

“With the Inflation Reduction Act, Congress again recognises that co-operatives have a critical role to play when the nation seeks to tackle big challenges,” Doug O’Brien, president and CEO of NCBA CLUSA said ahead of the Congress vote. “As people-centred businesses that are rooted in local communities, co-ops have the ability to get better outcomes for taxpayers and for their communities.”

But the Federation of Southern Co-ops, which works Black and other marginalised farmers and ranchers, is critical of the act. It welcomes many of the measure it contains but is concerned that it overrides a specific targeted debt relief measure in last year’s American Rescue Package Act, which is critical to its members. The USDA has said in reply that it still intends to act to address the issue of historic financial discrimination against Black farmers.

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