Opinion | The Climate Fight Will Be Won in the Appliance Aisle


If the programs fail, they could seriously mar the I.R.A.’s public image. And right now, they are faltering.

Perhaps the biggest problem is inherent to their design. The most successful federal programs are simple, straightforward and easy to use. Think of the U.S. Postal Service sending free at-home Covid tests to all Americans or the relative ease of signing up for and receiving Social Security benefits. These new home-upgrade programs, meanwhile, seem likely to be especially persnickety, complicated and onerous for many Americans.

That’s because, first, there are a lot of programs in play. Although the I.R.A. streamlined some of the most important existing climate tax credits (for example, for greening the grid), it included four home-focused programs. Two of these programs are tax credits meant to give Americans a tax discount when they install a new rooftop solar system, a geothermal-powered heater, a heat pump or another technology that reduces demand for carbon-emitting fossil fuels. Unlike other tax credits in the law, these programs have no income cap, so they can be used by wealthy Americans who can presumably afford to pay upfront to install residential equipment like a water heater. But like other new tax credits in the law, they require Americans to have some federal tax liability in the first place. If you owe nothing on your taxes, then you can’t get a discount.

These credits are likely to be generous in aggregate, but in some cases they will be too small to spur a serious change of behavior. Installing a whole-home heat-pump system, for instance, can cost tens of thousands of dollars, but the I.R.A.’s new tax credit will cover only $2,000 of that in one calendar year.

That’s when another set of programs is supposed to come in. The I.R.A. introduced a pair of rebate programs meant to help working- and middle-class Americans afford to upgrade appliances and other features of their homes. These two programs, known as HOMES and HEEHRA, are important. When it’s finally put in place, HEEHRA will lower the cost of heat pumps and other climate-friendly appliances at the point of sale, making them more affordable to consumers, including those who are not even aware of the policy. More than perhaps any other programs in the law, these rebates are meant to allow low-income Americans to reduce their monthly energy costs. And because they involve direct cash grants, using the rebates will not require owing any taxes to the federal government. That is huge for retirees and Social Security recipients, many of whom have no earned income and little to no federal tax liability.

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