Without an energy office, will Arizona get its full share of the Inflation Reduction Act?
In November 2015, the five remaining state employees assigned to secure federal funds for energy efficiency on behalf of Arizonans were abruptly let go from their jobs and their roles were dissolved. It was another step in then-Gov. Doug Ducey's process of dismantling what he saw as excess government.
Over its 40-year history, the State Energy Program had secured hundreds of millions of federal dollars for energy-efficiency projects throughout Arizona, including $115 million from the American Recovery and Reinvestment Act of 2009 and $715,000 from the U.S. Department of Energy in 2012, as reported by The Arizona Republic. But the Governor's Office viewed the program as excessive and saw an opportunity to "cut down on the overhead."
“We determined the functions could be better absorbed in existing agencies,” a spokesperson said at the time.
By 2023, with 500,000 more people living in the state and an ever-growing need to reduce emissions from burning fossil fuels to slow climate change and address air pollution, not everyone agrees that dismantling the energy office was the most efficient move.
The energy office story in 2015:Arizona shutters energy program; remaining workers fired
Last month, Gov. Katie Hobbs acknowledged the issue in her first State of the State address, declaring the need for a new state office to address a range of environmental concerns.
"My administration has heard loud and clear that reestablishing the governor's energy office is a priority for communities across the state. In response, we will relaunch this entity as the Governor's Office of Resiliency, which will focus on water, energy and land-use solutions."
But while this ideology may represent brighter, more sustainably lit days ahead, with the planned office of resiliency not yet operational, Arizona may already be falling behind on securing funding for energy efficiency upgrades made available by the August passage of the Inflation Reduction Act.
Seen by supporters as a historic investment in climate action, the IRA unlocks billions of dollars in incentives for home energy upgrades, discounts on solar panel installation and rebates on electric vehicles. When the IRA was signed into law last summer, employees of energy offices in other states were sparked to action, electrified by the charge to secure as large a slice of the resulting multibillion-dollar pie for their state as possible.
In Arizona, the response at the state level has been less clear. Many of the funds made available through the IRA can be accessed directly by homeowners or companies, through tax credits or point-of-sale discounts. And the Biden administration has earmarked portions for specific states and tribes, announcing in November an Arizona allocation of more than $153 million and $225 million overall for tribal nations.
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But certain pockets of money require states to engage in competitive application processes, match incoming funds or set up systems for disbursement and to verify income eligibility. Some Arizona activists worry that Gov. Hobbs' new agency won't materialize soon enough.
“We really want to do the best we can with (the IRA funding) because Congress is unlikely to do anything like this again for some time. So it’s even more a reason for Arizona to do everything we can to access those dollars. We really care about those emissions and about addressing environmental justice and climate," said Sandy Bahr, director of the Sierra Club's Grand Canyon Chapter. "Economically, it would be a huge missed opportunity if we didn’t really do all we can to maximize these funding opportunities.”
Action on climate must first avoid getting buried in text
At 725 pages, the Inflation Reduction Act is complex. The Senate summary highlights the basics: The bill will invest $369 billion in energy security and climate change programs over the next 10 years, raising funds via a corporate tax hike, prescription drug pricing reform and greater IRS tax enforcement.
In slightly more detail, the plan aims to lower home energy costs by saving families up to $14,000 on energy efficiency upgrades, up to $9,000 on solar panel installation and up to $7,500 on the purchase of an electric vehicle, through tax credits or direct consumer rebates. Investments in a clean energy economy are also meant to encourage the corporate expansion of solar and wind farms and battery plants to help meet President Joe Biden's climate goals and reduce harmful air pollution from fossil fuel emissions.
The fine print, in many cases, gets more confusing.
Eligibility for specific rebates depends on household income, homeownership, tax filing status, area of residence and more. The electrification nonprofit Rewiring America is one of several organizations that saw the need for a simplified guide to the Inflation Reduction Act. The group also created a savings calculator where people can enter their ZIP code and personal details to view information on available rebates and how much IRA money might be on the table for them.
A homeowner in central Phoenix with three family members who is making the local median household income of $65,000, for example, could access up to $19,000 in incentives from the IRA, according to Rewiring America. That would require them to take advantage of options to upgrade their electric wiring, stove, water heater, air conditioner, dryer and more, in addition to weatherizing their house, installing solar panels and battery storage and purchasing both a new and used electric vehicle that meets maximum price cutoffs and minimum requirements for domestic manufacturing.
Some of these discounts come in the form of tax deductions, assuming tax liabilities exceed these totals, requiring the homeowner to front the cost. Others occur at the point of sale, making the paperwork the responsibility of the heat pump seller, the solar panel installer or the electric vehicle dealer. In some cases, that difference depends on timing: In 2023, for example, electric vehicle credits will be awarded as tax rebates, but in 2024 they will be transferable to dealers, turning them into an upfront discount.
The exceptions continue.
"Some of these programs also have deadlines and some have longer timelines than others," Bahr said.
In some cases, she said, the federal government spends directly while other pockets of money are only available as federal loans. Some incentives go directly to the utilities. Others, like the home energy saving retrofit program, will be administered through the state. The Rural Energy for America program, which makes energy efficiency and renewable options available to agricultural producers or rural small businesses, requires a 50% match.
"So those are the kinds of things that we want to make sure we’re on top of so that we don’t miss the opportunity to do the things that we really need to do to address climate change and help the people who have been most burdened by it," Bahr said.
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Nonprofits stepping up but can't do it all
In the absence of a state energy office, nonprofits across the state are hard at work trying to help make sure these boxes get checked and that confusion and complications don't dissuade Arizonans from pursuing savings while helping to reduce emissions and advance energy independence. But without official, active participation from the state, the reach of these groups is limited.
Caryn Potter, the Arizona representative for the public-interest nonprofit SWEEP, or Southwest Energy Efficiency Project, noted the significance of Hobbs promising an office focused on energy, water and land. But she also expressed concern about the state's current lack of an office directed to handle IRA funding disbursement and about the mission for the new office potentially being too broad.
"When we start to get these larger sums of money available to the state, can agencies that have other responsibilities, are they going to be able to administer this and have the resources dedicated to making sure that this is done effectively?" Potter said. "That's the big question that advocates and organizations like SWEEP have. We want to make sure that this gets to the people that need it most and that the benefits are maximized with other preexisting programs."
SWEEP is trying to step into the gap by helping consumers understand what they need to do to access IRA incentives. The group is engaging with open government comment periods, offering thoughts on what it sees as the most likely obstacles to maximizing benefits and how agencies can make the process easier for people to participate in. Potter also mentioned a focus on addressing mistrust of government programs within marginalized communities. Arizona's lack of an energy office makes SWEEP's recommendations for local IRA implementation especially unique and important, she said.
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Yara Marin, the interior west regional director for Vote Solar, a nonprofit working toward 100% clean power across the United States by 2050, says her organization is monitoring various agencies that might play a role in IRA funding, and tracking legislation, regulation and the activities of clean energy policymakers. She acknowledged obstacles, but expressed excitement at the possibilities the IRA presents for bringing Arizona closer to Vote Solar's clean energy goals.
“Projections estimate that over 150,000 additional Arizona households will install rooftop panels as a result of these rebates, which is actually amazing," Marin said. “The IRA is also going to create huge investments in community solar and so we’re going to start seeing a rise of those projects across the country and especially in Arizona."
But she also voiced trepidation about the scope of Hobbs' new agency.
"This office will be tasked with securing our water supply, with land management and with advancing the clean energy economy," Marin said. "It will play a huge role in ensuring that our state is maximizing IRA benefits and ensuring that there's enough staff capacity, not only in the resiliency office, but across state agencies. And it will have to work really closely with NGOs, with utilities, with tribes, with community leaders, state officials and state agencies like the Arizona Department of Administration and the Department of Transportation, for example, to ensure that there's equitable distribution and implementation of all of these investments."
How heavy is the 'full weight' of government?
Energy, water and land-use will be big issues in Arizona for many gubernatorial administrations to come. In response to a request for clarification on how Hobbs plans to make sure her new resiliency office can handle these varied demands to ensure the state reaps the full benefits of the IRA, spokesperson Josselyn Berry sent a statement:
"Creating a State that is more sustainable and prepared for the economy of tomorrow is exactly why we are creating the new AZ State Resiliency Office. A team of dedicated public servants with policy and grants expertise are coming together as we speak to stand up this unique office. They will ensure that the State optimizes the amount of federal funds we are entitled to, including this $75 million for home energy rebates. The Governor's Office is assuming authority over administration of grants and programs just like this all over the State, combining it with policy expertise in what will become a first for our State — putting the full weight of the Governor's Office behind green innovation in Arizona."
With the daily acceleration of climate change and the race for certain IRA incentives between states already underway, that "full weight" effort can't come too soon in the eyes of Arizona energy efficiency advocates.
"The IRA is a huge step forward in helping mitigate the worst impacts of climate change, while also bringing significant tangible benefits to Arizona families," Marin said. "But it's not the perfect package and solution. There are still a lot of things that we need to address to make sure that historically underserved communities and people who want to benefit from the IRA have a seat at the decision making table."
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At the conclusion of her first State of the State address last month, Hobbs channeled a spirit of seizing the moment when she recalled the 1989 words of another Arizona governor, Rose Mofford:
"We cannot delay. Opportunities fade. Arizona's future hangs in the balance."
Only the actions from the pending office of resiliency will tell whether Arizona can capture this solar-powered moment before it fades.
Joan Meiners is the climate news and storytelling reporter at The Arizona Republic and azcentral. Before becoming a journalist, she completed a doctorate in ecology. Follow Joan on Twitter at @beecycles or email her at firstname.lastname@example.org.
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