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Blog May 2023 Updated July 2023

Four Areas in which the 2022 Inflation Reduction Act and Carbon Tax Credits Could Impact the Environmental Services Industry

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Gary Dietz

Product Marketing Manager - North America

The Inflation Reduction Act of 2022, enacted on August 16, 2022, was one of the most robust and significant pieces of climate legislation in U.S. history. Its numerous grants and tax credits for carbon sequestration, renewable energies, and other sustainable technologies will likely have a considerable effect on all climate-related industries in both the public and private sectors — especially the environmental services industry.

The end-to-end environmental SaaS solutions provided by the AMCS Platform, AMCS Fleet Maintenance, AMCS Field Services, and Quentic by AMCS EHS support the management and measurement of waste, recycling, utility, and transportation functions. In addition, we support associated environmental health and safety programs and compliance.

Imagine enriching the speed and efficacy and reducing the maintenance costs of the updated fleet and equipment you already own -- or will acquire because of this legislation. Or being able to align and prove compliance with safety training regulations more effectively. Perhaps you’ll need to better manage metals inventory and grading to get better prices as you supply the growing materials demand that new equipment and vehicle manufacture will require.

Here are four areas of the act that could impact our industry:

1. Tax credits and grants for carbon sequestration for even smaller businesses

The Inflation Reduction Act changed the minimum qualification for carbon sequestration to include the potential benefits of medium-sized landfills and anaerobic digesters (AD) that recycle a minimum of 100,000 tons of waste per year, as well as wastewater plants. Smaller landfills, ADs, and wastewater plants that capture their carbon and use it beneficially can qualify for grants and tax credits that may reduce up to 50% of total project capital costs. Solid waste professionals, recycling consultants, and landfill operators that have operations or clients that can benefit from this money should take steps as soon as possible to meet the wage and apprenticeship requirements required as well as preparing management and operational software needed. 

2. Cheaper renewable energy and other sustainable technologies via tax credits

A key part of the Inflation Reduction Act is providing clean energy incentives such as funding for renewable energy technologies and substantial tax credits to purchase alternative, low-carbon fuels. This means both cheaper renewable energy and potential tax credits for purchasing this energy. Companies from international conglomerates down to small recycling businesses should consider using clean energy and partnering with innovative start-ups. 

An example of more sustainable processes is the aluminum industry, responsible for around 3% of direct industrial CO2 emissions in 2021. This may shift substantially with federal and private funding for technologies such as ELYSIS that aim to eliminate carbon emissions associated with aluminum smelting. Aluminum recycling companies partnering with emerging clean energy companies can gain both a competitive edge and may be eligible for grants and tax credits – and while there are no guarantees, this could positively impact the demand and prices for recycled materials.

3. Inclusion of biogas in renewable energy tax credits

Developers of biogas projects producing renewable natural gas (RNG) can now benefit from similar tax credits to developers of renewable technologies such as solar and wind. RNG can be made from organic waste, and so owners of municipal wastewater plants, ADs, and solid waste landfills should consider developing biogas projects (which may also qualify for federal funding) to be eligible for renewable energy tax credits. An added bonus: RNG can also be used to make hydrogen, another form of clean energy eligible for funding and another potential income source for biogas project developers. 

4. Tax credits for buying electric vehicles (EV) and hybrids, including Class 1-7 commercial trucks

Federal tax credits for EVs have existed for some time, but the Inflation Reduction Act expands these credits to commercial fleets, trucks, and charging stations. The Inflation Reduction Act created the first ever EV tax credit for companies under Section 45W. Its Clean Heavy-Duty Vehicle program will provide funding to offset the costs of heavy-duty Class 6 and 7 commercial vehicles along with EV charging infrastructure and workforce training starting in 2023. EPA anticipates this new funding opportunity may begin later in 2023.

This is not only big news for any fleet-owning environmental services companies – it’s important for scrap metal recyclers. There will be an increased demand for copper and aluminum because of their use in EV production. 

Why partner with AMCS Group

Central to the Inflation Reduction Act is the tax support of projects that have measurable greenhouse gas reduction benefits. Environmental Services organizations in the recycling, waste, water, and transportation sectors may benefit directly or downstream from AMCS solutions. 

The end-to-end environmental SaaS solutions provided by the AMCS Platform, AMCS Fleet Maintenance, AMCS Field Services, and Quentic by AMCS EHS can support the management, compliance, measurement, and efficacy of your business in the context of this regulation. Our suite of software solutions enables better operational visibility and tracking, end-to-end management, and associated environmental health and safety training and compliance reporting necessary to run your business. Please contact AMCS to learn more.

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