The Inflation Reduction Act and More
The Inflation Reduction Act of 2022 marks the single largest investment in climate and energy in American history and provides potentially transformational opportunities for businesses and organizations of all sizes. On October 17, SBN Detroit hosted an informative discussion regarding these opportunities as well as those under the Infrastructure Investment and Jobs Act of 2021. The discussion focused on clean energy programs, available resources, workplace infrastructure, integrating different forms of funding, and partnerships. A list of resources is at the end of this article. The panelists were: Jerry Davis, professor, Ross School of Business, University of Michigan, oversees +Impact Studio and is faculty director of Business + Impact. Stacey Grant, principal and founder of Path Consulting, which offers equity-centered consulting support for communities, organizations, and nonprofits. Elizabeth Wallace, associate director, Michigan Community Programs, Elevate Energy Zachary Kolodin, chief infrastructure officer, State of Michigan The event was moderated by Nina Misuraca Ignaczak, founder, publisher, and editor of Planet Detroit, a digital media startup with a mission to produce quality climate, equity, health, and environmental journalism in the public interest. Takeaways follow: Kolodin: Michigan is a model for the country. Our main goals are to make sure the state gets internal justice for our projects and to bring in quality jobs. It is a great time to be in state government. Grant: The funding and resources are meant to benefit your communities. We need to advocate and make this happen, and we can do this in a data-driven way. Davis: The IRA is like gelato. There are thousands of programs and a lot of acronyms. There are also some great resources to look at that are specific to Michigan. It’s really important to familiarize yourself with the basics of what is out there. Grant: We are talking about funding that isn’t a cycle. It is rolling out through 2032. This is a moment, but we are also talking about longevity. If you are not in the game, you can still get in the game, and win the game. Kolodin: When we talk about workforce infrastructure in this space, we often miss the capital needed. When we look at skills, when we look at humans, we fail to look at access to capital and replicating the needed qualities for the replication of these skills in the workforce. Kolodin: The IRA creates obvious funding opportunities to create a low-interest capital fund to support entrepreneurs in this space. We need to look into how to create a fund like this and get access to capital. We need to get creative to get money where it needs to be. Wallace: Through the IRA, there is the greenhouse gas production fund. This is funding that is going to capitalize on these clean energy products. There is pro-bono technical assistance and legal support for communities and residents to try to alleviate the complexity if you are a business owner looking to do energy projects. Wallace: There are a lot of incentives for cities to partner with other cities, community organizations, and local businesses. Davis: It’s important to focus on mid-management. Commitment from senior leaders matters, but midlevel leaders and managers make the difference day-to-day. Michigan Saves is a great resource. I felt they were really helpful specifically for contractors because there are so many details in the IRA – and they simplified things greatly. Wallace: If you are looking to receive capital, there are a lot of different ways to get into the programs and the funding that is coming from the IRA. Keep an eye on what is going on locally and regionally and see where some of these things align with your organization and if you want to expand into it. Wallace: It’s a time to really collaborate with other organizations with similar goals and local, state, and regional governments to see what programs are coming down the line that may be beneficial for your organization. Grant: We are dealing with crises daily. A shift in power is required. I invite people who are in positions of power and who have access to information and resources to make themselves available. If you do not have that invitation, then you need to create that relationship. Click here for a list of resources. Be sure to subscribe to our newsletter for regular updates on sustainable business practices in and around Detroit.
The Inflation Reduction Act – How Small and Medium-Sized Businesses Can Benefit
The Inflation Reduction Act of 2022 includes $500 billion in new spending and tax breaks targeted toward climate change, clean energy, training, and workforce development, the development of clean infrastructure, and more. It puts the U.S. on a path to 40% emissions reduction by 2030 with these desired impacts: Lower energy costs Increased energy security Investments in decarbonizing all sectors Focused investments in disadvantaged communities Support for resilient rural communities Additionally, the legislation act offers businesses and entrepreneurs unprecedented opportunities but identifying these opportunities and navigating how to capitalize on them can be daunting. To help small- and medium-sized businesses understand the act, SBN Detroit held a virtual event on May 18 featuring Joel Howrani Heeres, director, Public Sector Consultants; Jerry Davis, professor, Ross School of Business; Dan Radomski, executive director, Centrepolis Accelerator at Lawrence Tech University, and Kimberly Hill Knott, president and CEO, Future Insight Consulting. Each speaker presented according to their areas of expertise, followed by a Q & A. We’ve shared some of the speakers’ points below. You can view the full event here. A significant portion of IRA rebates goes to homeowners, creating an opportunity for contractors to provide energy audits, electrification upgrades, and more. The funds allow for roughly 5,000 houses to take advantage of rebates. – Howrani There are five components involved in creating an enterprise – capital, labor, organization, supply, and distribution. The IRA creates opportunities within each of these components. – Davis When it comes to cleantech funding, it’s important to understand what stage of development you are in and how that applies to different funding opportunities. Generally, funding comes in when technologies are mature and ready for deployment. But there are different opportunities within the different stages. – Radomski As we transition to the Infrastructure Investment and Jobs Act (IIJA) there will be more investments in infrastructure, and the money will flow through state agencies and departments. – Radomski The key to being e successful with IRA funding is collaboration. Addressing climate change is multifaceted. For example, residential electrification dollars are coming. but many houses are not necessarily ready to replace fossil fuel sources with electricity. So, there is an opportunity to partner with community action agencies that manage funds for home repair to get homeowners ready. For example, the community action agency essentially does intake and prep, and a private contractor does the electrification work to use the rebates. – Howrani There are new opportunities up and down the supply chain from technicians to engineers to manufacturing. This is going to take an effort in workforce development by universities, community colleges, and manufacturers themselves. We need education in all of these areas which will lead to jobs and wealth creation. – Radomski My students surveyed local small businesses regarding their priorities around green energy. The overwhelming response was reliability. For these businesses, extended power outages could be catastrophic. This presents an opportunity – how do we solve this? – Davis Understanding that the IRA is not easily interpreted, I had my students translate parts of it into easy-to-understand How to Guides and also sample business models which can be found at Greenbiztransition.com View the full presentation and Q&A here. Be sure to subscribe to our newsletter for regular updates on sustainable business practices in and around Detroit.
Helping Detroiters Create New Businesses for a More Equitable World
Jerry Davis, Gilbert & Ruth Whitaker Professor of Management and faculty director of Business+Impact at the Michigan Ross School of Business, believes that with more available government funding than in the past, more entrepreneurs and businesses in Detroit are in a position to build equitable community wealth. Davis, who received his Ph.D. from the Stanford University Graduate School of Business and taught at Northwestern and Columbia before moving to the University of Michigan, has published six books and dozens of articles in academic and business publications. His latest book is Taming Corporate Power in the 21st Century (Cambridge University Press, 2022). His focus is reshaping and developing businesses to be drivers of social and environmental change. SBN Detroit spoke to Davis about his perspectives, the new graduate-level class, and what it ultimately means to Detroit businesses. Q: Tell us about your concept of reshaping businesses into drivers of change. A: I think there are two ways we can orient businesses toward a more equitable sustainable future. First, we can take an existing business and reform it from the inside. This is often done by intrapreneurs. Second, we can create new enterprises that are built right from the start. My overall concept is that businesses can address bigger challenges than just shareholder value through reform or fresh starts. There are so many new building blocks available to businesses today that we can leverage to not only make money but also to begin to address the racial wealth gap, generational inequality, and the green energy transition. Q: What do you mean by building blocks? A: Technology has fundamentally changed the building blocks for creating an enterprise in the last fifteen years. There are dozens of new ways to raise capital that didn’t exist ten to fifteen years ago. There are new ways to find distribution channels, new ways to work with suppliers and labor, new legal formats, and the list goes on. Q: How do the United Nations Sustainability Development Goals inform your work? A: Since the inception of the Sustainability Development Goals in 2015, I’ve used them as a GPS of sorts for orienting what businesses can do to contribute to social benefit. I’ve integrated this into my teaching and writing and research. Drilling down …If you had to pick one threat we are facing on a global basis that businesses can work better to address – and that creates business opportunities – it’s the green energy transition. This is the thing in our generation that we need to accomplish starting today. And it’s impossible to address it with government action only. There is a central role for businesses to play in bringing about this transition. And with the Inflation Reduction Act and Justice40 in place, there is no better opportunity to build green enterprises than right now. Q: What are some of the opportunities provided by the Inflation Reduction Act? A: As I said, the need for the green energy transition has never been greater. It is imperative for our species. At the same time, we have the Biden-Harris administration launching the IRA, which creates huge incentives to electrify and transition to green energy. There is an astounding amount of money being allocated to homeowners and renters and drivers to help make this transition. You can simply go online and see the offerings – switching from a gas furnace to a heat pump offers free cash. There are huge tax benefits to electric vehicle owners. And low-income brackets receive even more benefits. I highly recommend the “Rewiring America” website. From a business perspective, this is an opportunity like never before. Businesses that provide services around transitioning to green energy stand to prosper greatly through this funding. These opportunities represent a chance to build generational wealth. Q: Can you explain more about how the act supports generational-wealth building? A: Detroit has been hit hard in several ways … the mortgage crisis, residential flight, municipal bankruptcy, and the list goes on. These have robbed people of opportunities to create prosperity for themselves and their families. So, this funding represents an especially well-placed opportunity for cities like Detroit. According to the White House, the Justice40 initiative means that “40 percent of the overall benefits of certain federal investments flow to disadvantaged communities that are marginalized, underserved, and overburdened by pollution.” That includes “climate change, clean energy, and energy efficiency, clean transit, affordable and sustainable housing, training and workforce development, remediation and reduction of legacy pollution, and the development of critical clean water and wastewater infrastructure.” When you combine the IRA and Justice40, it opens the spigot for cash allocated toward environmental initiatives. So again, the opportunity to start a new business and build community wealth has never been greater than it is right now. This is the impetus behind a new graduate class starting this week called “Impact Studio: Designing the Equitable Enterprise” that I am teaching with my co-instructor Cat Johnson. Q: Tell us more about the class and how you see it impacting both the students and local businesses. A: The class focuses on how to use the new building blocks of business to create enterprises in Detroit that will facilitate the green energy transition. Students will interview dozens of Detroit businesses and members of the community to better understand the needs and pain points around energy. They will then map out the opportunities. For example, let’s say a building contractor is looking to use heat pumps but can’t find someone with the skill to install them, or can’t find a vendor for them. This represents an opportunity. Maybe a college can create training programs for installation. Or find incentives to make heat pumps more widely available. They will then go on to create what I call template business models – plausible, economically sustainable models that are replicable – and a set of how-to guides. The how-to guides will translate into plain English the ways in which entrepreneurs and communities can build on the IRA and the new building blocks of
