The IRA provides nearly $400 billion in projected climate investments that will create jobs, lower costs, cut pollution, promote justice, and supercharge the clean energy transition. States are eligible to receive funds from nearly 40 different IRA programs; a grand total of more than $50 billion that could flow directly to state governments. Now, governors and their administrations will play an enormous role in effectively and equitably implementing these new climate investments. The clean energy transition will be more affordable and more feasible as a result of these record federal investments. Governors and state policymakers will need to raise their ambition given this new landscape and should begin 2023 by committing to going further and faster on climate action than ever before. 

In 2023, governors should take the following actions to lead on climate and drive us toward a just, inclusive, and thriving clean energy future: 

1. Enact a strong Clean Electricity Standard to cut pollution from the power sector while improving air quality and public health. 

Shifting America’s power sector to clean energy is key to achieving our climate goals—and enacting a Clean Electricity Standard (CES) is the most effective, efficient policy to get the job done. CES’s set increasing targets for clean energy in a state power grid, requiring utilities to derive more of their electricity each year from carbon-free sources like solar and wind. This is a broadly popular, well-established policy tool—to date, over 30 states have enacted CES-like policies that have cut pollution and helped grow clean energy industries that now employ over 3 million Americans. Now, more states are embracing 100 percent clean electricity; 22 states have embraced the goal of achieving 100 percent carbon-free power generation, and a majority of these have solidified that target into law as a requirement of their electric utilities.

In 2023, more states should build upon these successes by implementing a CES that requires 80 percent carbon-free electricity by 2030, and 100 percent by 2035. The clean energy tax credits and other power sector financing programs in the IRA mean they have the funds to make this change in an efficient, affordable way. 

Clean electricity standards, and related clean electricity policies and investments, also curb dangerous air pollution and save lives by replacing polluting fossil power plants with clean energy. An ambitious nationwide CES could prevent hundreds of thousands of premature deaths and avoid $1.7 trillion in health and environmental damages, all while lowering costs for Americans and creating millions of good-paying jobs. Without federal CES legislation, it’s up to governors to enact clean electricity standards that will unlock these benefits for their states. Governors should push to enact bold CES through the state legislative process, or explore ways to implement clean power requirements through executive action and public utility commission proceedings.

The IRA contains hundreds of billions in tax credits and other power sector investments that incentivize clean energy deployment, effectively accelerating the clean energy transition while cutting costs for consumers. States with existing CES-like policies should make targets more ambitious to account for these incentives. Additionally, states should pair clean electricity standards with state-level transmission reform, and other complementary measures, to ensure that clean energy can get to those who need it. 

2. Advance building electrification and efficiency by upgrading Building Energy Codes and setting Zero-Emission Appliance Standards to lower consumer costs, cut pollution, and improve public health. 

States and local governments have significant authority over the energy use and pollution allowed from buildings and building appliances in their jurisdictions. More state and local governments are taking action to crack down on the carbon, nitrogen oxides, and other harmful pollution that comes from the U.S. buildings sector, using energy codes for new commercial and residential buildings, and zero-emission standards for new appliances.

Throughout the United States, building energy codes set efficiency standards for new and renovated buildings that cut climate pollution, create jobs, and lower household utility bills. These benefits are felt especially by low-income residents, who spend three times more of their income on energy costs compared to wealthier households. By 2040, building energy codes are projected to save $138 billion in consumer energy costs and prevent 900 million metric tons of carbon pollution, equivalent to the annual emissions of 227 coal-fired power plants. 

Importantly, there is no federal building code. It’s up to states to use energy codes to set bold efficiency standards and lock in these benefits for decades to come. Fortunately, over $1.2 billion in funding–from both the Infrastructure Investment & Jobs Act (IIJA) and the IRA–is starting to become available to ease the transition to more ambitious codes.

Governors should also take steps to restrict fossil fuel pollution in residential and commercial buildings in their states. Gas and oil burning appliances (stoves and heating systems) release dangerous air pollutants into the home that increase the risk of serious health issues like childhood asthma. Studies have shown that gas appliances can even leak toxic pollutants when turned off. Communities of color are hit the hardest; black people are 55 percent more likely to die from illness related to appliance pollution than white people. Dozens of towns and cities across the country are confronting this problem by banning gas connections in new buildings. 

Momentum against indoor fossil fuel use is building on the state level as well. In 2022, the Washington State Building Code Council amended the statewide building energy code to require that all new commercial and residential buildings install fossil-free electric heat pumps. Beginning in 2023, heat pumps will heat and cool nearly every new building in Washington State. 

States can also enact Zero-Emission Appliance Standards to slash pollution from buildings. In September 2022, The California Air Resources Board voted to ban the sale of new gas-fired furnaces and water heaters starting in 2030. Instead, new buildings, or existing buildings replacing their heating systems, will need to install electric alternatives such as heat pumps. This bold action will effectively phase out fossil-powered heating systems and cut dangerous indoor air pollution across the state. 

Colorado has taken an innovative approach to building decarbonization as well. In 2021, the Colorado state legislature passed a Clean Heat Standard that sets pollution reduction targets for gas distribution utilities that deliver energy to residential and commercial buildings.  

An analysis from Rewiring America found that if every single-family household in the US replaced their heating and cooling systems with a heat pump, it would avoid 160 million metric tons of greenhouse gas emissions per year—equivalent to the annual emissions of 43 coal-fired power plants—while saving consumers several hundred dollars each year on their energy bills. 

Governors and other state lawmakers can bring these benefits home and address toxic indoor air pollution by implementing aggressive building energy codes and appliance standards. Ambitious state policies should restrict the use of and pollution from fossil heating and cooling systems— and prevent fossil fuel connections in new buildings altogether. For more information on upgrading building energy codes, in particular, including federal funding opportunities through the IRA and IIJA, see this memo from Evergreen. 

3. Adopt California’s latest Clean Car Standards to decarbonize the transportation sector, save consumers money and curb dangerous air pollution.

Tailpipe emissions are a menace to public health, and communities of color are disproportionately exposed to dangerous air pollutants from cars and trucks. Additionally, the transportation sector is the top contributor to climate pollution nationwide. 

California’s Advanced Clean Cars II rule requires car manufacturers to progressively ramp up electric vehicle (EV) production. By 2035, the rule requires 100 percent of new cars, passenger trucks, and SUVs sold in the state to be zero-emission vehicles. Within California, the policy is projected to reduce climate pollution from passenger vehicles by 50 percent in 2040, save $13 billion in avoided health impacts, and result in consumer savings as high as $7,900 per car in the first 10 years of vehicle ownership. 

While heavy-duty trucks only account for 10 percent of on-road vehicles, they are responsible for a disproportionate share of climate pollution and toxic tailpipe emissions that can lead to heart disease and death. California’s Advanced Clean Trucks rule aims to fight dangerous pollution by requiring truck makers to produce a greater percentage of zero emissions trucks each year until 2035. This standard will especially benefit communities of color, who are more likely to be subject to dangerous levels of toxic truck pollution. 

Under the Clean Air Act, states can adopt California’s ambitious standards. To date, five other states have officially adopted the Advanced Clean Trucks Rule and five (in addition to California) have adopted Advanced Clean Cars II, with many more likely to follow suit. Governors should pursue adoption, acting with executive authority where possible, of California’s rigorous car and truck standards to curb pollution, improve air quality and public health, promote health equity, and unlock the massive potential of domestic electric vehicle markets. 

Complementary IRA programs will make electric vehicles more affordable for American consumers, further aiding compliance with strong vehicle standards. A series of tax credits offers up to $7,500 to those who purchase EVs, driving demand to match increased production. Additionally, governors should take advantage of new federal investments in the IIJA and quickly build out a robust EV charging network to ensure the success of the electric vehicle transition. 

4. Aggressively pursue federal funding to bolster clean energy development, promote equity, improve efficiency, cut pollution, and supercharge state-level climate action. 

In 2022, President Biden and Congress delivered the Inflation Reduction Act (IRA), the largest climate and clean energy investment in US history. States are eligible recipients of nearly 40 different IRA programs; a total of more than $50 billion to directly support state climate action. The IRA also includes hundreds of billions of dollars that can flow directly to individuals, businesses, tribes, and community organizations, and states can play a key role in communicating these opportunities to ensure their constituents reap the benefits of this transformational legislation. Additionally, the IIJA provides billions of dollars for clean infrastructure throughout the U.S.

Federal programs targeted directly to state governments aim to promote home energy efficiency, fund decarbonization projects, create equitable green financial institutions, and more. But the IRA and IIJA’s far-reaching benefits will only be available to states that apply for funding and show they’re ready to implement these programs effectively. Several IRA and IIJA programs are beginning to roll out, and states should closely monitor the multitude of funding opportunities and application deadlines in 2023. 

Strategic use of federal dollars and well-designed state-level programs have the potential to create thousands of jobs, lower costs for Americans, drive investment into disadvantaged communities, and put states on the path to meeting their own climate commitments. 

For descriptions and more information on all climate and clean energy programs in the IRA, see the White House's IRA Guidebook. Programs that states should be ready to apply for early in 2023 include:

Greenhouse Gas Reduction Fund - $27 billion designed to both support state governments in deploying zero emission technologies and create an ecosystem of green banks that finance climate and clean energy projects, especially in disadvantaged communities. The Environmental Protection Agency (EPA) may begin making grants under this section as soon as February 2023. 

Climate Pollution Reduction Grants - Another new EPA program that will provide $5 billion in direct grants available to states, local governments and Tribal nations to plan for and implement policies and investments that reduce climate pollution. 

State home energy programs - A total of $9 billion across three provisions for states and Tribal nations to implement consumer rebate programs that will promote energy and cost savings through efficiency and electrification projects, with a focus on low-income residents. The Department of Energy (DOE) anticipates that the funding to states will be available sometime early in 2023. 

These are just a few of the many opportunities for states in the IRA. Other programs support transmission siting, clean energy infrastructure financing, building code updates, agriculture and conservation, clean vehicles, air pollution monitoring, and more. For a complete list of IRA clean energy and climate programs in which states are eligible to receive funding, see this resource from Evergreen Action, which includes program descriptions, funding amounts, eligible recipients, and other details.

States have a generational opportunity to both implement and build on the federal victories the climate movement secured in 2022. 2023 needs to mark the beginning of an era of accelerated state climate leadership. Governors should begin their terms prepared to mobilize their entire administrations to go further and faster on climate than ever before.