Since Joe Biden took office, the Biden administration has called for aggressive economywide emissions reductions. From setting a goal of net-zero greenhouse gas emissions by 2050 with an interim goal of at least 50% emissions reduction by 2030, to advocating for holistic approaches to achieve such aims, his agenda is ambitious. With the passage of the Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law, and the Inflation Reduction Act (IRA), Congress has provided crucial funding and new federal programs to address the multi-faceted challenges and opportunities of aggressive economywide decarbonization. The wide-ranging programs and investments included in IIJA and IRA are expected to lower economywide emissions by more than 40% by 2030 (relative to 2005 levels).
These two bills have resounding implications for the transportation sector. The Biden administration is reimaging how transportation could better serve communities and the greater economy, while also enabling transportation innovation.
Transportation’s Decarbonization Blueprint
With the Biden administration’s emissions reduction objectives as the guiding structure and the IIJA and IRA as the key building blocks, a Transportation Decarbonization Blueprint (Blueprint) was approved in winter 2022. The Blueprint provides an aspirational framework for achieving the Biden administration’s aggressive emissions reduction targets in the transportation sector.
Most notably for shippers and carriers, a key pillar of the Blueprint is the aim to transition to zero emission vehicles and fuels such as clean electricity, sustainable biofuels and e-fuels, and clean hydrogen. The Blueprint acknowledges the diversity and difficulties involved in decarbonizing medium- and heavy-duty trucks, freight rail, maritime shipping, and aviation; therefore, both public and private investments will be important to spur the development, pilot demonstration, and adoption of innovative zero emission fuels.
The Infrastructure Investment and Jobs Act from a Transportation View
Of the $863.7 billion in funding available through the IIJA, over 65% – $590.7 billion – is specifically for transportation, particularly transportation infrastructure. The focus of this funding is on enabling modernization and emissions reduction across transportation modes. Here is the transportation funding breakdown across five fiscal years:
- $361 billion in funding for highways, roads, and bridges
- $91.9 billion for transit
- $68.3 billion for rail
- $18.1 billion for safety
- $13.5 billion for multimodal and freight
- $11.4 billion for ports and inland waterways
Highlighted below are key programs and funding opportunities available within the IIJA for eligible states, local governments, and other public sector entities. Although the private sector cannot be a direct recipient of most of these programs, there may be the opportunity to execute contracted work on behalf of the public sector.
Some of the funding in the IIJA is “authorized” which means that it was not made immediately available through the IIJA and will require Congressional action to appropriate further funds. Authorized funds are included in separate sections below.
IIJA Expanded: Highways, Roads, and Bridges
$8 billion for Nationally Significant Multimodal Freight and Highway Program
- Eligibility for a highway, bridge, or (multimodal) freight project of national or regional significance that is likely to reduce on-road emissions, among other guidelines.
- Eligibility includes multistate corridor organizations in addition to the above entities.
$7.2 billion for National Highway Freight Program
- States may use up to 30% (compared to 10% under current law) of funding on freight intermodal or freight rail projects.
- Allows the designation of more miles as critical rural and urban freight corridors. Adds eligibility for modernization/rehab of a lock and dam or a marine highway corridor, connector, or crossing that is functionally connected to the National Highway Freight Network and likely to reduce on-road mobile source emissions.
$6.4 billion for Carbon Reduction Program
- New formula funding for states for projects to reduce transportation emissions or the development of carbon reduction strategies.
$2.5 billion for Charging and Fueling Infrastructure
- Discretionary funding for states, territories, tribes, transit agencies, and port authorities to spur the deployment of EV charging and hydrogen, propane, or natural gas fueling infrastructure along designated alternative fuel corridors.
$1.3 billion for Transportation Infrastructure Finance and Innovation Program
- Provides credit assistance for eligible transportation projects of regional and national significance. This includes large-scale surface transportation projects to fill market gaps and leverage private co-investment.
- Private firms are eligible to apply.
$400 million for the Reduction of Truck Emissions at Port Facilities
- A new program that studies and provides competitive grants to reduce truck idling and port-related emissions through port electrification projects.
- Eligible entities are not specified.
Authorized Funding – Dependent on Future Federal Appropriations
$25 million for Emerging Technology Research Pilot Program
- Allocated for research on emerging technologies and activities to reduce the impact of automated driving systems and advanced driver automation system technologies on pavement and infrastructure performance, and to improve transportation infrastructure design.
IIJA Expanded: Multimodal and Freight
$7.5 billion for Local and Regional Project Assistance, also known as RAISE Grants
- Competitive, discretionary grants made available to states, territories, tribes, transit agencies, and port authorities for projects that will have a significant local or regional impact (e.g., environmental or economic benefits) and improve transportation infrastructure.
$5 billion for National Infrastructure Project Assistance Grants (with another $5 billion over five years authorized)
- Discretionary grant funding (single or multi-year grants) available to states, territories, tribes, transit agencies and port authorities for projects that will generate national or regional economic, mobility, or safety benefits.
- Eligible projects include highway or bridge projects, freight intermodal or freight rail projects, and railway-highway grade separation or elimination projects.
Authorized Funding – Dependent on Future Federal Appropriations
About $25 million for Multi-state Freight Corridor Planning
- New program for states and select local government entities to enter multi-state contracts to promote the improved mobility of goods.
About $19 million for National Multimodal Cooperative Freight Research Program
- Administered in conjunction with the National Academy of Sciences, this new program establishes an advisory committee to develop a national research agenda on improvements to freight movement efficiency and resiliency.
IIJA Expanded: Ports and Inland Waterways
$2.3 billion for Maritime Administration Port Infrastructure Development Program
- Discretionary grants for projects that improve the safety, efficiency, or reliability of the movement of goods into, out of, around, or within ports.
IIJA Expanded: Rail
$5 billion for Consolidated Rail Infrastructure and Safety Improvement Grants
- Allocated for projects that improve the safety, efficiency, and reliability of freight rail and intercity passenger rail
- Available for states, territories, tribes, transit agencies, railroad companies, rail carriers or equipment manufacturers, transportation research boards, universities, or nonprofit labor organizations.
$3 billion for a Railroad Crossing Elimination Program
- New grant program for eligible states and select local government entities for highway- or pathway-rail grade crossing improvement projects that improve the safety and mobility of people and goods.
IIJA Expanded: Loan Programs Office (LPO)
About $55 billion for the Advanced Technology Vehicle Manufacturing (ATVM) Loan Program
- Expanded eligibility of loan applications to include medium- and heavy-duty vehicles, trains, aircraft, marine transportation, and hyperloop technology.
Inflation Reduction Act (IRA) Tax Credits and Available Grants for a Better Transportation Sector
To complement the IIJA, the IRA provides tax credits for the use of alternative energy and grants for investment in alternative energy infrastructure.
Tax Credits Available Through the IRA:
- The extension of the $1 per gallon biodiesel/renewable diesel mixture credit through 2024.
- The extension of the existing $0.50 per gallon alternative fuel excise tax credit through 2024.
- The creation of a new income and excise tax credit for sustainable aviation fuel, with a base of $1.25 per gallon, and an increase up to $1.75 per gallon possible depending on lifecycle greenhouse gas emissions.
- Tax credits for clean hydrogen. The size of the tax credit will depend on if you qualify for 45V, which is based on the lifecycle emissions of the hydrogen production, or 45Q which is for carbon sequestration (i.e., blue hydrogen).
- The tax credit of up to $40,000 for heavy-duty battery-electric or hydrogen fuel cell trucks.
- The Alternative Fueling Property Credit, which credits up to $100,000 for the installation of alternative fueling infrastructure, including EV chargers and hydrogen, ethanol, natural gas, CNG, LNG, and LPG, and biodiesel fueling infrastructure, at non-private residences in low-income urban and rural areas.
- After 2024, sustainable aviation fuels, biodiesel renewable fuels, and alternative fuels will transition to a fuel-neutral 45Z clean fuel production tax credit, which is applicable for fuel produced and sold between 2024 and 2028.
Grants Available Through the IRA:
- $1 billion clean heavy-duty vehicle grant fund to support the replacement of existing Class 6 and Class 7 trucks with zero emission vehicles, as well as the construction and operation of associated charging or fueling infrastructure.
- $3 billion grant fund that port operators can use to reduce air pollution by developing logistical and climate change abatement plans and by deploying new “zero-emission port equipment,” including hydrogen fueling infrastructure for zero emission vehicles.
- $60 million for Diesel Emissions Reduction Act (DERA) grants to identify and reduce diesel emissions resulting from goods movements facilities (e.g., airports, railyards, and distribution centers), and vehicles servicing goods movement facilities, in low-income and disadvantaged communities to address the health impacts of emissions on those communities.
- $3 billion in funding for Advanced Technology Vehicles Manufacturing (ATVM) to provide direct loans for re-equipping, expanding, or establishing manufacturing facilities making low- or zero emission vehicles and their components.
- Applicable vehicles and components include medium- and heavy-duty vehicles, trains, maritime vessels, aircraft, and hyperloop technology.
- $2 billion for the DOE Advanced Manufacturing Office to provide grants to at-risk or recently shuttered domestic auto manufacturers to shift their production to electric, hybrid, plug-in hybrid, and fuel cell electric vehicles.
You Can Reduce Emissions in Your Transportation Network
The IIJA and IRA present a wealth of opportunities for stakeholders in the transportation sector to obtain federal funding, provide input to federal transportation and infrastructure planning, and benefit from economywide efforts to re-envision and support a more modernized and sustainable transportation sector.
Breakthrough’s CleanMile solution can suggest grants, partners, and options for a shipper’s or retailer’s transportation network, and thus help capitalize on the myriad opportunities created by the IIJA and IRA. Logistics professionals can make real progress toward decarbonizing transportation and contribute to their corporate sustainability goals.
