Photo of 3 different construction workers all looking at a laptop on a construction site

President Joe Biden signed the Inflation Reduction Act into law on August 16, 2022, allocating hundreds of billions of dollars towards new construction projects in the energy, infrastructure, and climate reform sectors alongside health care reform and other subsidies.

“The American people won, and the special interests lost,” President Biden claimed at the signing — and for those in the construction industry, those wins could be huge, with major tax incentives, grants, and subsidies available for those throughout the construction industry.

The bill’s impact will be more significantly felt in some sectors of the construction world than others, of course. Here’s four sectors that might see a noticeable boost.

1. Residential construction

Clean energy is one of the main focuses of President Biden’s goals with this bill’s passage, but its clean energy-focused spending isn’t just going to go to hydrogen hubs and electric vehicles. In fact, opportunities will abound for energy-efficient home retrofits. from RMI estimated that millions of retrofits, upgrades, and installations would impact the building industry as a result of the Inflation Reduction Act.

The bill provides incentives for new home installations such as electric heat pumps, new types of insulation and sealing ductwork, and upgraded electrical panels. 

Specifically, the new bill includes a number of programs that will impact the residential building sector. The High Efficiency Electric Home Rebate will focus on electrification upgrades, while the Home Energy Performance-Based Whole-House Rebate will incentivize home energy retrofits.

Related coverage: Boom or Bust? The 5 Best Cities for Residential Construction — and the 5 Worst

2. Road infrastructure

$3 billion of the Inflation Reduction Act is headed to new Neighborhood Access and Equity Grants. This program is aiming to rebuild and rework connections across highways and railroads, as well as to redesign dangerous roads. 

“These grants will reconnect communities divided by existing infrastructure, mitigate negative impacts of transportation facilities or construction projects on communities, and support equitable transportation planning,” read a White House on the bill.

Building on the infrastructure investments made as part of the Bipartisan Infrastructure Law in 2021, “These investments are a game changer for the manufacture of roads and bridges,” BlueGreen Alliance vice president of manufacturing and industrial policy Ben Beachy.

Related coverage: House Passes Infrastructure Bill Setting up $1 Trillion in Spending — and the Construction Industry Will Benefit

Some of those in the industry have already seen the interest that the new programs have brought up. “We’ve already got contractors calling me saying how can we get at this,” said National Asphalt Pavement Association Executive Vice President of Advocacy Jay Hansen.

3. Renewable energy and clean transportation

The bill includes over $300 billion for investment in climate reform and renewable energy, touted as in fact the largest federal investment in clean energy in U.S. history.

“This bill is the biggest step forward on climate ever — ever — and is going to allow us to boldly take additional steps toward meeting my climate goals,” President Biden said.

A large part of this is going to infrastructure and manufacturing, with $60 billion allocated for renewable energy infrastructure alongside various tax credits that will aim to incentivize clean transportation and clean building standards.

Some aspects of this, such as the tax credits, actually went into effect with the bill’s signing, meaning that people in these areas of the industry generally can already start receiving these benefits.

For example, Prime Policy Group director Becky Weber that the grants and credits included in the bill would incentivize those in the bus and motorcoach industry to turn to new manufacturing of electric vehicles and alternative fuels rather than traditional modes of transportation.

Industry experts in solar power are also feeling bullish about the bill’s impact. The bill’s new offers homeowners the ability to subtract 30% of the cost of solar installation and electricity generation from federal taxes, raising hopes for many that will be encouraged.

4. Hydrogen production

Just recently, $8 billion was made available for hydrogen hubs in the Bipartisan Infrastructure Bill, which led to a coalition of Colorado, New Mexico, Utah, and Wyoming teaming up to begin the Western Inter-States Hydrogen Hub Project.

However, this new bill takes things a step further. Much like with the renewable energy sector, the Inflation Reduction Act offers tax credits that could turn into hundreds of billions of dollars in incentives for new construction in the hydrogen sector.

Those in hydrogen are excited about the possibilities included — especially with the scale of funding set out over the next decade. 

“Candidly, until now, we’ve lacked the investment and funding to bring [these technologies] to scale,” Brad Crabtree, assistant secretary for the Department of Energy’s Office of Fossil Energy and Carbon Management. “That has now changed.”

The bill also establishes incentives for new clean hydrogen production. On top of the hydrogen hub project in the west of the country, this may spur new construction. 

Michael Ducker, senior vice president of hydrogen infrastructure at Mitsubishi Power, that the incentives could potentially make clean hydrogen competitive with traditional hydrogen, while major states such as Pennsylvania direct their energy focuses on new hydrogen construction.