The U.S. Inflation Reduction Act — What Does it Mean for Agriculture?

The United States just passed the largest climate legislation in its history - The Inflation Reduction Act (IRA) of 2022. Included in this law is $369B to support a renewable energy transition and natural climate solutions in agriculture and forestry. These investments have the potential to reduce the nation’s greenhouse gas emissions by 40% by 2030. This will put the US on track to reaching its commitments under the Paris Agreement by 2050.

Supporting Climate Action in Agriculture

The ag sector contributes about one-quarter of the global greenhouse gas emissions and when the entire food value chain is included, that number rises to one-third! If we are to realize the Paris goal of holding warming to 1.5C, the ag/food value chain must drastically reduce its GHG emissions.

The good news is that in the last few years, many efforts have focused on reducing ag GHG emissions and sequestering carbon in soils, including efforts focused on the adoption of regenerative ag practices (such as reduced tillage and cover cropping).

Interest in programs like this is high, driven by improvements in measurement, reporting and verification technologies along with corporate climate commitments (learn how Regrow is accelerating innovation in measurement, reporting and verification tech).

Facilitating Practice Adoption

Over the last several years, there’s been a growing interest in regenerative agriculture (several consumer brands, like General Mills and Kellogg’s, now have regenerative agriculture initiatives included in their annual ESG plans). Despite this, however, adoption at scale is lagging due to costs associated with implementation of practices, costs of measuring and verifying high-quality reductions or removals, and grower support and outreach. These barriers to implementing climate-friendly practices highlight the need for increased economic support of regenerative agriculture. The IRA helps to address this need by allocating approximately $18B toward existing government programs that emphasize methane and nitrous oxide emission reductions and increasing soil carbon removals. 

It is currently estimated that these programs are oversubscribed 3-fold (there’s more interest than there is funding to support such programs).

This highlights the industry’s interest in reducing emissions and increasing carbon removals. The level of funding offered by the Inflation Reduction Act will help to satisfy this growing interest. The remaining approximately $2B in the Act has been allocated to technical assistance and data collection. This appropriation will help drive innovation in technology from improved data collection of the outcomes of implementing these practices and technologies. Regrow is intimately familiar with this process — just last year we were named winners of the AgriNovus Indiana Producer-Led Innovation Challenge for our FluroSense platform, which reduces the barrier of on-farm data collection for growers wishing to participate in sustainable farming programs. We are eager to see how the funding allocated by the U.S. government continues to support innovation in technology and data collection.

Accelerating Our Path to Net-Zero Emissions

In the overall climate mitigation strategy for the United States, it is critical that we support practices and technologies in the ag sector that cut GHG emissions and remove CO2 from the air. Unlike direct carbon capture and storage technologies, reductions and removals in working agricultural lands are available today and the interest in adoption is high. Scaling regenerative agriculture can help accelerate the path to net-zero right now, while other carbon capture and storage technologies develop. This new law will help to accelerate reductions/removals in the ag supply chain by investing directly with growers to improve the sustainability of the sector.

While the focus on the impacts of the IRA are rightly focused on climate mitigation outcomes, the investments in agriculture also create a very important co-benefit.

Regenerative ag practices that focus on building and improving soil health such as reduced tillage and cover cropping also impact climate adaptation. Improvements in soil health and soil moisture retention due to these practices help improve the resilience of crop production in the face of climate change. In this way, the Inflation Reduction Act can be viewed as a double win for the ag and food sector, helping to reduce the environmental impacts of food production while helping to protect global food security from the impacts of climate change.

At Regrow, we look forward to working with partners across the ag/food value chain to help realize the benefits of scaling regenerative agriculture that the IRA will bring.

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