top of page

Could AgTech stand to benefit from the Inflation Reduction Act?

Clean energy and electric vehicles aren’t the only sectors of climate tech that stand to benefit from Inflation Reduction Act, which includes $360 billion in funding towards climate initiatives.

Representing the largest climate investment in U.S. history, the Inflation Reduction Act (IRA) includes major policy objectives from making electric vehicles, solar panels, home weatherization, and other clean energy alternatives more affordable to the overall sustainable electrification of our grid.

With an overarching goal of clean modernization, the bill steps out of the country’s main power hubs and into rural America to tackle the high-carbon industry of agriculture. The bill uses tools to advance new sectors in the industry such as $20 billion in credits to support carbon-light agriculture and $5 billion for forestry.

Specifically, the bill would add $18 billion in additional funding for existing farm bill conservation programs, top it off with another billion in funding for technical assistance, $300 million for a carbon capture and greenhouse gas emissions quantification program, and $100 million for other administrative expenses, as reported by AgWeek.

Moreover, the bill aims to bring renewable energy rural, and while biofuels are not the biggest part of the bill, the IRA provides $5 million to the U.S. Environmental Protection Agency to carry out a program known as the Renewable Fuel Standard.

This program would carry out data collection and analyses for lifecycle greenhouse gas emissions of fuel, providing $10 million for new grants to support investment in advanced biofuels. The bill extends tax incentives for biofuels, including for biodiesel and renewable diesel, and represents the single-largest investment in infrastructure for home-grown biofuels.

The IRA’s rural renewable goals don’t end there. The bill would also provide approximately $1.7 billion for eligible projects under the Rural Energy for America Program (REAP) and $304 million for grants and loans for “underutilized” renewable energy technologies and technical assistance with REAP applications.

This term originally appeared in the Build Back Better Act. Despite that it has yet to be defined by the U.S. Department of Agriculture, this solution addresses longstanding concerns that REAP funds have been concentrated among only a couple of technologies, leaving niche areas that could have large effects on renewable rural energy untapped.

While the majority of the IRA’s agricultural investments are aimed at farmers and ranchers who voluntarily participate in conservation programs, such as stashing carbon in soil, Protocol reports that the investment could have a trickle-down effect on startups that support regenerative agriculture practices.

In the realm of agtech, the first thing that may come to mind are practices that use solar, wind, and biomass. Whether it be solar technology used for farm machinery, wind turbines to pump water for irrigation, or biomass derived from animal waste to generate electricity, these practices are fairly popular in the industry. However, renewable energy technologies can take on other forms to support regenerative agriculture practices.

For one, drones, which are slowly becoming a mainstream farming tool, can be used for precision farming, livestock management, crop spraying and irrigation mapping, all tools necessary to ensure farming is more sustainable. Farming robots that improve efficiency can also reduce environmental impacts, and so can digital sensors intended to maximize yields, conserve water and fertilizers, reduce waste and, on the whole, increase productivity.

While conservation and climate-smart agriculture make up the majority of this portion of the bill, the IRA also provides agricultural credits, including a new debt relief program, and $2.9 billion to help underserved farmers, ranchers, and forest landowners, especially those living in high poverty areas, veterans, limited resource producers, beginning farmers and ranchers, and most notably farmers who previously experienced discrimination before 2021 in USDA farm lending programs.

bottom of page