Editor's note: This article is part 2 in a special 3-part series examining how the Inflation Reduction Act will impact agriculture and funding opportunities that may result for farmers. The series will highlight conservation provisions included in the bill, rural development, energy and other agriculture-related provisions, as well as ag credit and technical assistance.


Rural communities are set to benefit from significant financial support included in the Inflation Reduction Act (IRA) of 2022 to promote renewable energy production and transition to sustainable energy sources.

The bill allocated nearly $11 billion for rural electric cooperatives, renewable energy loans, biofuel infrastructure and the Rural Energy for America Program (REAP). As with other portions of the bill, all allocated funds will remain available until the end of fiscal year 2031.

“The REAP program and the additional funding assist agricultural producers and rural small businesses become more energy efficient and adopt renewable energy technologies and sources,” said Jonathan Coppess, director of the University of Illinois ag policy program.

The Inflation Reduction Act provides up to $2 billion for REAP, with $303 million set aside for underutilized technologies and technical assistance. The U.S. Department of Agriculture anticipates funds will support renewable energy and energy-efficiency projects for more than 41,500 farms and small businesses.

Biofuels infrastructure

The legislation also provides up to $500 million in grants for infrastructure improvements to blend, store or distribute biofuels to give consumers more fueling options. The grants will cover up to 75% of the cost to increase the sale and use of agricultural commodity-based fuels through infrastructure improvements for blending, storing, supplying or distributing biofuels. This includes installation of new equipment or retrofitting existing fuel dispenser and storage equipment, as well as for home heating distribution systems to use biofuels and ethanol.

Additionally, the IRA extends biodiesel, alternative fuel and second-generation biofuel tax credits through the end of 2024. The current tax credit is a $1-per-gallon biodiesel tax credit for producers or blenders of pure biodiesel and a $1-per-gallon renewable diesel tax credit for producers or blenders of biomass-based diesel or diesel/renewable diesel blends.

The IRA also establishes a new sustainable aviation fuel credit through fiscal year 2024. The credit is $1.25 per gallon, plus a supplementary amount of up to 50 cents based on how much the fuel reduces lifecycle greenhouse gas emissions compared to fossil fuels.

Funds for rural electric cooperatives

Rural electric cooperatives will also see significant new funding opportunities for affordable, reliable clean energy systems.

The USDA last month announced it soon will be opening applications for two programs, which represents the single largest investment in rural electrification since President Franklin Delano Roosevelt signed the Rural Electrification Act into law in 1936.

The Empowering Rural America (“New ERA”) program makes $9.7 billion available to eligible rural electric cooperatives to deploy renewable energy systems, zero-emission and carbon capture systems. To apply, eligible entities must submit a letter of interest between July 31 and Aug. 31, 2023.

In addition to New ERA, the USDA will also be opening applications for the Powering Affordable Clean Energy (PACE) program, which makes $1 billion available in partially forgivable loans to renewable-energy developers and electric service providers, including municipals, cooperatives and investor-owned and Tribal utilities to help finance large-scale solar, wind, geothermal, biomass, hydropower projects and energy storage in support of renewable energy systems. Loans through this program may be forgiven by 40% of the loan amount, and the maximum loan amount is $100 million. The USDA will begin accepting letters of interest starting on June 30, 2023, on a rolling basis until Sept. 29, 2023.

Additionally, $100 million has been allocated to the USDA Rural Development to cover administrative costs associated with program implementation.


To learn more about how the Inflation Reduction Act will impact agriculture, check out the Iowa Farm Bureau Spokesman's special series, along with resources available through American Farm Bureau and USDA.