Note from the editor, August 16: The Inflation Reduction Act’s signature has been amended since the original publication of this story on July 28, 2022.
The Inflation Reduction Act was signed into law on Tuesday at the White House by President Joe Biden following 18 months of negotiations and will-they-or-won’t-they news cycles. A room full of supporters gathered for the signing, he declared, “This bill is the biggest step forward on climate ever.” “Ever.”
It’s possible that Biden is accurate that it’s one of the biggest climate expenditures made by the US, if not the entire world. Funding for tax cuts on clean energy and electric vehicles, indigenous production of batteries and solar panels, and pollution reduction total $369 billion in the recently enacted Iaw.
If its policies are effective as intended, it would encourage American business and consumers to reduce their reliance on fossil fuels, fine fossil fuel companies for excessive methane emissions, and provide much-needed funding for environmental cleaning. Biden stated on Tuesday that “this bill finally fulfills the commitments Washington has made to the American people for decades.”
The IRA employs tax credits to encourage customers to purchase electric vehicles, electric HVAC systems, and other cleaner technologies, reducing emissions from transportation and electricity production. It also contains incentives for businesses to produce these technologies domestically. It also contains funding for a variety of other climate-related goals, including investments in resilient agriculture and the restoration of forests and coastlines.
According to three separate estimates by economic modelers at Rhodium Group, Energy Innovation, and Princeton University, these investments, dispersed over the next ten years, are projected to reduce emissions by about 40% below 2005 levels by 2030. The law assists in bringing the US a little bit closer to its declared objective of halving pollution within a ten-year period.
Although it’s less than the $2 trillion the Biden administration previously envisioned, the primary climate change provisions of the Inflation Reduction Act are remarkably close to the version the House passed last autumn, a bill enthusiastically praised by climate activists. Democrats inserted clauses that remove regulatory barriers for some fossil fuel projects and compel the Department of the Interior to host more offshore oil lease sales in order to earn Sen. Joe Manchin’s (D-WV) support.
Manchin plans to introduce a separate bill that would expedite energy infrastructure permits, removing a barrier to the Mountain Valley Pipeline’s 300-mile journey of fracked gas through West Virginia. It needs to receive 60 votes in the Senate to pass, therefore there is no assurance that it will.
A climate pact that saves tens of billions of dollars for clean energy and pollution remediation, even with these concessions, was unthinkable just a few weeks ago. And, according to Energy Innovation’s estimate, the impact on global pollution outweighs the emissions produced by the pro-fossil fuel pieces by a factor of around 24 to 1.
Leah Stokes, a political scientist at UC Santa Barbara who has counseled Democrats on the reconciliation bill, called it a “total game changer” for the environment.
Climate change is the primary focus of the Inflation Reduction Act’s investments.
The act accomplishes several things that are unrelated to climate change. The IRS, the Affordable Care Act, and prescription drug reform all have financing. Additionally, it establishes a corporate minimum tax, which is one method the law works to combat inflation. But given that the majority of the act’s investments go toward climate programs, it may be said that this is a law on climate change.
Most of the major initiatives in the House’s Build Back Better Act are still included in the agreement, including support for domestic clean energy manufacturing and consumer tax credits for solar panels and electric vehicles.
Electric vehicles and clean energy: The cost of solar, wind, batteries, automobiles, heat pumps, and other sustainable technologies is being reduced through a variety of tax benefits. The goal is to promote as much renewable development as is feasible in the two sectors of the economy that produce the most pollution: transportation and power production.
One kind of tax credit would last an additional 10 years and be targeted at sustainable energy companies to increase the amount of solar, wind, and battery storage on the grid.
The second type would encourage Americans to construct heat pumps, embrace solar technology, and purchase electric vehicles in an effort to increase the use of renewable energy.
Consumers would receive $7,500 for new electric cars and around $4,000 for used ones until 2032, but there would be new limitations on where the batteries were made and income thresholds (examined in-depth on Twitter by Bloomberg’s Tom Randall).
One of these programs, the $9 billion Home Energy Rebate Program, focuses on retrofits and electrifying home appliances, while another $1 billion helps make public housing more energy-efficient. These programs specifically assist low-income people.
The law also allots $27 billion to fund the establishment of a National Green Bank, a scheme that would aid in leveraging private funding for clean projects, including those in low-income areas.
‘Fossil fuels’ The IRA makes modest progress against methane, the second-worst climate pollutant. Methane is generated at every stage of oil and gas production, including drilling at the wellhead, compressor stations, and liquefied natural gas ports. It is 86 times more potent a greenhouse gas than carbon during a 20-year period.
Congress would for the first time impose some industry-wide restrictions on gas leakage. Oil and gas companies will be charged an increasing tax if their total methane emissions exceed a specific threshold. In addition, there is a new royalty charge on all methane collected from public lands, including the usual venting and flaring practices. Additionally, there is funding for the Environmental Protection Agency and oil operators to monitor methane leaks in order to enforce all of this.
The charges the oil industry must pay to operate on public lands and waters have also changed in some ways. The Act increases minimum bids (from $2 per acre to $10) and royalty fees for the oil industry. However, there are some additional incentives for oil leasing, according to the environmental organization Center for Western Priorities, such as a requirement that the Department of the Interior increase its offshore oil offerings.
Environmental justice and pollution reduction: The total budget for environmental justice initiatives is $60 billion. One-fifth of the financing, $15 billion, is allocated to a variety of objectives, including renewable energy and emissions reductions for underprivileged and low-income regions. Additionally, $3 billion in block grants are available to community organizations, municipalities, and tribes for initiatives including mine cleanup, air quality monitoring, and increased weather preparedness. Additionally, the law includes $3 billion for the reconstruction of highway-separated neighborhoods.
Occupational pollution Industry is currently the third most polluting sector in the US, behind power and transportation. It might rank as the most polluting industry by 2030. Heavy industry continues to rely on fossil fuels due to the high heat required to create raw materials, although cleaner automobiles and renewable energy sources are commercially available technologies that need to be deployed on a larger scale to make these sectors cleaner. In order to reduce its carbon footprint, the IRA encourages energy efficiency at industrial locations.
manufacture of sustainable energy domestically: An additional $60 billion has been set aside in finance and incentives to promote domestic production of sustainable energy technologies.
The majority of those incentives will be used to speed up US production of solar panels, wind turbines, batteries, and essential minerals as well as to aid in the construction of the factories that would produce electric vehicles.
With the addition of $500 million for heat pumps and essential minerals, the Defense Authorization Act will now be able to support Biden’s plan to increase the production of the energy-efficient equipment.
Jason Walsh, executive director of the organization focusing on the environment and workers, outlined the significance of domestic production for batteries, solar, and offshore wind. “Those are significant and dangerous investments. And they will need some long-term policy stability and support if we expect manufacturers to produce them in the United States, he added.
A more comprehensive view of US climate action
Advocates who have spent years (or even decades) lobbying for the passage of a climate deal were relieved to hear that climate legislation was once again on the table.
Economic modelers at Rhodium Group predicted that global emissions were on course to be between 24 and 35 percent lower by 2030 than they were in 2005, the peak year for carbon emissions, even in the absence of new legislation from Congress or the administration. Even though it might seem like a lot, Biden had set a target for cutting those 2005 levels in half by the end of the decade as part of the Paris climate agreement.
The US may not reach its full potential as a result of the Inflation Reduction Act. To fill in the rest of the gap, federal controls for power plants, automobile emissions, and methane will still be crucial.
However, this is a far cry from the dismal scenario when it appeared that Biden would only have a limited number of regulatory choices available to combat climate change. While the left has urged Biden to declare a climate emergency, his authority and long-term effects would be much less than what Congress might accomplish.
Democrats have praised the measure as a significant advancement in the fight against the climate problem, despite its flaws. When it left the Senate two weeks ago, Sen. Brian Schatz (D-HI) broke down in tears. Now that we’re actually addressing climate change, I can look my kids in the eye and tell them, he said.
The top 5 Fall getaways in the Northeast
This story has been updated with new information. Fall brings a welcome respite from summer’s heat and humidity as well...
Giant Slide reopened in the US for the first time since going viral
Thousands of people showed up to the Giant Slide in Detroit on the first weekend it reopened since going viral.
This hiker falls to his death at the Grand Canyon
A hiker walking in Grand Canyon National Park fell approximately 200 feet to his death on Friday afternoon, according to...
Ford fixed a problem with the Mustang that caused many crashes
Ford Mustang prototype mystery of 'The Bulge' has finally been solved.
You can buy a 90s Porsche-inspired boat, if you really want to
Yes, this is a yacht made to kind of look like a 993-generation 911 cabriolet.