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The Inflation Reduction Act, as the newly renamed budget reconciliation bill is known, could help reduce consumer prices on goods. If it passes, however, it will undoubtedly have an even bigger impact on climate change.
After over a year of negotiations, with multiple collapses that threatened to make a mockery of President Biden’s pledges to reduce greenhouse gas emissions, Sen. Joe Manchin, D-W.Va., and Senate Majority Leader Chuck Schumer, D-N.Y., announced late Wednesday that they had reached a deal that includes $369 billion worth of investments toward combating climate change. This will be the largest single climate allocation by any one country in history.
“It will be absolutely historic when it comes to making progress on the climate crisis,” Leah Stokes, an environmental policy expert who teaches political science at the University of California, Santa Barbara, told Yahoo News.
“Let me be clear: This bill would be the most significant legislation in history to tackle the climate crisis,” President Biden said in remarks in support of the agreement on Thursday.
Although significant compromises were made to win Manchin’s support, including an agreement to mandate new federal fossil fuel production, most climate activists and experts have enthusiastically greeted the news of the deal.
The major climate components of the bill, which has yet to win final approval in the House or Senate, include tax incentives for wind, solar, hydrogen and nuclear power. There will be $20 billion in loans for electric vehicle manufacturing and $30 billion in tax credits to boost the manufacturing of solar panels and wind turbines and the mining of minerals used in electric vehicle batteries.
Electric car manufacturers and consumers looking to save money at the pump would be big winners. The bill would add a new $4,000 tax credit for buying electric vehicles to the existing $7,500, though it would be limited to trucks, vans and SUVs that retail for less $80,000, cars below $55,000 and only families with adjusted gross incomes below $300,000 per year.
There are also major investments in climate justice, which means ensuring that low-income communities are not disproportionately harmed by the effects of climate change and that clean-energy economy opportunities are fairly distributed. The bill would spend $3 billion for climate justice block grants and $3 billion to reduce air pollution at the nation’s ports. It would also establish the Greenhouse Gas Reduction Fund, a $27 billion bank that would distribute funds to nonprofits and state and local governments to help reduce their carbon footprints by advancing rooftop solar, for example, or switching to a clean-vehicle fleet.
Farmers would also benefit from the legislation, as it includes $20 billion for “climate smart agriculture” — essentially, subsidies to farmers to help them manage their crops in a way that absorbs carbon dioxide.
And surprisingly, despite his support for oil and natural gas production, Manchin agreed to the imposition of fees on industry for leakage of methane, a highly potent greenhouse gas that often escapes from oil and gas wells and pipelines.
The bottom line is that the package of policies is projected to get the United States to a 40% reduction in emissions from its 2005 level by 2030. That’s short of the 50% that Biden pledged to the global community in Glasgow, Scotland, as part of last year’s United Nations climate agreement, but well ahead of where the U.S. had appeared to be headed without sweeping new measures being enacted.
Activists who have been lobbying Congress to pass a climate bill seemed mostly elated as the details of the compromise emerged.
“The Senate put forward a package that will save countless lives by making historic investments in a more just, affordable and competitive American clean energy economy,” Evergreen Action co-founder Sam Ricketts said in a statement released Wednesday evening. “With $369 billion in climate and clean energy investments, this agreement is a historic breakthrough.”
The compromise does fall short of what Biden had originally proposed, and what the House passed, last year. To win the support of Manchin, a coal-state centrist, Schumer had to make several key concessions. The total environmental spending has been reduced from $555 billion, and a program to incentivize utilities to switch to clean energy was scrapped.
Most controversially, and in a breach of a Biden campaign pledge, there would be continued fossil fuel production on federal lands and new offshore oil and gas leasing in the Gulf of Mexico and near Alaska.
That has some green groups angry, especially as recent research demonstrates the severe harm to health caused by burning fossil fuels and the dramatic effects of climate change that are being felt across the country right now, including extreme heat waves, record-breaking droughts and rampant wildfires.
“The bill fails to address the out-of-control fossil fuel industry causing the climate crisis, encourages leasing of our public lands and waters, and entrenches sacrifice zones,” said John Noël, senior climate campaigner at Greenpeace USA, in a statement released Thursday morning. “Millions of people die every year as a result of fossil fuel air pollution, and we cannot afford any fossil fuel expansion if we’re going to avoid a climate catastrophe. Marketing a 40% reduction in emissions over 8 years while increasing fossil fuel leasing and a handshake deal to streamline permitting for fossil fuel infrastructure does not add up.”
Some environmental activists who are heavily focused on reforming federal land use were much more enthusiastic about the trade-offs, noting that the new federal fossil fuel leases would charge drillers higher royalty and rental rates and include funding for cleaning up abandoned oil and gas wells.
“This bill includes the first meaningful reforms to the oil and gas leasing system in a hundred years,” Jennifer Rokala, executive director of the Center for Western Priorities, said in a statement. “If it becomes law, it will represent a turning point in America’s energy and climate policy.”
“No bill is perfect, and there are major flaws in this final package,” Rokala continued. “Reforming the system while locking in more drilling is taking two steps forward and another step backwards.
“In all, we cannot let the bad overshadow the good this bill will ultimately provide for our children and grandchildren.”
Stokes agreed. She had blasted Manchin in a New York Times op-ed after he announced earlier this month that he would not vote for climate action at this time.
“Mr. Manchin’s grandchildren will grow up knowing that his legacy is climate destruction,” she wrote.
Now, she said, his legacy could be saving the future of everyone’s grandchildren. And she predicted that Democrats will be able to whip the votes needed for passage in both houses of Congress.
“There’s going to be 10 times as much clean investments in this bill as dirty investments,” Stokes said. “We need to keep our eye on the prize: If we don’t pass these clean energy investments, we will not be bringing clean energy manufacturing to the United States.
“We felt what failure looked like in the last two weeks,” she said. “We understand the grief. Failure is not an option. We cannot be delivering a broken planet for ourselves and for our children and for our grandchildren. The stakes are too high. There is not another decade left to waste. We must get these clean energy and climate investments over the finish line.”