FILE PHOTO: AES Clean Power wind turbines in Palm Springs
Mon, August 8, 2022
(Reuters) - After years of failed attempts to pass major legislation to combat climate change, the U.S. Senate's Inflation Reduction Act is poised to become largest U.S. climate legislation in history.
The bill would divert nearly $370 billion to climate and energy security measures, aimed at slashing greenhouse gas emissions around 40% by 2030 and curbing consumer energy costs at the same time.
Much of the spending would go to new or expanded tax credits to promote clean energy generation, electrification, energy efficiency and wider adoption of electric vehicles.
A good chunk of the bill, however, is also devoted to supporting fossil fuel development by protecting federal drilling auctions and supporting upgrades of coal and gas facilities - concessions required to win over West Virginia's Democratic Senator Joe Manchin in the party-line vote.
The agreement represents a compromise from the initial sweeping legislative ambitions by President Joe Biden's administration for combating climate change, though the legislation was praised by environmental advocates as a crucial step forward.
Here are some of the key climate and energy provisions in the deal, which must now pass the House of Representatives before going to Biden to sign into law.
* Credits of several thousand dollars for the purchase ofzero-emissions electric vehicles: up to $7,500 for new EVs and$4,000 for used electric cars. Transportation generates around aquarter of U.S. greenhouse gas emissions.
(Reporting by Timothy Gardner and Leah Douglas in Washington; Writing by Richard Valdmanis; Editing by Will Dunham and Lisa Shumaker)
Ben Adler
·Senior Editor
Tue, August 9, 2022
The Inflation Reduction Act (IRA) passed by the Senate over the weekend will pursue an extremely wide and varied array of strategies intended to combat climate change.
Steam rises from the cooling towers of the coal-fired power plant at Duke Energy's Crystal River Energy Complex in Crystal River, Fla. (Dane Rhys/Reuters)
This approach represents a break from many past congressional proposals designed to reduce the greenhouse gas emissions that cause global warming, most of which proposed using a singular, overarching policy, such as taxing emissions or requiring tradable permits for emissions. Those measures all died in Congress, but this one made it through the Senate and is expected to pass the House later this week.
“The whole package in terms of dealing with climate change is a long-overdue improvement,” former Democratic Rep. Henry Waxman told Yahoo News on Tuesday. Waxman was chair of the House Energy and Commerce Committee for many years, and he co-wrote a bill that passed the House but died in the Senate that would have capped carbon emissions and gradually reduced the number of tradable credits for them, a system known as cap-and-trade.
“Unlike other efforts in the past, such as cap-and-trade or a carbon tax, this approach gives a lot of incentives, financial especially, through the tax code and appropriations for industry to accomplish a reduction in emissions,” Waxman said. “This climate proposal has very little, if any, regulation. It’s a lot of incentives to develop, in effect, a partnership with industry and the government … to sharpen up the technology to accomplish our goals.”
Here’s a guide to the biggest programs in each bucket of climate policies, and what they will mean for American families.
Consumer clean energy costs
Solar panels create electricity on the roof of a house in Rockport, Mass. (Brian Snyder/Reuters)
The IRA would pour money into helping homeowners, especially those with low and moderate incomes, and lower their carbon footprint and their energy bills by helping them transition to more efficient heating and cooling systems. There will be a $9 billion program to help low-income households switch to electric appliances (such as stoves) and to retrofit their homes for energy efficiency (by insulating windows, for example).
There will also be tax credits for replacing oil and gas burners with electric heat pumps and water heaters and installing rooftop solar, allowing customers to get 30% off the cost of these purchases.
To reduce dependence on oil, the bill would provide a $4,000 consumer tax credit for lower- and middle-income individuals to buy used electric vehicles, and a $7,500 tax credit to those who make less than $150,000 per year or couples who make less than $300,000 per year who buy new electric vehicles. (Qualifying EVs must cost less than $55,000 for cars and less than $80,000 for trucks.) There is also a $1 billion grant program to help local authorities make affordable housing more energy-efficient.
A family that uses all these rebates and tax credits could receive an additional grand total of $28,500 in incentives, according to the Center for American Progress. Rewiring America, an advocacy group that promotes electrification, estimates that a family that takes advantage of these incentives will save an average of $1,800 per year on home heating fuel and lower energy bills.
However, in order to win the crucial support of Sen. Joe Manchin, D-W.Va., the IRA requires that an EV eligible for the tax credit must have a battery built in North America with minerals mined or recycled there as well. Currently, most EVs on the market would not qualify. The purpose is to develop EV building capacity domestically, instead of relying on China, which is the main producer of lithium-ion batteries. But automakers have expressed doubts that they will be able to meet the bill’s requirements on its timeline.
Decarbonizing the economy
Piles of coal at the PacifiCorp Hunter coal-fired electrical generation plant in Castle Dale, Utah. (George Frey/Bloomberg via Getty Images)
About $30 billion will be doled out in grants and loan programs to states and electric utilities to switch utilities from burning gas and coal to using clean energy sources such as wind and solar power. There are also grants and tax credits for clean commercial vehicles — think electric delivery trucks, buses and taxis — and money for efforts to reduce emissions from industrial processes, such as chemical, steel and cement plants.
In order to use the federal government’s buying power to catalyze private sector investment as well, the IRA contains $9 billion for the U.S. to buy clean technologies. For example, it includes $3 billion for the U.S. Postal Service to purchase zero-emission vehicles.
As part of this bill’s emphasis on equity, there is a $27 billion “clean energy technology accelerator” that will distribute funds to deploy clean energy technologies, especially in lower-income communities. An example of a recipient of these funds would be, say, a nonprofit that helps low-income renters, who can’t buy a solar panel for their own home, enjoy the cost savings of buying solar panels by pooling their money and buying solar panels to go in a public space and sharing in the savings
In a major win for environmentalists, there is also going to be a program to reduce the leakage of methane, a highly potent greenhouse gas, from oil and gas wells and pipelines. This is the rare portion of the IRA that includes sticks as well as carrots: grants to help the industry comply and the imposition of fees for operators that continue to leak methane at a high rate.
Domestic clean energy manufacturing
An electric vehicle charging station in New Rochelle, N.Y. (Star Max/IPx via AP)
Whatever the costs and benefits of Manchin’s buy-American requirements for the EV tax credits, every Democrat agrees that developing the ability to produce the key ingredients of a clean energy economy within the United States would be beneficial. So the IRA includes $30 billion worth of tax credits for manufacturing solar panels, wind turbines, batteries capable of storing wind and solar energy, and the processing of key minerals needed for all those technologies (and for electric vehicles).
Separate from those tax credits for making the actual products, there are $10 billion in tax credits for building the infrastructure needed for that production, such as wind turbine and solar panel factories, and $2 billion for renovating auto factories to make EVs. The federal government will also offer up to $20 billion in loans to build new EV manufacturing facilities across the country and will provide $2 billion for additional clean energy research.
Environmental justice
Predominantly Black and Latino neighborhoods and poorer communities suffer an outsize share of the effects of climate change, such as extreme heat, flooding and the pollution from burning fossil fuels on highways and in factories and power plants. The IRA will give out $3 billion in block grants for community-led projects to deal with those kinds of problems, another $3 billion for neighborhood improvements like reconnecting areas separated by highways, $3 billion to reduce pollution at ports and $1 billion for electric heavy-duty vehicles, like garbage trucks.
Agriculture and land use
Drought-conditioned saplings from resilient seeds used to reforest burn scars are grown at John T. Harrington Forestry Research Center in Mora, N.M. (Adria Malcolm/Reuters)
Plants absorb carbon dioxide, so how they are managed can affect how much carbon is in the atmosphere. The IRA will spend $20 billion on climate-smart agriculture practices (rotating crops instead of planting the same ones in the same place every year, for example) and $5 billion for forest conservation and urban tree planting.
The bill also incorporates tax credits and grants to support the domestic production of lower-carbon biofuels and $2.6 billion in grants to conserve and restore coastal areas that are needed both to absorb carbon and to manage storm surges that are becoming severe because of climate change, via rising sea levels and more intense storms.
The bill also includes some measures that were needed to win Manchin’s support that will actually make climate change worse, such as requirements that the federal government lease swaths of federal land and coastal areas for oil and gas drilling. As with the electric vehicles, Manchin is focused on producing as much energy domestically as possible. Still, the overwhelming majority of environmentalists are exultant at the IRA’s overall potential to reduce the severity of climate change.
'A long time coming': Al Gore, other climate activists celebrate Senate passage of IRA
The Senate’s approval of the Inflation Reduction Act (IRA) on Sunday marks the first time the body has ever passed any significant measures to address climate change.
The IRA contains $369 billion in spending over 10 years to subsidize the deployment of clean energy and electric vehicles, and it includes other measures to combat climate change, such as a fee on methane leaked in oil and gas drilling. Overall, it is expected to help the U.S. reach a 40% reduction in the greenhouse gas emissions that cause global warming from 2005 levels by 2030.
Although that falls short of President Biden’s goal of cutting those emissions by 50%, it nonetheless thrilled longtime leaders on climate change, who just 10 days earlier were apoplectic when it appeared the Senate would pass no climate change legislation at all.
“It’s been a long time coming, but the Senate has finally advanced transformative climate legislation,” former Vice President Al Gore, who kick-started the climate movement with his 2006 documentary “An Inconvenient Truth,” tweeted.
While many climate activists have harshly criticized Sen. Joe Manchin, D-W.Va., for successfully demanding concessions to fossil fuel producers — such as increased oil and gas drilling on federal land — Gore praised him. “Thank you to Senators [Chuck] Schumer and Manchin and to every Senator who fought to ensure that climate action was a priority in this bill,” he tweeted.
While pledging to keep pushing for more action in the future, the Senate’s leading climate hawks rejoiced.
“We did it,” tweeted Sen. Brian Schatz, D-Hawaii. “We passed the biggest climate bill that any country has ever passed. It is the reason I came to the Senate.”
He also told the New York Times’ Lisa Friedman, “Now I can look my kids in the eye and say we’re really doing something about climate.”
For the last 12 years, Sen. Sheldon Whitehouse, D-R.I., has given a weekly address on climate change when the Senate is in session. He recently gave his 285th speech on the subject.
“We’ve packed a lot into this historic legislation, and I look forward to spending the coming weeks and months talking with Rhode Islanders about how the bill will lower their energy and health care bills and create millions of jobs,” Whitehouse said in a statement. “I’m also very proud to have shaped the major climate components of the bill, which is expected to double to triple the rate of historical emissions reductions. While there’s still much more to do to lead the planet to safety in the race against climate change, this is by far the biggest step the United States has ever taken to lower emissions. It is good reason for hope.”
In 2009, when he was in the House of Representatives, now-Sen. Ed Markey, D-Mass., co-authored a bill that would have capped and gradually reduced the carbon emissions that are the leading cause of climate change. The bill, known as Waxman-Markey, passed the House but died in the Senate. Markey has remained a leading legislator on climate change since he moved into the upper chamber.
“Twelve years ago, I watched my landmark climate legislation pass in the House and die in the Senate,” Markey said in a statement on Sunday. “Today, powered by a movement that never once wavered in the struggle for a livable future, I joined my Democratic colleagues in passing a bill that makes historic investments in climate justice and delivers the resources we need to have a fighting chance at a livable planet.
“As I know all too well — doing nothing is a political option, but it’s not a planetary option. The Inflation Reduction Act is far from everything we wanted to achieve, but it’s the start of what we need.”
Before Waxman-Markey failed, then-President Barack Obama had tried unsuccessfully to help shepherd it through the Senate. On Sunday, Obama celebrated in a pair of tweets that his former vice president accomplished what he couldn’t.
“Thanks to President Biden and Democrats in Congress, people’s bills will get smaller, their lives will get longer, and we’ll have a real shot at avoiding the worst impacts of climate change,” Obama wrote.
Veteran environmental activist Bill McKibben did temper his elation with acknowledgment of the concessions to Manchin. McKibben wrote “The End of Nature,” one of the first popular books about climate change, published in 1989, and he co-founded the climate change advocacy group 350.org in 2007.
“34 years and 40 days ago, Jim Hansen broke the news of global warming to the U.S. Senate,” wrote McKibben in a tweet, referring to the legendary 1988 congressional testimony in which Hansen, then director of NASA’s Institute for Space Studies, stated that the Earth had clearly warmed and that with “99 percent confidence” it was caused by the buildup of greenhouse gases in the atmosphere. “Finally, today, they act[.] It’s late, it’s deeply compromised, and it’s also a great victory for all who have fought so long and hard.”
Celebrities who have been outspoken activists on climate change also chimed in. Mark Ruffalo may be best known for playing the Hulk in Marvel movies, but he is also a leading activist opposing extracting natural gas and oil through fracking.
“As we are living through record heat, fires, floods, droughts, & climate anxiety, we can take a breath. A solid beginning. It will create meaningful jobs, bring manufacturing back to the USA, & begin to address climate change significantly,” he tweeted.
Former New York City Mayor Michael Bloomberg, a multibillionaire, made climate change one of his signature issues as mayor and in his private philanthropy. On Monday he praised the bill and noted it would be a boon to local governments attempting to deal with climate change.
Leading climate scientists also cheered the news while already looking ahead to the possibility of further action in the future. Michael Mann, the director of the Earth System Science Center at Pennsylvania State University, tweeted that the IRA “Puts us on path to meeting our obligation to cut carbon emissions in half by 2030, re-establishing American leadership on climate & paving the way to global climate action.” He followed up in response to critics who fretted that scientists were too celebratory of a bill that won’t, in and of itself, avert catastrophic climate change, to argue that it is a first step.
Katharine Hayhoe, who serves as chief scientist of the Nature Conservancy and a professor at Texas Tech, told Yahoo News that the bill’s passage would have global reverberations.
“This is huge,” Hayhoe said on Monday. “The United States is historically responsible for 25% of global carbon emissions and its influence outside its borders on technology, on policy, is enormous.”
Hayhoe acknowledged that the emission reductions would fall short of the U.S.’s pledges in previous global climate agreements, but said “it’s a step in the right direction.”
“I particularly applaud the inclusive nature of the solutions,” she added. “Of course, there’s clean energy and there’s solar and wind and battery manufacturing, and tax credits, but there’s also funds to support climate-smart regenerative agriculture, to support restoring and conserving forest ecosystems and coastal habitats — and to support low-income communities who bear a disproportionate impact from climate change.”
There were, however, some detractors. Adam McKay, the director of the blockbuster film “Don’t Look Up,” a thinly veiled climate change parable, criticized the bill as “a greatest hits of everything wrong with USA.”
Peter Kalmus, a climate scientist at NASA’s Jet Propulsion Lab, gave the bill a mixed review in a Twitter thread running down its pros and cons.
The same dichotomy could be seen between mainstream environmental advocacy groups, which exulted in the bill’s passage, and some farther-left organizations that are particularly focused on opposing fossil fuel development.
“This is a historic moment for climate action, and a turning point in American climate policy,” said Evergreen Action executive director Jamal Raad. “Today, the Senate passed the largest climate investment in history — by far. This is the end of a decades-long road to pass a climate bill, but it’s only the beginning of the road towards achieving the greenhouse gas pollution reductions that science demands and building a better future for us all.”
Raad went on to acknowledge that painful compromises were made. Greenpeace USA, on the other hand, focused mainly on those concessions.
“The Inflation Reduction Act includes much needed investment in renewable energy, and a down payment on the union jobs we need to propel a green economy,” Greenpeace USA co-executive director Ebony Twilley Martin said. “But it is also a slap in the face to the frontline communities, grassroots groups, and activists that made this legislation possible. The IRA is packed with giveaways to the fossil fuel executives who are destroying our planet.”
While Greenpeace did not join its major counterparts such as the Sierra Club in urging swift passage of the IRA, it did not call for rejecting it either, instead asking Senate Majority Leader Chuck Schumer “to do everything in his power to kill” a side deal he made to secure Manchin’s support, in which the Senate will later take up separate legislation to streamline the process for obtaining permits for energy development projects.
Still, those views represented a minority opinion. Most people who have been working on climate change for decades seemed to agree with Hayhoe, who said they “should not let the perfect be the enemy of the good,” and Whitehouse, who told the Times’ Friedman: “It’s a bit of a dream come true.” But, he hastened to add, "Of course, it’s only the first chapter of the dream.”
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