U$A / IRA

Most electric vehicles won't qualify for federal tax credit

TOM KRISHER

Tue, August 9, 2022

DETROIT (AP) — A tax credit of up to $7,500 could be used to defray the cost of an electric vehicle under the Inflation Reduction Act now moving toward final approval in Congress.

But the auto industry is warning that the vast majority of EV purchases won’t qualify for a tax credit that large.

That's mainly because of the bill's requirement that, to qualify for the credit, an electric vehicle must contain a battery built in North America with minerals mined or recycled on the continent.

And those rules become more stringent over time — to the point where, in a few years, it's possible that no EVs would qualify for the tax credit, says John Bozzella, CEO of the Alliance of Automotive Innovation, a key industry trade group. As of now, the alliance estimates that about 50 of the 72 electric, hydrogen or plug-in hybrid models that are sold in the United States wouldn't meet the requirements.

“The $7,500 credit might exist on paper," Bozzella said in a statement, “but no vehicles will qualify for this purchase over the next few years.”

The idea behind the requirement is to incentivize domestic manufacturing and mining, build a robust battery supply chain in North America and lessen the industry's dependence on overseas supply chains that could be subject to disruptions.

Production of lithium and other minerals that are used to produce EV batteries is now dominated by China. And the world's leading producer of cobalt, another component of the EV batteries, is the Democratic Republic of Congo.

Though electric vehicles are part of a global effort to reduce greenhouse gas emissions, they require metallic elements known as rare earths, found in places like Myanmar, where an Associated Press investigation has found that the push for green energy has led to environmental destruction.

Under the $740 billion economic package, which passed the Senate over the weekend and is nearing approval in the House, the tax credits would take effect next year. For an EV buyer to qualify for the full credit, 40% of the metals used in a vehicle's battery must come from North America. By 2027, that required threshold would reach 80%.

If the metals requirement isn't met, the automaker and its buyers would be eligible for half the tax credit, $3,750.

A separate rule would require that half the batteries' value must be manufactured or assembled in the North America. If not, the rest of the tax credit would be lost. Those requirements also grow stricter each year, eventually reaching 100% in 2029. Still another rule would require that the EV itself be manufactured in North America, thereby excluding from the tax credit any vehicles made overseas.

Automakers generally don’t release where their components come from or how much they cost. But it’s likely that some versions of Tesla’s Model Y SUV and Model 3 car, the Chevrolet Bolt car and SUV and the Ford Mustang Mach E would be eligible for at least part of the credit. All those vehicles are assembled in North America.

The tax credit would be available only to couples with incomes of $300,000 or less or single people with income of $150,000 or less. And any trucks or SUVs with sticker prices above $80,000 or cars above $55,000 wouldn't be eligible.

There’s also a new $4,000 credit for buyers of used EVs, a provision that could help modest-income households go electric.

The industry says the North American battery supply chain is too small right now to meet the battery component requirements. It has proposed that the measure expand the list of countries whose battery materials would be eligible for the tax credit to nations that maintain defense agreements with the United States, including NATO members.

One component of the bill would require that after 2024, no vehicle would be eligible for the tax credit if its battery components came from China. Most vehicles now have some parts sourced in China, the alliance said.

Sen. Debbie Stabenow, a Michigan Democrat and a leading ally of Detroit automakers, complained that Sen. Joe Manchin of West Virginia, a critical Democratic vote, had opposed any tax credits for EV purchases.

“I went round-and-round with Senator Manchin, who frankly didn’t support any credit of any kind, so this is a compromise,” Stabenow told reporters Monday. “We’ll work through it and make this as good as we can for our automakers.”

Manchin, long a holdout Democrat who negotiated terms of the deal with Senate Majority Leader Chuck Schumer, had blocked previous climate and social spending proposals.

Manchin's office declined to comment. He told reporters last week that he wants automakers to “get aggressive and make sure that we’re extracting in North America, we’re processing in North America and we put a line on China. I don’t believe that we should be building a transportation mode on the backs of foreign supply chains. I’m not going to do it.”

Stabenow asserted that the bill was written by people who don't understand that manufacturers can't simply flip a switch and create a North American supply chain, though they are working on it. Numerous automakers, including General Motors, Ford, Stellantis, Toyota and Hyundai-Kia, have announced plans to build EV battery plants in the United States.

Katie Sweeney, executive vice president of the National Mining Association, said that industry leaders “like the requirement that minerals for batteries be sourced close to home rather than from our geopolitical rivals.”

“Doing that,” she said, "directly supports high-paying jobs here in the United States ... secures our supply chain and really enhances our global competitiveness.”

Stabenow said she remains hopeful that the Biden administration can offer the tax credits next year while it works on the detailed rules for the battery requirements.

“We will continue to work with the automakers and the administration on getting as much common sense into the regulations as possible,” the senator said.

Messages were left Monday seeking comment from the White House and the Treasury Department, which would administer the credits.

Stabenow says she's pleased that the measure would restore tax credits for General Motors, Tesla and Toyota, all of which hit caps under a previous bill and can no longer offer them. Ford, too, she said, is closing in on an EV cap.

____

AP Writers Matthew Daly and Fatima Hussein contributed to this report from Washington.

How top-selling electric vehicles will be affected by new tax credit

Pras Subramanian

·Senior Reporter

Mon, August 8, 2022 

In a big win for Democrats, Senate passage of the Inflation Reduction Act brings the bill to the House, where the bill is expected to pass. If all goes as planned, the legislation could be in front of President Biden to sign in as little as a couple weeks.

For the automotive industry, a big piece of the legislation is the expansion of the $7,500 federal tax credit for EVs (electric vehicles), in which the cap on automakers to qualify for the credit — which currently is at 200,000 vehicles — will be removed.

While that sounds like good news for the automakers, several requirements have now been introduced that have the automakers claiming 70% of EVs and PHEVs (plug-in hybrid EV) will not qualify for the credit.

“There are 72 EV models currently available for purchase in the United States including battery, plug-in hybrid and fuel cell electric vehicles, says John Bozzella, CEO of the Alliance for Automotive Innovation, a trade group that counts General Motors, Toyota, and Ford as members in a statement. “Seventy percent of those EVs would immediately become ineligible when the bill passes and none would qualify for the full credit when additional sourcing requirements go into effect. Zero.”

These are the main requirements that will change and make the EV tax credits more restrictive:

• Final assembly needs to take place in North America

• MSRP needs to be below $55,000 for cars, and below $80,000 for trucks and SUVs

• Battery material sourcing must be sourced from U.S. or free-trade partners, with phase-in starting in 2024

The final component of battery sourcing, coming in less than two years time, means no EVs will qualify for the credit, according to Bozzella. Note that these are just requirements on the automaker end; the bill adds income requirements on the consumer that will make many high-earning Americans and joint filers ineligible for the tax breaks.

The Automotive Alliance for Innovation lists all the zero emissions EV and PHEVs for sale in America here, along with a map and list of EV and battery manufacturers in America.

Along with that information and quarterly sales reports, Yahoo Finance has verified how the following cars, the top 5 selling EVs and PHEVs in America, will fare under the new rules.

Tesla Model 3 and Model Y

Both U.S.-made Model 3 sedans and Model Y SUVs, the top selling EVs in America, would qualify for the tax credit following passage, a boost for the brand because Tesla is currently phased out of the tax credit. (Note: Tesla does not break out sales between Model 3 and Model Y, but registration data is used as a proxy.)

However, only the lowest trim Model 3 Rear Wheel Drive qualifies (MSRP $46,990). As for the Model Y, both trims qualify (Long Range - $65,990; Performance - $69,990) assuming the government classifies the Model Y as an SUV.

Ford Mustang Mach-E

Coming in second in sales last quarter for EVs and PHEVs was the Ford Mustang Mach-E, with 10,941 units sold. With a starting MSRP of $43,895, the base Mach-E could qualify as a car or SUV, and because the Mach-E is assembled in Mexico, it actually would qualify for the tax credit.

Jeep Wrangler 4xE

The first plug-in hybrid on the list, the Wrangler 4xE, sold 10,861 units last quarter. With it most likely to be categorized as an SUV, and with a starting MSRP of $54,595, it would qualify for the tax break because the Wrangler is made at Jeep’s plant in Toledo, Ohio.

Hyundai IONIQ 5 and Kia EV6

The first non-US brand on the list, the all-electric Hyundai IONIQ 5, which sold 7,448 units in the second quarter, and its sister brand Kia’s EV6 EV sold 7,287 cars. Though the Korean automaker does build cars in the U.S. at a plant in Alabama, the IONIQ 5 and Kia EV 6 are built in South Korea so they would not qualify for the tax credit. This is a blow for Hyundai as the IONIQ 5 and EV6 has been praised by reviewers, and start at a very competitive $39,950 and $33,900 respectively, though the relatively cheap MSRPs may still make both viable options for many Americans despite loss of the credit.

Chevrolet Bolt EV and EUV

GM’s lone entry on the list, the Chevrolet Bolt EV and Bolt EUV, sold 6,945 units last quarter. With a starting price of $25,600, it is the cheapest pure electric vehicle on the market, and with final assembly taking place at GM’s Orion plant in Michigan, the Bolt will continue to qualify for the federal tax credit.

Audi e-tron, Lucid, Polestar 2

Note that popular, sought-after models like the Audi e-tron (country of assembly), Lucid Air (price), Polestar 2 sedan (country of assembly), and Porsche Taycan (price & country of assembly) that currently qualify for the federal tax credit, will not if the bill is signed into law.

All is not lost for manufacturers however, as it may be possible the incentives will no longer so important.

“By the time vehicle manufacturers can take full credit of the act, the market will be ready to accept electric vehicles and the incentives will no longer be necessary,” says Sam Fiorani, Vice President of Global Vehicle Forecasting at AutoForecast Solutions in a statement to Yahoo Finance. “With or without the incentives, the price to the buyer will not change substantially. Incentives like these prop up the price and provide extra profits for the manufacturer.”

Editor's note: this story has been updated to reflect that final assembly of an EV or PHEV has to take place in North America, per the latest draft of the Inflation Reduction Act.

The climate bill could short-circuit EV tax credits, making qualifying for them nearly impossible



James Morton Turner, Professor of Environmental Studies, Wellesley College
Mon, August 8, 2022 

The U.S. Senate passed a far-reaching climate, energy and health care bill on Aug. 7, 2022, that invests an unprecedented US$370 billion in energy and climate programs over the next 10 years – including incentives to expand renewable energy and electric vehicles.

Rapid and widespread adoption of electric vehicles will be essential for the United States to meet its climate goals. And the new bill, which includes a host of other health and tax-related provisions, aims to encourage people to trade their gasoline-fueled cars for electrics by offering a tax credit of up to $7,500 for new electric vehicles and up to $4,000 for used electric vehicles through 2032.

But there’s a catch, and it could end up making it difficult for most EVs to qualify for the new incentive.

The bill, which needs House approval, requires that new electric vehicles meet stringent sourcing requirements for critical materials, the components of the battery, and final assembly to qualify for the tax credits. While some automakers, like Tesla and GM, have well-developed domestic supply chains, no electric vehicle manufacturer currently meets all the bill’s requirements.

Building a domestic EV supply chain

At first glance, the revised EV tax credits seem like a smart move.

Existing U.S. policy allows credits for the first 200,000 electric vehicles a manufacturer sells. Those credits helped jump-start demand for EVs. But industry leaders, including Tesla and GM, have already hit that cap, while most foreign automakers’ vehicles are still eligible. The bill would eliminate the cap for individual automakers and extend the tax credits through 2032 – for any vehicle that meets the sourcing requirements.

Right now, China dominates the global supply chain for materials and lithium-ion batteries used in electric vehicles. This is no accident. Since the early 2000s, Chinese policymakers have adopted aggressive policies that have supported advanced battery technologies, including investments in mines, materials processing and manufacturing. I discuss how China got a head start in the race toward a clean energy future in my new book, Charged: A History of Batteries and Lessons for a Clean Energy Future.

Sen. Joe Manchin, the West Virginia Democrat who stalled earlier efforts to get these measures through the sharply divided Senate, said he hopes the requirements will help scale up the U.S. domestic critical minerals supply chain.

The EV incentives would complement other U.S. policies aimed at jump-starting domestic EV manufacturing capacity. Those include $7 billion in grants to accelerate the development of the battery supply chain allocated in the Infrastructure Investment and Jobs Act of 2021 and a $3 billion expansion of the Advanced Vehicle Manufacturing Loan Program included in the current bill, formally known as the Inflation Reduction Act.

The problem is that the Inflation Reduction Act’s sourcing requirements come online so quickly, starting in 2023, and ratchet upward so rapidly, that the plan could backfire. Instead of expanding electric vehicle adoption, the policy could make almost all electric vehicles ineligible for the tax incentives.

Even Tesla’s Gigafactory relies on China

The bill excludes incentives for any new vehicle which contains battery materials or components extracted, processed, manufactured or assembled by a “foreign entity of concern” – a category which includes China.

According to Benchmark Intelligence, a market research firm that tracks the battery industry, China currently controls 81% of global cathode manufacturing capacity, 91% of global anode capacity, and 79% of global lithium-ion battery manufacturing capacity. By comparison, the United States has 0.16% of cathode manufacturing capacity, 0.27% of anode manufacturing capacity, and 5.5% of lithium-ion battery manufacturing capacity.

Even the U.S.’s most advanced battery factories, such as Tesla’s Nevada Gigafactory, currently rely on materials processed in China. Despite Ford’s plans to expand its domestic supply chain, its most recent deals are for sourcing batteries from Chinese manufacturer CATL.

In addition to excluding materials and components sourced from China starting in 2023, the bill also requires that a minimum percentage of the materials and components in batteries be sourced domestically or from countries the U.S. has a fair trade agreement with, such as Australia and Chile. The threshold starts at 40% of the value of critical minerals in 2023 and ramps up to 80% in 2027, with similar requirements for battery components.

If a manufacturer doesn’t meet these requirements, its vehicle would be ineligible for the tax credit. Whether the Treasury Department would come up with exemptions remains to be seen.

Although EV manufacturers are already pursuing plans to develop supply chains that meet these sourcing requirements, proposals for mines and processing facilities often face challenges. Indigenous and environmental concerns have slowed a proposed lithium mine in Nevada. In some cases, key materials, such as cobalt and graphite, are not readily sourced domestically or from fair-trade allies.

Proposed recycling projects could help meet demand. Redwood Materials projects its recycling facility, currently under construction in Nevada, will supply cathode and anode materials to support one million electric vehicles per year by 2025. Despite such optimistic projections, experts anticipate that recycling can only play a small role in offsetting the demand for raw materials needed to scale up electric vehicle adoption in the coming decade.

How much can the bill do to cut emissions?

Clean energy supporters called the bill historic. In addition to a massive investment in renewable energy and electric vehicles, it provides support for technologies such as carbon capture and storage and zero-carbon fuels, and includes a fee to curtail methane emissions, as well as some trade-offs that boost fossil fuels.

Forecasters have projected that the climate package as a whole could help put the U.S. on track to reduce greenhouse gas emissions by about 40% by 2030 compared to 2005 levels – still short of the Biden administration’s goal of a 50% reduction, but closer.

But for the U.S. to hit those goals, electric vehicles will have to replace fossil-fueled vehicles by the millions. A realistic EV tax credit that allows time for manufacturers to diversify their supply chains and makes these vehicles more affordable for all Americans will be crucial. The proposed policy risks short-circuiting EV tax credits just when they are needed most.

This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: James Morton Turner, Wellesley College.

Read more:

Revolutionary changes in transportation, from electric vehicles to ride sharing, could slow global warming – if they’re done right, IPCC says

How a few geothermal plants could solve America’s lithium supply crunch and boost the EV battery industry

Inflation Reduction Act

Factbox-U.S. climate deal has money for EVs, clean energy and even Big Oil

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.

 * An extension of investment and production tax credits forwind, solar and other renewable energy sources. Wind and solarare considered crucial to cleaning up the power sector, which isthe source of another quarter of U.S. greenhouse gas emissions. 

* An extension and expansion of credits for carbon captureand sequestration, including from big emitting power plants.This incentive allows fossil fuel plants to keep running as longas they install equipment that can capture 75% or more of theircarbon output. 

* Credits for production of nuclear and hydrogen power. TheBiden administration considers nuclear and hydrogen energy to bevital to decarbonization.

 * Extended credits for biodiesel, and incentives for"sustainable aviation fuel" needed to reduce emissions from theairline industry. 

* Allocation of billions of dollars to the U.S. Departmentof Agriculture for climate-friendly farming practices. 

* A fee on emissions of the greenhouse gas methane from theoil and gas industry, alongside more than $1.5 billion inincentives for producers to install new technology helping tocut those emissions. Methane is seen by scientists and climatepolicy experts as one of the worst climate offenders, but alsoone of the easiest to tackle in the near term.

 * A requirement that the Interior Department conduct oil andgas lease sales offshore and onshore for years to come. Bidenhad promised during his campaign for the presidency to endfederal oil and gas drilling to fight climate change but has faced significant political and legal obstacles. 

* A permanent extension of the coal excise tax that willfund the Black Lung Disability Trust Fund, assisting coal minerswho are battling black lung disease.

(Reporting by Timothy Gardner and Leah Douglas in Washington; Writing by Richard Valdmanis; Editing by Will Dunham and Lisa Shumaker)

Here’s what the Inflation Reduction Act will do to combat climate change

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.

 The $369 billion in climate-related spending over 10 years targets five areas: 

consumer clean energy costs, decarbonizing various sectors of the economy, domestic clean energy manufacturing, environmental justice, and agriculture and land use. 

Taken together, these programs would help the U.S. reduce its greenhouse gas emissions by 40% from 2005 levels by 2030, and would save an estimated 3,700 to 3,900 lives per year thanks to cleaner air from a reduction in burning fossil fuels.

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

Ben Adler

·Senior Editor

Mon, August 8, 2022 

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.

Former Vice President Al Gore at a news conference during the U.N. Climate Change Conference (COP26) in Glasgow, Scotland, in November 2021. (Phil Noble/Reuters)

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.”

Sen. Ed Markey and Rep. Alexandria Ocasio-Cortez at a news conference to reintroduce the Green New Deal at the U.S. Capitol in April 2021. (Jonathan Ernst/Reuters)

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.”

Michael Bloomberg at a panel at the U.N. Climate Change Conference (COP25) in Madrid in 2019. (Sergio Perez/Reuters)

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.”