Inflation Reduction Act : Implications for Climate Change

In retrospect, it appears that Earth still has a chance at survival. This August, amid mounting scepticism, the US Congress and President Joe Biden have passed the most comprehensive and the first major climate change legislation in the country's history, three decades after ratifying the world's first climate treaty. The bill, which has the misleading name "Inflation Reduction Act (IRA)" will also give the US government more power to negotiate lower prices for prescription drugs and give more money to help millions of Americans pay for health care.

The Senate bill, which is more than 725 pages long, includes nearly $370 billion in investments to reduce greenhouse gas emissions and about $60 billion to promote environmental justice and health equity.

Let us delve into the specifics of the bill's climate change language [1]:

• ?Title I, Part-5 addresses tax deductions for energy-efficient commercial buildings, the financing rate for the Hazardous Substance Superfund, the increased rate of the coal excise tax for funding the Black Lung Disability Trust Fund, and tax credits to produce electricity from renewable sources, qualifying zero-emission nuclear power produced and sold after 2023, and the sale or mixture of sustainable aviation fuel.
• In Title II, the law allocates funds to the Department of Agriculture (USDA) for forest restoration, wildfire prevention, and other similar initiatives connected to conservation and renewable energy.
• Title IV of the bill allots money for things like marine and coastal habitats, weather forecasting, and sustainable aviation fuel and technology.
• Title V allocates funds to the Department of Energy (DOE) for a wide range of energy-related projects, including rebates for saving money on energy costs, improvements to electric transmissions and infrastructure, and the construction of cutting-edge industrial facilities. Expenditures for natural resources, water supplies, the Office of Insular Affairs, leases for developing energy on federal land, and other similar matters are all included in the same bill under the same title.
• Title VI of the bill funds the Environmental Protection Agency (EPA) to set up a greenhouse gas reduction fund, as well as environmental and climate justice block grants to disadvantaged communities. Furthermore, the bill funds the United States Fish and Wildlife Service (USFWS) to develop and implement recovery plans for endangered and threatened species conservation and survival. Additionally, this bill funds the Federal Highway Administration and the General Services Administration for the neighbourhood access and equity grant programme, environmental reviews of transportation projects, and grants for the use of low-carbon construction materials and products on federally funded transportation projects.
• Title-VIII of this bill includes funding to help Indian tribes deal with climate change.

What does this new bill mean for mitigating climate change?

The Senate-passed plan invests billions of dollars in clean-energy technology to drive the country closer to President Joe Biden's lofty target of decreasing greenhouse gas emissions by half by 2030. Meeting that target is critical to avoiding the worst effects of global warming by limiting the rise in global temperatures to less than two degrees Celsius—ideally, less than 1.5 degrees Celsius—above preindustrial levels. The global average temperature has already risen by about one degree Celsius above that baseline, implying that time is of the essence in dealing with the climate emergency. In recent weeks, lawmakers, advocates, and the press have prominently mentioned three groups' emissions models [2]:

1. According to the economic analysis company Rhodium Group, under the IRA, emissions would decrease by 31% to 44% from 2005 levels by 2030. Rhodium estimated that emissions in the United States would decrease by 24–35% during that time period in the absence of the bill.
2. The Princeton University REPEAT Project, which evaluates the impact of climate policies, calculated that the measure would reduce emissions by 42% of 2005 levels by 2030, compared to 27% without it.
3. Energy Innovation found that the bill will reduce emissions by 37 to 41% of 2005 levels by the end of the decade, compared to 24% without it. Additionally, IRA provisions could generate up to 1.5 million new jobs by 2030 and avert up to 3,900 premature deaths.

?The Inflation Reduction Act funds would make it more affordable for Americans to reduce their own contribution to global warming. The first benefit for homeowners would be a tax credit for energy efficiency improvements. In the future, the plan would also reserve about $8 billion for two rebate programmes aimed at low- and middle-income households. The first would promote the replacement of obsolete appliances with more energy-efficient ones, as well as the necessary home renovations to support them. The second would aim to reduce energy waste at home. Also on the personal mobility side, consumers might receive up to $7,500 in reimbursement for a new electric vehicle and $4,000 for a second-hand automobile [3].

Oil companies would also have access to $1.5 billion to help them reduce their carbon footprint. The measure provides incentives for gas and oil businesses that take steps to reduce methane leaks while penalising those who do not with fees of up to $1,500 per tonne of methane emissions. With the help of this new law, the United States might increase its use of renewable energy sources like wind and solar by 550 gigawatts.

By providing billions of dollars in incentives for the domestic manufacturing of clean energy materials, the new measure at the same time aims to compete with China in the clean energy sector. The International Energy Agency estimates that by 2025, China will have produced 95% of the world's solar cells and modules.

Not Enough!!

While the bill has a lot going for climate change mitigation measures, it has also been slammed by green groups. The fact that it still backs gas and oil drilling is one of the bill's major flaws in the eyes of climate campaigners. Termed as “poison pill” [4] by many Climate activists, a proposed climate and energy package would require a lot of oil and gas leasing in the Gulf of Mexico and Alaska, bring back an illegal lease sale in the Gulf in 2021, and force the leasing of millions more acres of public land before any new solar or wind energy projects could be built on public lands or waters. As a result, the Interior Department will end up offering at least 2 million acres of public lands and 60 million acres of offshore waters for oil and gas leasing each year for the next decade as a prerequisite to installing any new solar or wind energy, and if the department fails to offer these minimum amounts for leasing, no right of way could be granted for any utility-scale renewable energy project on public lands or waters.

The Climate Justice Alliance (CJA) [5], which represents a wide range of urban and rural groups across the country, conducted a cost-benefit analysis of the IRA and found that the bill's benefits were outweighed by its drawbacks and threats posed by the expansion of fossil fuels and unproven technologies like carbon capture and hydrogen generation, which the bill would incentivize with billions of dollars in tax credits that would primarily benefit oil and gas companies.

Furthermore, climate funding is not listed as a domestic spending bill in the IRA. Biden had promised $11.4 billion per year by 2024, but Congress had only allocated $1 billion for 2022. So, as it cleans up its act at home, the US cannot afford to ignore its climate duties abroad.

What lies ahead?

Although it was arduous to get the "Inflation Reduction Act" passed, the future could be even more difficult. For instance, to link wind and solar farms in various parts of the country, new transmission lines will need to be built. Backup batteries must be placed for renewable energy sources. To guarantee the grid can operate nonstop without emitting greenhouse gases, novel technologies like clean hydrogen and advanced nuclear, as well as underutilised methods like carbon capture and sequestration, must be used.

It will be significantly more difficult to clean up transportation and industry due to the limited technical solutions available and the extended lifespans of automobiles and heavy industrial machinery.

Furthermore, the legislation is mainly focused on the issue of controlling greenhouse gas emissions—there is still a lot more that must be done, notably at the federal level, to prepare the country to deal with the effects of climate change i.e., climate change adaptation.

Regardless of the effectiveness of the Inflation Reduction Act, it is evident that additional climate action is required to fulfil emissions targets in 2030 and beyond. Indeed, even if the modellers' estimates are true, the measure will not be enough for the US to fulfil its declared targets under the Paris agreement of reducing emissions to half of 2005 levels by 2030.

The way ahead for US climate action is not as clear as some would want. However, the government has taken a significant stride forward with the Inflation Reduction Act. The precise size is still unknown.

[1] Inflation_Reduction_Act_of_2022

[2] Predicting the climate bill’s effects is harder than you might think, MIT Technology Review

[3] 3 ways the Inflation Reduction Act would pay you to help fight climate change, NPR

[4] Manchin Poison Pills Buried in Inflation Reduction Act Will Destroy Liveable Climate, Centre for Biological Diversity

[5] THE INFLATION REDUCTION ACT IS NOT A CLIMATE JUSTICE BILL, Climate Justice Alliance

#climatechange #ira #climatejustice #esg #sustainability #ghgemissions #motherearth