Why is the Inflation Reduction Act a big deal for Planet Earth?

This past week, the US Congress passed the Inflation Reduction Act, which included a range of new taxation, healthcare, and climate initiatives.?Most of the bill's spending initiatives focused on transitioning the country to clean energy and reducing greenhouse gas emissions, making it the most important climate legislation in US history.

Why are people calling the Inflation Reduction Act the "Climate Bill"?

While the bill's measures to increase corporate taxes and lower prescription drug costs were significant, the IRA most notably?invests $370 billion into addressing climate change. Even though it's only about?half of our annual defense spending, it is?the most significant federal investment ever in combatting the climate crisis, incentivizing both innovation and mass adoption.

The core of the spending comes from?tax credits that incentivize businesses and individuals to transition to clean energy.?Tax credits are better than deductions because they decrease your tax bill, not your taxable income, directly maximizing your return. The bill?makes?expensive?electric vehicles (EV) more accessible for the average consumer, offering rebates of?$7,500 for purchasing a new EV?and $4,000 for a used one. Americans will also earn?tax credits to improve the energy efficiency of their homes?and switch to clean energy. The bill?offers families thousands of dollars to install new windows, doors, and insulation?and end their dependence on natural gas by installing electric heating and cooling systems. There's money for states to create training programs for contractors and incentives to?install solar panels?and batteries.

Beyond tax incentives, the climate bill also?pumps money directly into retiring fossil fuel power sources and renewable energy infrastructure. The bill clears financial barriers for states to?close coal plants?and provides flexible funding to focus on emissions reduction projects. There's also flexible?funding to build out more nascent clean energy technologies, like?hydrogen power?and direct?carbon capture, by as much as?13 times. While carbon capture still has?many flaws?in its current use,?which we've discussed, the?funding also makes room for agricultural carbon capture. The act includes?$20 billion for climate-smart agriculture, which improves biodiversity and natural carbon capture of the soil and plant life. We've highlighted the?critical role biodiversity plays?in making our planet habitable.?

What are people excited about?

The Inflation Reduction Act is?a landmark step by the world's largest historical emitter of greenhouse gas emissions to finally address the realities of climate change. If you?haven't heard, or if you've archived it in your brain for the sake of mental wellness,?we're running out of time to prevent a climate disaster. Top scientists have already?started to model extinction-level scenarios within the next fifty years. Implementing?the climate bill is projected to reduce our annual greenhouse gas emissions?by 40% below 2005 levels. While that's short of President Biden's?goal of a 50% reduction?in line with the Paris Agreement, it's a significant acceleration from our current path of reducing emissions by only 24-35% in the next thirty years. It also?reestablishes American credibility?in the global efforts to battle climate change.

American businesses will benefit from the bill's?domestic manufacturing and production incentives.?While criticized for the?short-term limitations, the electric vehicle and clean energy tax credits focus on products?built in US facilities?with materials sourced from US mines. The investment in US manufacturing is?projected to create more than 1.5 million jobs.

The climate bill favors carrots over sticks to motivate the clean energy transition, but?one crucial new stick is the fee on methane gas.?Methane has?80x more planet-warming power than carbon dioxide. The bill will allow the government to?fine businesses for every metric ton of methane?produced above federal limits, limiting the production of this harmful greenhouse gas.

What are people worried about?

There's?plenty of doubt?whether the proposed legislation can achieve the projected emissions reductions by 2050. Most of the projected emissions reductions would come from the?transition of the power and transportation sectors?from fossil fuels to renewable power sources. If you've ever had construction on your street, you can understand the doubt about a?speedy reconstruction of national infrastructure.

The most significant source of pessimism about the bill's climate credentials comes from?the accommodation of the fossil fuel industry. As a clean energy bargaining chip, fossil fuel sympathizers pushed to include measures that?facilitate the development of oil and gas infrastructure?alongside the renewable projects. The bill?opens millions of acres of public lands and waters to oil and gas leasing?before the areas can be used for clean energy projects. These measures will likely result in a?near-term expansion of domestic energy production through fossil fuel extraction.

Several climate groups?believe?the expansion of fossil fuel production outweighs the bill's benefits,?particularly for low-income communities. The bill directly allocates?$60 billion to environmental justice initiatives, focused on helping communities?disproportionately affected by pollution?by electrifying transport trucks and shipping ports, improving civil construction, and?keeping people safe?from?extreme urban heat effects. However, activists say that?it's not enough,?and marginalized communities will feel the?repercussions?of the bill's fossil fuel compromises.

What's next?

Like most things produced through a democratic process,?this bill isn't perfect, but it's a substantial signal to the nation that it's time to take climate change seriously.?Keep pushing for more legislation in your area and take advantage of the tax credits to shift your homes and vehicles to clean energy.

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?? The Share Scoops Team