By Tom Molloy
Climate Progress, Finally!
On August 16th, President Joe Biden signed into law a major bill that seeks to fight climate change, raise taxes on corporations and expand health care coverage. The bill takes significant steps toward fulfilling his goal to modernize the American economy and reduce its dependence on fossil fuels. It will lower prescription drug costs for seniors on Medicare, extend federal subsidies for health insurance and reduce the federal deficit. It will also help electric utilities switch to lower-emission sources of energy and encourage Americans to buy electric vehicles and electrify their homes and appliances through tax credits.
Named the Inflation Reduction Act, it passed the House and the Senate with the support of every Democrat and no Republicans.
The legislation will raise about $700 billion through corporate tax increases and prescription drug savings, and it will spend about $400 billion on clean energy and health care provisions. The package falls far short of what most Democrats had wanted, as Sen. Joe Manchin demanded that the social safety net items be removed, and Sen. Kyrsten Sinema, blocked many of the tax increases.
It is the aspect related to climate change and the environment that I focus on in this article. Specific aspects of the bill to fight climate change and improve air quality are summarized below by the Center for American Progress (not all inclusive list).
(1) Electric Incentives
A low- or moderate-income household could choose from a variety of incentives that add up to $28,500 to switch to efficient electric home appliances, install rooftop solar, and buy new electric vehicles. Specifically:
Purchasing electric vehicles
The Inflation Reduction Act offers up to $7,500 toward the purchase of a new electric vehicle or up to $4,000 toward the purchase of a used electric vehicle. (Not available to those earning more than $300,000 per year for new vehicles or $150,000 per year for used vehicles.)
Installing rooftop solar
Provides for 30 percent off the cost of rooftop solar, which amounts to average savings of $7,000, according to estimates from the Sierra Club, The bill also offers 30 percent off the cost of home batteries
Switching to electric appliances
Offers homeowners up to $14,000 in rebates to switch over to electric appliances covering up to 50 percent of the costs for moderate-income households and 100 percent of the costs for low-income households. This can include:
- $8,000 for a heat pump, which serves as an air conditioner in the summer and heater in the winter
- $1,750 for a high-efficiency, all-electric heat pump water heater
- $840 for an electric induction cooktop
- $840 for a high-efficiency all-electric heat pump clothes dryer
- Up to $9,100 for enabling improvements to the electric panel, wiring, and home insulation
- $1,750 for a high-efficiency, all-electric heat pump water heater
- $840 for an electric induction cooktop
- Up to $9,100 for enabling improvements to the electric panel, wiring, and home insulation
Improving energy efficiency: An alternative rebate option offers to cover more than 50 percent of the cost of whole-home energy efficiency retrofit or more than 80 percent in the case of homes occupied by low- or moderate-income households.
Making major investments in affordable housing and multifamily rental units: The bill provides rebates of up to $400,000 for whole-building energy efficiency retrofits in large multifamily apartment buildings as well as grants and loans worth $1 billion in total for improving efficiency and installing zero-emission equipment in affordable housing units
(2) New Jobs
1.3 million new good jobs would be created in 2030
The bill could create up to 1.3 million new U.S. jobs by 2030 in construction, manufacturing, and service, according to Energy Innovation. With the earlier CHIPS and Science Act, the Infrastructure Investment and Jobs Act (IIJA), and President Joe Biden’s work to expand “Buy America,” the new bill would provide the means for the United States to take control of its own clean energy future—fostering a homegrown, robust clean energy manufacturing sector making us less vulnerable to global supply shocks in the future. The provisions include:
- An additional 10 percent bonus if projects use materials manufactured in the United States
- $5.8 billion for federal procurement of zero- and low-emission manufactured products
- $3 billion to expand and establish electric vehicle manufacturing facilities
- $2 billion to help current automakers transition to electric vehicles or hybrids
- $6 billion to support technologies that will help heavy manufacturing facilities slash their emissions
(3) Cleaner Air
Up to 3,900 lives would be saved annually by 2030 as a result of cleaner air
According to Energy Innovation, pollution reductions from the Inflation Reduction Act’s clean energy investments would save an estimated 3,900 lives annually by 2030, avoiding unnecessary premature deaths resulting from bad air quality and would prevent up to 100,000 asthma attacks annually. In analyzing the tax credits included in the bill, the Rhodium Group, found that the credits, together with state and federal regulatory action, would cut harmful air pollutants significantly.
(4) Climate Change
Three independent modelers (Rhodium Group, Energy Innovation, Repeat Project) confirm that the major climate investments in the bill are likely to cut U.S. greenhouse gas emissions to 40 percent below peak 2005 levels by 2030.
When coupled with other federal and state level initiatives, this bill would put within reach the United States’ commitment under the Paris Agreement: to slash climate pollution to half of 2005 peak levels by 2030.
Additional reading
https://www.americanprogress.org/?s=inflation+reduction+act
https://energyinnovation.org/wp-content/uploads/2022/08/Modeling-the-Inflation-Reduction-Act-with-the-US-Energy-Policy-Simulator_August.pdf
https://energyinnovation.org/wp-content/uploads/2022/08/Updated-Inflation-Reduction-Act-Modeling-Using-the-Energy-Policy-Simulator.pdf
https://rhg.com/research/climate-clean-energy-inflation-reduction-act/
