Dear EarthTalk:

What are the environmental/climate benefits (or drawbacks) of the Inflation Reduction Act?

David Montague, via email

The Inflation Reduction Act (IRA), a bill passed by the Biden Administration in 2022 to bolster the U.S. economy, was especially notable for its unprecedented investments in clean energy and climate health. Setting $369 billion aside for climate investments, the IRA incentivizes citizens to implement and invest in renewable energy by increasing tax benefits to homes with installed solar panels and battery storage equipment, and by giving substantial funding to clean energy companies. The bill’s efforts were predicted to bring $3 trillion into renewable energy, open up 170,000 new jobs within the industry, and increase the sales of electric vehicles.

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Climate analysts initially projected that America’s greenhouse gas emissions would be cut roughly 40 percent below 2005 levels by 2030 due to the IRA’s funding of clean energy, with an average of 46 to 79 gigawatts of carbon-free energy predicted to be added to America’s electrical grid annually. The IRA puts additional priority on making clean energy more affordable for disadvantaged communities and lower-income households by increasing tax benefits for specific areas and families to start establishing clean energy within their communities. Implementing clean energy in disadvantaged communities may assist in mitigating the harmful air pollution in those areas, and in reducing their carbon footprints.

Despite its environmental benefits, the IRA has still allowed the fossil fuel industry to thrive and even expand. The bill was only approved by the U.S. Senate after the Biden Administration agreed to sell a $200 million lease for oil and gas companies to develop a large plot of land in the Gulf of Mexico, as many senators are investing partners with those companies. In a recent USA Today article on the IRA, reporters Matthew Brown and Michael Phillis stated that “the bill prohibit[s] leasing of federal lands and waters for renewable energy unless the government has offered at least 2 million acres of public land and 60 million acres in federal waters for oil and gas leasing during the prior year.” Clean energy improvements notwithstanding, fossil fuels will continue to burn and communities will continue to suffer from environmental hazards if specific legislation to discourage oil and gas development is not passed.

As of now, fossil fuels are reaching record levels of development and usage in the U.S., while only 32 gigawatts of carbon-free energy, a trifling amount in the scheme of things, have been added to the grid per year due to project delays, supply issues and the resistance of local communities. Many supporters of the bill argue that it was right to secure energy security for the American economy and its citizens via fossil fuels, since the clean energy industry is still developing a greater capacity for energy output. However, it could just as easily be argued that discouraging the continued development of oil and gas could have accelerated the clean energy industry’s projects and growth. The IRA is undeniably an economic bill first, and an environmental bill second. But while environmentalists may have their issues with the final outcome, let’s remember that the IRA is still the single largest climate bill ever passed in U.S. history.

CONTACTS

• How the IRA of 2022 Can Lower Your Energy Bills, www.solar.com/learn/inflation-reduction-act
• How the IRA’s Tax Incentives Are Ensuring All Americans Benefit from the Growth of the Clean Energy Economy, home.treasury.gov/news/press-releases/jy1830
• The IRA's surprise winner, the U.S. oil and gas industry, https://www.usatoday.com/story/news/nation/2022/08/18/climate-change-inflation-reduction-act-oil-gas/7837956001/.

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