How the White House Is Rolling Out Its Landmark Climate Law
How the White House Is Rolling Out Its Landmark Climate Law
The monumental potential of the Inflation Reduction Act comes with a monumental to-do list.
Last week, my friend and Colorado State Senator Kerry Donovan published a powerful and important op-ed in The Denver Post: “We were excited to have a baby. A doctor’s visit changed everything.” It is a brave and moving piece, and I’m grateful to Kerry and her husband Shad for sharing their story. If you read one thing today, make it that.
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It’s not always easy to find reasons to be hopeful these days. That’s particularly true when it comes to the climate crisis or U.S. politics—or, better yet, the combination of the two.
Yet as the planet warms and the midterms approach, it’s worth savoring moments of hope when we find them—not to pretend that things aren’t as precarious as they appear (they certainly are), but to remind ourselves that progress is still possible.
That feeling of cautious hopefulness was an unexpected dividend of reporting and writing my latest article for The Guardian, “Biden’s climate bill victory was hard won. Now, the real battle starts,” which was published this morning.
The story explores how the Biden administration is rolling out the $369 billion worth of new climate investments and tax incentives that were included in the Inflation Reduction Act (IRA), the landmark climate legislation that Biden signed into law in August.1 As the story shows, implementing the IRA efficiently, effectively, and equitably is a complex and daunting undertaking:
One of the first tasks facing the Biden administration is the design and execution of $270 billion worth of tax incentives affecting huge swathes of the U.S. economy. At the same time, it must begin distributing close to $100 billion in grants and other federal funds to cites, states, Tribal nations, companies, nonprofits, and local communities. It must do so quickly since many programs created or supplemented by the IRA include rigorous timelines, such as a new $27 billion greenhouse gas reduction fund, for which money must start going out the door no later than next February and be spent within two years.
And the administration must distribute all of this money and roll out all of this policy while simultaneously coordinating across dozens of different departments and agencies; minimizing waste and fraud; investing in risky and uncertain technologies; smoothing diplomatic wrinkles with international allies who object to the law’s manufacturing and sourcing requirements; meeting the expectations of climate organizations and advocacy groups whose support for the IRA was contingent on promoting environmental justice and protecting workers; and seeking to head off the inevitable attacks and investigations of congressional Republicans.
In fact, there are so many overlapping and intersecting challenges that I wasn’t able to talk about all of them in the article. One challenge that I ran out of space to cover in the story is investment risk.
The not-so-simple reality of a society-wide decarbonization effort is that getting financial incentives out the door on time, on target, and into the communities that need them most—a huge task in itself—will not single-handedly guarantee a just and sustainable clean-energy transition.
“The underlying assumption [of the IRA] is we’re on the right track, and if we do more of what we’re doing, we’ll make a big contribution to solving the U.S. part of the climate problem, maybe set an example for the world,” Charles F. Sabel, a professor of law and social science at Columbia Law School, told me. “Some of that is true. But the deeper benefit that comes from this kind of massive investment” would be the unlocking of new innovations and technologies that may not yet exist.
In many cases, the U.S. government is either uniquely capable of making these investments, or simply the only funder willing to do so. For instance, in the summer of 2009—the aftermath of the financial crisis, when private capital was still skittish and scarce—the Department of Energy (DOE) loaned Tesla, then an up-and-coming electric vehicle manufacturer, $465 million.2 That taxpayer-funded support helped Tesla grow into the most valuable car company in the world and (regrettably) made its founder even more money.
(Side note: The IRA includes some $11.7 billion in new funding for the DOE’s Loan Programs Office, which is the same program that fronted Tesla close to half a billion dollars in 2009.3 Having previously enjoyed significant federal support, last December Tesla CEO Elon Musk told Bloomberg that he was now opposed to energy subsidies, saying that the government should “get out of the way and not impede progress.”4 Since the passage of the IRA, Musk has already indicated that Tesla will ramp up production of its electric trucks and take other steps to capitalize on the law’s tax provisions.5)
Returning to the discussion of investment risk: In an essay for the Yale School of the Environment (and in their recent book, Fixing the Climate: Strategies for an Uncertain World), Sabel and David G. Victor, a professor of innovation and public policy at the University of California at San Diego, argue that truly exploiting the carbon-reducing, job-creating, and environmental justice-advancing potential of the IRA will demand a willingness from the Biden administration to make unproven and uncertain investments across the entire economy.6
Using IRA funds for “technologies that American companies already know how to deploy, such as solar farms, making buildings more efficient, and developing networks of electric vehicle charging systems...will undoubtedly bring down emissions faster,” Sabel and Victor write. “But deep decarbonization requires a transformation of the American economy that will demand a much more active effort to push the technological frontier and build new industries so emissions can be driven to zero.”7
Achieving that goal, however, will require the Biden administration to withstand the inevitable political blowback and manufactured pseudo-scandals that can follow investments that don’t pay off. (Think Solyndra—but with today’s Republican Party.8) Government agencies “operate in this environment where if you take risk and the risk doesn’t work, then you have investigations,” Victor told me. “And that environment is a much more noxious environment when you know the investigations are happening.”
A flood of those bad-faith GOP investigations feels closer and more imminent than ever. Climate advocates and activists are well aware of that. Yet the IRA’s vast potential, and the industrial momentum the law has already spurred, have nevertheless left many of them hopeful. And hope is a rare and valuable sentiment, particularly in the trenches of the climate movement.
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Speaking of hope, I hope you’ll read the full story here: “Biden’s climate bill victory was hard won. Now, the real battle starts.” Thanks to The Guardian’s Dominic Rushe and Betsy Reed, as well as the many folks who took the time to speak with me for this piece.
https://www.npr.org/2022/08/16/1117762225/biden-signs-inflation-reduction-act-into-law
https://techcrunch.com/2009/06/23/the-government-comes-through-for-tesla-with-a-465-million-loan-for-its-electric-sedan/
https://www.energy.gov/lpo/inflation-reduction-act-2022; https://www.investopedia.com/department-energy-loan-programs-office-6504004
https://www.bloomberg.com/news/articles/2021-12-07/musk-blasts-biden-s-infrastructure-bill-says-should-be-canned
https://www.bloomberg.com/news/articles/2022-10-12/tesla-semi-tsla-looks-like-a-bidenmobile-spurred-by-inflation-reduction-act; https://www.cnbc.com/2022/10/20/musk-tesla-expects-to-meet-inflation-reduction-act-requirements-for-tax-credits.html
https://press.princeton.edu/books/hardcover/9780691224558/fixing-the-climate
https://e360.yale.edu/features/biden-climate-bill-industrial-policy
https://www.eenews.net/articles/republicans-search-for-the-next-solyndra/