Why we need the Inflation Reduction Act

WWF's Marcene Mitchell on the path to reaching US climate goals

Solar panels stretch across a field as the sun sets

Update

On August 6th, the Inflation Reduction Act of 2022 passed the US Senate. The bill now moves on to the US House of Representatives for a vote. If confirmed, it will then pass on to President Biden for his signature and passage into law.

I was in a meeting with my staff mourning the tenuous future of U.S. Climate action when I heard about the Inflation Reduction Act of 2022. With the chances of reconciliation seemingly slim to none, and the West Virginia v. EPA decision weighing down the ability of the Executive Branch to act, things seemed particularly grim. The reports broke about the climate deal brokered as part of the Senate reconciliation package, and the mood change was palpable as the ramifications sunk in. Democrats had agreed upon a Bill that could clear the U.S. Senate. It offers up more than $350 billion in historic investments that would set the United States on a solid path towards reaching its climate goals.

Among the most important provisions are the $9 billion in consumer home energy rebates. This includes 10 years of tax credits aimed at allowing American homes to run on more energy efficient and clean systems, which will save them money. Second, are the extension of the EV tax credits to help Americans transition to cleaner cars. There is also over $60 billion supporting onshore clean energy manufacturing, including tax credits for clean technology manufacturing facilities, tax credits to support the development of sustainable aviation fuel. $30 billion is targeted to grants and loans to the states and electric utilities so they can accelerate their transition to clean generating capacity. There is $6 billion to support an Advanced Industrial Facilities Deployment Program to address emissions from hard-to-decarbonize facilities in the chemical, steel and cement industries.

In other words, this Bill gets at the root cause of climate change – carbon emissions from burning fossil fuels– and offers significant resources addressing those emissions in American businesses, on our roads, in our communities. The Bill also recognizes the role that nature plays in responding to the climate crisis. It includes $20 billion for climate-smart agriculture, $5 billion to support response to wildfire and forest management, and $2.6 billion to bolster coastal areas and habitats that are being impacted by climate change. It also includes significant support for communities that are being harmed first and worst by carbon emissions and climate change. The package includes over $60 billion in support for communities facing environmental justice issues.

As much as this bill offers a lot to be optimistic about, legislation like this is only the beginning of the journey to address the climate crisis. The Bill provides potentially transformational resources to help decarbonize the economy, but it is up to all of us – our businesses, our communities, our institutions, our state and local governments – to actually do the work of becoming being more energy efficient and reducing emissions in our day-to-day operations.

The Bill also doesn’t get us all the way there – most of the analyses of the provisions in the Bill indicate that the best- case scenarios are that the investments made by the legislation will result in reducing emissions by around 40% by 2030. This is not enough to limit global warming to 1.5 degrees Celsius, which is what the science says needs to be the goal if we’re going to avoid the worst impacts of climate change. There are also concerns that some of the concessions that are made to oil and gas production will end up hampering progress rather than promoting it.

Not to be ignored is the matter of garnering sufficient support for a Bill that raises taxes on some of the nation’s largest businesses (those that are worth a billion dollars or more) in order to pay for these climate investments. While there are business leaders who have indicated their support, other members of the business community have withheld their support on the grounds that they cannot advocate for a tax increase.

Here’s the thing – climate change is a “pay now or pay later” proposition. Businesses who think that we can continue to postpone federal climate action in order to avoid any responsibility for its cost have not been paying attention to the costs we are already bearing. With the rising number of billion-dollar climate disasters every year, rising fossil fuel prices and increasing supply chain issues, anyone who thinks that market conditions will not worsen as global temperatures continue to rise is kidding themselves.

Businesses are already losing money because of climate change. Given the choice between paying a defined tax increase whose proceeds will be used to improve the economic environment and slow the advancement of climate impacts or continuing to absorb the runaway increases in costs and ongoing market volatility created by worsening climate impacts, the choice shouldn’t be that hard.

This Bill may not be perfect, but it’s the best thing to come along in a long time and is certainly massively better than nothing at all. That’s why WWF is urging Congress to pass the Inflation Reduction Act of 2022 immediately, and for all of us to put our shoulders to the wheel to implement the emissions reductions it supports. Climate change won’t wait, and we can’t afford to either.

Marcene Mitchell is the Senior Vice President, Climate Change for WWF-US