The passage of the Inflation Reduction Act of 2022 will long be remembered, but probably not for its effect on inflation. This $430 billion bill is intended to fight climate change, lower drug prices and raise some corporate taxes, with $369 billion of it going to support important climate and energy provisions.
Senate Majority Leader Chuck Schumer called this “the boldest climate package in U.S. history,” saying, “It will kick start the era of affordable clean energy in America. It’s a game changer, it’s a turning point, and it’s been a long time coming.”
Here are some things the bill will do, according to Politico:
• It will help more than triple the clean power production in the United States, adding up to 550 gigawatts of electricity from wind, solar and other clean power sources (according to the analysis from the American Clean Power Association).
• It will cut our net greenhouse gas emissions by 31-44% below 2005 levels in 2030 (according to Rhodium Group). That’s compared to a 24-35% drop expected from current policies.
• It will trigger investment, American job creation and innovation (according to John Podesta, founder of the liberal Center for American Progress, and Robbie Orvis, senior director of energy policy design at Energy Innovation, a non-partisan think tank).
• The bill focuses on incentives for oil companies to build their carbon capture and hydrogen businesses.
According to Scientific American, there are provisions in the act that environmentalists won’t like but that do help the fossil fuel industry. “There were guarantees for new oil and gas leases, and tax credits for carbon capture and sequestration. Notably absent was any requirement to actually reduce emissions.”
CNBC also reported on what’s in the 725-page bill. States will receive about $30 billion in grant and loan programs for electric utilities to advance the clean energy transition. For individuals, there’s a $7,500 tax credit to buy a new electric vehicle and a $4,000 credit for buying a used one. Both credits would only be available to lower and middle-income consumers.
A summary of the climate/energy portions of the Inflation Reduction Act claims it:
1. Lowers energy costs for Americans through policies that will lower prices at the pump and on electricity bills, help consumers afford technologies that will lower emissions and energy prices, and reduce costs that would otherwise be passed on to them.
2. Increases American energy security through policies to support energy reliability and cleaner production coupled with historic investments in American clean energy manufacturing to lessen our reliance on China, ensuring that the transition to a clean economy creates millions of American manufacturing jobs, and is powered by American-made clean technologies.
3. Invests in decarbonizing all sectors of the economy through targeted federal support of innovative climate solutions.
4. Focuses investments into disadvantaged communities to ensure that communities that are too often left behind will share in the benefits of the transition to a clean economy. It includes $1 billion for clean heavy-duty vehicles, like school and transit buses and garbage trucks.
5. Supports resilient rural communities by investing in farmers and forestland owners to be part of growing climate solutions. It also makes significant investments in clean energy development in rural communities.
We have to wonder how this will affect the Kansas oil and gas industry. We have to wonder how it will affect the economy and the price of filling a gas tank. We have to wonder if it will be the “landmark achievement” that Gregory Wetstone, president and CEO of American Council on Renewal Energy, said it is. But we do know that it includes some provisions intended to be helpful to fossil fuel producers.
Fossil fuels will someday become the dinosaurs of the energy industry, but rest assured they will be needed for many years to come.