Perspectives on the Inflation Reduction Act
By: Robert Marino | TCAT’s Director of Green Infrastructure
What is the Inflation Reduction Act?
The Inflation Reduction Act (IRA) is a bill that is estimated to help the US reduce carbon emissions by 40% over 2005 levels by 2030 and keep 24 tons of carbon emissions out of the air for every ton the bill creates.
Why is it called the Inflation Reduction Act? Inflation simply means that prices are going up, or are getting “inflated.” It is called the IRA because, at least on paper, the bill will generate more revenue for the government than it spends, hopefully causing prices to stop going up. It generates revenues by imposing a 15% minimum tax rate on corporations. However, because the Federal Reserve (the Federal Reserve, or “the Fed” is like the Central Bank of the US Government) has a large influence on inflation, and is not affected by the IRA, there might not be a significant drop in inflation, at least not right away. The tax provisions in the IRA are expected to generate $450 billion over 10 years.
The IRA lowers health insurance premiums for people using the Affordable Care Act (aka Obamacare), and caps out-of-pocket drug prices for people using Medicare. It also, finally, gives the government the right to negotiate some prescription drug prices for Medicare, something that has already cost taxpayers billions of dollars in free money giveaways for giant pharmaceutical corporations. This alone will save almost $300 billion over 10 years.
Why is the IRA being called a climate bill?
There is about $369 billion dollars of spending over 10 years on things that can reduce the climate crisis. Please note that this bill is over 700 pages long, so this is the briefest of summaries. For a more detailed breakout of the bill go here, for a funny and informative video go here, for a climate justice perspective go here, for carbon reduction pathways go here, and for the bill itself, go here. There is $214 billion for electricity (this includes a $30 billion dollar tax incentive for nuclear, important for Washington as two reactors are planned for the State), $66 billion for manufacturing, $48 billion for buildings, $33 billion for transportation, $21 billion for lands and resilience, $21 billion for agriculture, and $575 million for water. For more on the implications for Washington State check out this article from the Seattle Times.
Does the IRA center Black Indigenous People of Color and other frontline communities and redress environmental (in)justice?
No. There is about $45-$60 billion in the bill that could address environmental justice and frontline communities, but there are few guarantees. Does the IRA increase fossil fuel production? Yes. It does so by requiring that over 600 million acres of additional federal lands and waters be made available for fossil fuel leasing if renewable energy is going to be developed on federal lands. These lands and waters, whether in the Gulf South or Alaska are shared by communities who bear the brunt of fossil fuel corporations’ extractive, poisonous methods. This means peoples’ health will suffer as toxic pollution is absorbed by the land, water, and air from dirty fossil fuel extraction and processing.
Let me close by directing you to Rhiana Gunn-Wright, the Director of Climate Policy at the Roosevelt Institute, a key author of the Green New Deal, a Black woman, and mother. She writes on Twitter:
“I’ve been asked to give my take on IRA so here it is: the bill contains some very good, very needed investments: in renewable energy, in a green bank, in electrifying key tech in homes, in credits for EV purchases, etc. It also weds those investments to very major harms.
Whether that’s fossil fuel leases or the mountain valley pipeline or permitting reform or technologies that directly and indirectly harm frontline communities or tech that will likely be exploited to prolong our dependence in fossil fuels – the list of bad things is long.
And just as important as those discrete bad things is the fact that it helps lock-in a dependence on cars, a dependence on environmental racism, and a dependence on extractive industries that does very little to move us towards a more just economy with new balances of power which is a big part of what we need to decarbonize and fuel a larger public appetite for climate action. And quite frankly as a black woman currently holding my sleeping black child, I simply cannot say that another bill that treats black, brown, and indigenous lives again as the price of admission for domestic, political progress is something where the good outweighs the bad. That may be the case in terms of emissions reductions but *i* cannot make those words come out of *my* lips.
What I can offer is what I see as the facts: -this bill contains investments that will help decarbonize and, in doing so, save some lives. -those investments come at tremendous, racist costs, the full scope of which we don’t yet know but could very likely take some lives. And yet this is the only major climate legislation in front of us at what is likely the last opportunity to pass major climate legislation for the foreseeable political future. It’s all very…American.”