October 3, 2022

Editor’s note, August 7: This story was originally published on July 28, 2022, and has been updated to reflect the Senate’s passage of the Inflation Reduction Act.

Congress has overcome its biggest hurdle to finally pass historic climate legislation. After nearly 18 months of bargaining and 15 in a row After hours of voting over the weekend, Senate Democrats passed the Inflation Cut Act on the basis of a rigorous partisan vote on Sunday.

The bill contains $369 billion to fund clean energy and tax credits for electric vehicles, domestic manufacture of batteries and solar panels, and pollution reduction. It is the single most important step the United States has ever taken to combat the climate crisis. It is, arguably, one of the largest individual investments ever made in climate in the world.

If the bill’s policies work as intended, they will push American consumers and industry away from dependence on fossil fuels, penalize fossil fuel companies for excess methane emissions, and inject money to clean up pollution.

The bill uses tax credits to incentivize consumers to buy electric cars, electric HVAC systems and other forms of clean technology, which reduces emissions from cars and electricity generation, and includes incentives for companies to manufacture that technology in the United States. It also includes funds for a range of other climate priorities, such as investing in forest and coastal restoration and resilient agriculture.

These investments, spread out over the next decade, are likely to reduce pollution by about 40 percent below 2005 levels by 2030, according to three separate analyzes by economic designers at rhodium groupAnd the Energy innovationAnd the Princeton University. The legislation helps bring the United States a little closer to its stated goal of halving pollution within a decade.

The main components of climate change in Inflation Reduction Act It looks surprisingly similar to the version passed by the House last fall, a measure widely celebrated by climate activists – although smaller than 2 trillion dollars Imagine Biden once upon a time. To win the support of Senator Joe Manchin (D-WV), Democrats added provisions that remove roadblocks for some fossil fuel projects and force the Department of the Interior to make more offshore oil lease sales. The Senate will also consider a separate bill that would speed up permitting for energy infrastructure, removing an obstacle to Mountain Valley Pipeline To transport fracked gas 300 miles through West Virginia.

The Inflation Control Act extends the end of solar and wind energy subsidies by 10 years to help promote clean electricity on the grid.
Andrew Caballero Reynolds/AFP via Getty Images

Even with these concessions, a climate agreement that preserves tens of billions of dollars for clean energy and cleanup pollution would have been unimaginable just weeks ago.

A “complete game changer” for the climate was what Leah Stokes, the political scientist at the University of California, Santa Barbara, who advised Democrats on the reconciliation package, coined.

Most Inflation Control Act investments target climate change

There is a lot that the law does that is not related to climate change. there Finance To the Affordable Care Act and Prescription drug repair. It also sets minimum corporate taxes – one of the ways the bill helps tackle inflation. But this is arguably a climate bill, with climate initiatives making up the bulk of the bill’s investments.

The deal retains most of the House Building Better Act’s major programs, including consumer tax credits for solar panels and electric vehicles and funding for domestic clean energy manufacturing.

Clean energy and electric vehicles: There is a large mix of tax credits aimed at lowering the costs of solar, wind, batteries, automobiles, heat pumps and other clean technologies. The idea is to drive as much renewable development as possible into the most polluting parts of the economy: transportation and electricity generation.

One type of tax credit might target clean energy companies to spread more solar, wind and battery power on the grid, extending the existing credits by another 10 years.

The second type seeks to increase consumption of renewable energy, and to provide incentives for Americans to install heat pumps, adopt solar energy, and buy electric cars.

In electric cars, for example, consumers will get $7,500 for each new vehicle and about $4,000 for a used one through 2032, but with some new restrictions on where batteries are manufactured and income limits (explored in detail on Twitter by Bloomberg’s Tom Randall).

Some of these programs specifically help low-income people, such as the $9 billion Home Energy Discount Program to focus on retrofits and electrification of home appliances; An additional $1 billion helps make public housing more energy efficient.

The bill also allocates $27 billion to create the National Green Bank, a program that would help increase private financing for clean projects, including in low-income communities.

Fossil fuels: The bill has taken some steps toward the second most problematic climate pollutant, methane. methane 86 times stronger A greenhouse gas more than carbon over a 20-year period, it’s also an incredibly leaky gas that is emitted at any point in oil and gas production – wellhead drilling, compressor stations, LNG plants. For the first time, Congress is placing some industry-wide restrictions on methane leaks. Oil and gas companies that emit above a certain level of methane in all operations charge fees that escalate over time. There is also a new royalty fee on all methane extracted from public lands, including the common practice of venting and burning. To implement all of this, there is additional methane leak monitoring funding for oil operators and the Environmental Protection Agency.

There are some changes in the fees the oil industry pays for the production of public land and water as well. The bill raises royalty rates for the oil industry and raises minimum bids (from $2 per acre to $10). However, the environmental group’s Western Priorities Center noted that the bill also includes some new incentives for oil leasing, such as requiring the Department of the Interior to expand its offshore oil offerings.

In exchange for his support, Senator Joe Manchin secured language that would boost offshore oil lease sales and allow speed for gas pipelines.
Tom Williams/CQ-Roll Call, Inc via Getty Images

Pollution Reduction and Environmental Justice: There are $60 billion for global environmental justice priorities: $15 billion of this funding goes to a range of priorities such as clean energy and reducing emissions specifically for low-income and disadvantaged communities. Community groups, governments, and tribes could also qualify for $3 billion in pooled grants for programs like cleaning up abandoned mines, monitoring air quality, and improving resilience to severe weather. The bill includes $3 billion to restore and reconnect communities divided by highways.

industrial pollution: At the moment, the industry is the industry of the United States The third most polluting sectorAfter transportation and power. By 2030, the sector may be the most polluted. While cleaner cars and renewable energy sources are off-the-shelf technologies that must be adopted on a larger scale to make these sectors cleaner, heavy industry is still dependent on fossil fuels due to the high heat required to produce the raw materials. So the bill helps in this sector by stimulating energy efficiency in industrial sites to reduce their footprint.

Domestic clean energy manufacturing: There is another $60 billion in incentives and financing to boost domestic manufacturing of clean energy technologies.

Most of these incentives will go to speed up manufacturing in the United States of solar panels, wind turbines, batteries, and critical metals, and to help build the facilities that would make electric cars.

The inclusion of $500 million for heat pumps and critical minerals is novel, providing funding for Biden’s use of the Defense Authorization Act to boost manufacturing for energy-efficient technology.

Jason Walsh, executive director of the BlueGreen Alliance that focuses on the environment and business, explained why local manufacturing of batteries, solar and offshore wind is important. These are big investments, and they are risky investments. And if we expect manufacturers to make it in the US, they’ll need some long-term policy certainty and support.

The bigger picture of climate action in the United States

The news of climate returning to the table came as a relief to defenders who spent 18 months fighting for the climate agreement to be passed.

Without any new action from Congress or the President, the economic designers in rhodium group He estimated that climate emissions are on course to be, by 2030, between 24 and 35 percent lower than they were in 2005, the year of peak carbon emissions. That’s not much, even if it seems like it: Biden set a target under the Paris climate agreement to cut 2005 levels in half by the end of the decade.

The Inflation Reduction Act does not necessarily get the United States there. Federal regulations for power plants, automobile pollution, and methane will remain important to make up for the rest of this gap.

However, this is far from the bleak picture when it appeared that Biden would have a few limited regulatory options to tackle climate change. While Biden has faced pressure from the left to declare a climate emergency, his powers and lasting influence will be far more limited than what Congress can do.

Although incomplete, Democrats have hailed the bill as a major step forward in combating the climate crisis. Senator Brian Schatz (Democrat from Hay) last week Call It is “historic and only down payment”. On Sunday, Schats left the Senate chamber in tears, he reported The New York Times. “Now I can look my kids in the eyes and say we’re doing something about the climate,” he said.

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