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Breakdown of the Newly Passed Inflation Reduction

On August 16th, 2022, President Joe Biden signed H.R. 5376, more commonly referred to as the Inflation Reduction Act (IRA), into law. A new piece of legislation that Forbes has called “the most significant climate action legislation in U.S. history.” It is a comprehensive law meant to address both emission reductions and economic growth. Included in the law are measures to lower drug costs for those with Medicare, stabilize healthcare premiums for millions, and increased savings on power bills for most Americans. However, as this is the C Change newsletter, the emphasis of this article will be highlighting the parts of the bill aimed at broadening renewable energy and reducing total emissions.

There is a consensus that the IRA could cut U.S. emissions by 37-41% by 2030, according to Anand Gopal of Inside Climate News. This would swerve the U.S. back on track to reach net-zero emissions by 2050 per the Paris Agreement. Concessions were made to the fossil fuel industry to gain enough votes to pass the bill. Even still, this frightened Big Oil enough to fight to stop it. Along with influencing politicians, political advocacy groups were mobilized to fight against the bill. Namely the libertarian-affiliated group Americans for Prosperity which is funded by the Koch Family, notorious for their ties to the oil industry and politics.

With $386 billion dedicated to climate and energy spending, the package aims to slash pollution and provide new job opportunities in overburdened communities even without grants at the level that Democrats hoped. (although, it will still provide a record $60 billion in grants to assist these communities overburdened with pollution.) The law will also catalyze the transition to electric vehicles, penalize companies that release or flare methane, and would mark a significant increase in royalty rates for oil and gas development on federal land not seen for 100 years. New or expanded tax credits are also included to promote clean energy generation, electrification, green technology retrofits for homes and buildings, greater use of clean fuels, environmental conservation, and wider adoption of electric vehicles, among other purposes. Of course, green legislation this widespread wouldn’t have been able to be passed without concessions of some extent to get enough votes from fossil fuel aligned politicians. Some notable compromises made included the Federal Government offering tens of millions of acres offshore for oil and gas drilling. This was included as a prerequisite for a large increase in offshore wind energy development.

All in all, this is a huge step in legislation for renewable energy and emission and pollution reduction. Both at an industry scale and for you and I. Hopes are high going into this final quarter of 2022. New York Times Best-Selling Author and online educator, Hank Green, posted on Twitter; “I just got a text from a friend who works on energy policy in Montana saying the Inflation Reduction Act basically took their goals from impossible to achievable in one day.”