Yves here. The Democrats are desperate to promote the image that they’ve Done Something on climate change before the midterms, since young voters consider it (correctly) to be a high priority issue. Biden looked awfully emasculated by “President” Joe Manchin. So the much hyped climate bill was important to preserving Biden’s appearance of manhood.
We were skeptical of that even this weak 700+ page bill would get done due to its funding side depending heavily on negotiating drug price cuts, which we believe Big Pharma will fight tooth and nail. Oh, and Krysten Simema has yet to sign on, so it still may be a Team Dem fail on its own terms.
Readers pointed out that the usual trick of citing the headline spending amount, $433 billion over 10 years, masked the fact that $40ish billion a year is way too small to do much even if it were very well targeted.
This article has found that the bill’s green branding is overstated, by virtue of containing pork for some pet greenhouse gas generators.
By Aaron White, the North America editor of ourEconomy. You can follow him at @aaronwolfwhite. Originally published at openDemocracy
Last week, Joe Manchin, the West Virginia senator whose decisive vote in the evenly split upper house has led some to brand him ‘President Manchin’, and Senate Majority leader Chuck Schumer surprised even the most clued-in political junkies by announcing support for a climate bill that had been declared dead just several weeks before.
The 725-page legislation seemed a brief respite from a summer of extreme weather – a brutal heatwave and flooding across the US – as well as soaring inflation, a cost of living crisis and radical Supreme Court rulings that overturned abortion rights and limited the regulatory power of the Environmental Protection Agency.
Manchin, the top recipient in the US Congress of fossil fuel cash, had previously killed President Joe Biden’s more ambitious climate package. But there are signs that this time may be different.
For one, this is now Manchin’s package. He even named it the Inflation Reduction Act (extraordinary abbreviated to IRA).
It’s a far cry from Biden’s Build Back Better plan or the 2019 Green New Deal, the congressional resolution proposed by two Democrats, Massachusetts Senator Ed Markey and New York Representative Alexandria Ocasio-Cortez. The IRA includes nearly $370bn in clean (and dirty) energy as well as healthcare and tax provisions that will lower the costs of prescription drugs and implement a 15% corporate tax on large businesses.
But it has already been endorsed by key progressives in Congress, including Markey and Ocasio-Cortez. The IRA followed unprecedented sit-ins by congressional staffers demanding the party leadership reopen climate negotiations before departing Washington DC for the August recess.
Through tax credits and rebates, the IRA bill offers domestic green energy incentives, including the manufacture of electric vehicles, wind turbines, heat pumps and solar panels. It also includes a methane fee and establishes a national green bank, which would leverage private funding for green projects and unleash an estimated $290bn in further investment.
Democrats and climate experts claim the package will cut carbon emissions by 40% by 2030 compared to 2005 levels. Overall, the proposed legislation will make it more affordable for people to access clean technology.
But the full picture isn’t quite so rosy, or, in this case green.
Unlike last year’s Build Back Better package, the IRA actually incentivizes fossil fuel production. The bill that Manchin killed had the clean electricity program, which would penalize utilities that didn’t transition to renewable energy. The IRA bill’s ‘all of the above’ energy strategy invests in developments that will mean further greenhouse gas emissions. New solar and wind projects are contingent on approval for oil and gas leases on millions of acres of public land and waters. And there is a provision that locks in new drilling in the Gulf of Mexico and off the coast of Alaska. (Many climate groups are now mobilizing against these elements.)
Schumer has also agreed to support legislation that will make it easier to approve green energy as well as fossil fuels projects, such as the Mountain Valley Pipeline that Manchin desperately wants.
It’s no surprise then that the package was reportedly pushed and subsequently lauded by a diverse coalition of capital that includes Bill Gates and Exxon Mobil executives.
So, the IRA is a very dirty and risky trade-off, but one that Democrats will probably take.
This ostensibly ‘moderate’ approach of working alongside the fossil industry and even incentivizing production is radically destructive. It is in direct opposition to a recent report by the UN’s Intergovernmental Panel on Climate Change, which states that we need “immediate and deep emissions reductions” to keep global warming to 1.5°C.
‘Merica Loves Its Cars
In typical American fashion, the IRA bill is also into cars. Big ones. It includes billions of dollars worth of rebates for electric vehicles – $7,500 tax credit for a new purchase and $4,000 for used – and incentives for companies to manufacture and source vehicles, batteries and minerals in the US or in a country with a US free-trade agreement.
As Jael Holzman outlines in E&E News, which covers energy and environmental policy, this requirement will probably create major barriers to accessing the credit. “Minerals required to make market-ready EV batteries — lithium, cobalt, graphite and nickel — are primarily mined, refined and processed in China and Russia or in less adversarial nations like the Democratic Republic of Congo and Indonesia that aren’t parties to US free trade agreements,” she points out.
The bill even incentivizes the purchasing of larger electric vehicles such as trucks and SUVs, which are, as Aaron Gordon notes in Vice, “incredibly energy intensive”.
Notably, there is no mention or support for other modes of transport such as trains, electric bikes or even walking. So much for investing in the transition of urban and public spaces to be more green and enjoyable. The IRA bill is classic Americanah, but with a touch of green.
The proposed package has a paltry $1bn for energy and water efficiency in affordable housing. The communities most impacted by the climate crisis, the housing crisis and the cost of living crisis are abandoned once more at a time when Democrats are hemorrhaging working class support.
How About the Rest of the World?
It’s striking but not surprising that the US can annually approve, with bipartisan support, nearly $800bn in military spending, but not a climate finance plan for the most climate-vulnerable countries.
The US is responsible for the largest share of historical greenhouse gasemissions but Congress only approved $1bn in climate finance in this year’s spending bill. (Biden pledged to increase this to an annual $11.4bn by 2024 but this requires congressional approval.) The IRA is silent on global climate finance.
But it’s not just absence. The US Federal Reserve’s recent interest rate hike to combat inflation at home is exacerbating the global debt crisis in developing countries. This is making it even more difficult for those least responsible for and most directly impacted by the climate crisis to adapt to our rapidly warming planet.
But given the current composition and corruption of the US political system, the dire state of the planet, and the many many defeats of climate and social legislation, many progressives would have taken any serious climate investment. It is certainly true that this is the largest investment in renewable energy in US history, but that’s really not saying much.
Next time let’s hope it’s far bolder, just, global – and finally pisses off the fossil fuel industry.
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$4K off a 2yr old PHEV (did Hyundai/ Kia still offer battery replacement, back then?) Or replacing Toyota’s older technology battery for $1,200, yourself. Would have a LOT of my coworkers, suddenly trading in F450 & RAMs! Wonder, just how long it’ll take somebody to CRUSH this (or buy up lease/ rental fleets of EV & hybrids?)
So electric cars will increase in price by roughly $7500 so the carmakers can cash in on government money.
Oh, and Fox reports Manchin raised $6.1M after coming out with this bill. $65,000 came from donors within West Virginia. Nice gig if you can get it.
Even with the generous subsidies electric vehicles are out of reach for many Americans. Silicon Valley’s high paid techies love the freebies, however. There are Teslas everywhere.
$22K for a car you can power with ~$1K PV for the first 40mi. Or buying a Prius & replacing the battery, is indeed turning a lot of us goober’s into hippy eco-terrorist Bernie-bro tree-huggers? Guess, it’s a matter of perspective. But, speaking with my VERY Pennsyltucky StateFarm agent. Her hubby’s driving a re-batteried Toyota, with ridiculous miles on it, that now they’re considering a hybrid Nissan taxi or Kia?
The unchanged 2023 model liquid-battery-cooling Chevy Bolt base MSRP is down $5.9k to $26.6k explicitly because $7.5K earlier tax credit was exhausted. GM will likely make very few and those will have dealer junk added + “scarcity” to push price back up. There’s a “custom” option that might get a base model if you can get it past the stealership. Maybe.
Usually a Tesla goes by in the first 10 cars i see while walking the dog. Bolts much rarer.
Detail to see what’s actually in the bill:
https://www.evergreenaction.com/documents/The-Climate-Impact-of-the-IRA.pdf
Numerate estimates of bill’s impact:
https://repeatproject.org/docs/REPEAT_IRA_Prelminary_Report_2022-08-04.pdf
Why co-sign this weak sauce hand waving from some rando at “ourEconomy”? C’mon NC, you *were* at McK/GS/HBS…these broad characterizations and isolated scary data points would never have made their way onto any client-facing slides (not even the multiple appendices!). Imagine a source footnote citing “ourEconomy”…better to just say “McK Analaysis” right? You are capable of constructing or at least citing reasonable big-picture estimates but you repeatedly choose not to do so (eg tons of CO2 reduced). You can do better, and your readership deserves it! Thanks for all that you do.
Your comment violates two of our written site Policies. First, it is an assignment. On top of that, you missed that this is a finance blog, not an environment blog.
Second, your attack is also 100% ad hominem. You don’t raise a single concrete objection, save maybe that the author wrote a piece aimed for a broad audience, not subject matter experts.
Third, if we are playing the ad hominem/credentialism game, I see no reason to trust your source. It is funded by Evolve Energy, which in turn looks to be operating on behalf of what one might call “Big Greenwashing” interests. From its description:
One also has to wonder what sexual favors were exchanged to have Princeton depicted as a lead sponsor, when the URL does not go to princeton.edu, which you would expect if if were an actual Princeton initiative. The page also adopts Net Zero branding, when Net Zero has been attacked as a questionable methodology, particularly the basis for computing and verifying carbon offsets.
I trust you will find your happiness elsewhere on the Internet.
That bill just sounds appalling. President Manchin has got my vote to be named one of the four horsemen of the apocalypse.
He only got to be President with the help, cooperation and coordination of the entire Dem apparatus. If not him, it would have been someone else.
Agreed though that this is a dumpster fire (emitting greenhouse gasses.)
According to NRDC, the bill will result in 10%, not 40%, reduction in carbon emissions from 2005 level by 2030. The other 30% is already expected to happen.
https://www.nrdc.org/experts/manish-bapna/why-congress-must-pass-climate-bill
“From a climate perspective, this package will position the country to cut carbon pollution and other greenhouse gas emissions at least 40 percent, below 2005 levels, by 2030. Here’s the breakdown.
“NRDC’s early analysis shows that this package, once enacted, could cut emissions by roughly 10 percentage points. U.S. emissions are already down about 17 percent since 2005. Further declines were already expected to bring reductions to 30 percent by the end of this decade, due to existing state and federal policies and the improving economics of clean energy and vehicles.“
U.S. emissions are already down about 17 percent since 2005
I wonder what that number would have been sans pandemic
The Natural Resources Defense Council (NRDC) has long been a “captured” environmental group. I would accept much of what they say with a big grain of salt.
Captured by who?
Industry. In fact, the NRDC receives substantial funding from Fortune 500 corporations.
I would encourage you to read Naomi Klein’s “This Changes Everything: Capitalism vs The Climate”. She exposes most of the so called environmental groups for what they are. NRDC is one of them.
Don’t forget that the United States unilaterally moved the climate reduction goalposts.
Every other country measures carbon reductions based on 1990 emissions. The United States measures off of 2005 US emissions, a little less than 20% above 1990 emissions. When we boast about 20% reductions, we are saying that we are back to 1990. When we say we are reducing emissions 40% by 2030, we are saying that by 2030 the US will reduce carbon emissions by 20% compared to 1990 – a target that Germany hit in 2007. Absent the current carbon burning frenzy that the Ukraine war has spawned, The US is nearly a generation behind countries that take climate seriously.
When NRDC and other big-box environmental groups pimp phony US progress, they enable phony US climate policy.
I understand that emissions in 1990 was already high and Sir Obama wanted that as a base year so that they could brag about a higher reduction. Now we have 2005 year which these politicians love because it’s even more favorable!
The crooked politicians who enact a phony legislation such as this think they can escape the effects of global climate change. They don’t understand that they have nowhere to run to.
Perfect is the enemy of good. We can only hope that Congress folk learn that they can survive (politically) actions that help the planet to survive.
I don’t know so much that the “perfect is the enemy of the good”
but I do know that these guys are the enemy of the good…
It’s no surprise then that the package was reportedly pushed and subsequently lauded by a diverse coalition of capital that includes Bill Gates and Exxon Mobil executives.
Diverse coalition of capital… pretty much a monoculture up there in the dizzying heights of billionaire socialism…what, may I ask, do they not agree on?
but Diversity! just so long as it doesn’t apply to GMO monocropping and global supply chains dictated by the very diverse crowd of white guys on wall st.
I mean they don’t all drink dom perignon, some prefer Cristal…
https://www.bloomberg.com/news/articles/2016-12-02/the-10-best-ultra-luxury-champagnes-for-your-money
Oil and gas leases on public lands and waters is also an enemy of the good. You can’t get that land back once it’s drilled, not to how it was. Just for that I’d say shoot down this Machin monstrosity. The less our lands are jacked post-collapse, the better.
Watching every other street west of Broadway above W79th turn into pipeline ROW as DNC superdelegate apartment owners move their carbon-footprint 140 mi west, into Frackistan, by replacing fuel-oil with fracked methane boilers (without co-gen) is precisely what some of us predicted as Williams & Spectra helped greenwash our city with quick-to-kick, re-re-refracked wells; impossible to plug, leaking radium flavored fracking brine & exponentially worse amounts of methane each year, as annulars, cement-jobs & casing fails, as progressively worse kleptocrats try to bail-out Albright’s fracking Ponzi scheme.
That’s same phrase that Sir Obama used to push through his giveaway to the Health Insurance and related beneficiaries – OBAMACARE, How is that workin out?
I guess the Dems want to lose as much support as possible to say that the Repubs caused the greatest recession ever.
One thing certain…we now know who runs the economy… hint: it ain’t the majority of folks.
Seems like both parties are trying to start a mass movement antithetical to most peoples needs and in line with the big money.
Good reading on topic of Mass Movements – The True Believer Thoughts on the Nature of Mass Movements- Eric Hoffer – Copyright 1951.
You can be sure that the study has been much advanced and honed with IT to aide
I’m assuming that when MIT finally designs a way to effectively take CO2 out of the atmosphere there will be no problem funding that project. Interesting compromise on fossil fuel – Biden is going for the Caribbean and keeping Alaska – so I assume other licenses will be withheld for now. The freebies for electric vehicles is a good idea. The pharma negotiation sounds promising. And it was really interesting to read that one of the considerations for our procuring necessary natural resources now will be getting around restrictions between the two trading settlement blocks – “Obtaining credit.” I’m also pretty sure that if some smart guys get together and come up with a plan to divert the Mississippi, that’ll get done too. I actually see the first glimmerings of good sense coming out of Congress. I’ll try not to faint.
Greenhouse gas emissions isn’t the most pressing environmental issue to be dealt with. Loss of habitat, loss of bio-diversity, water, air, and ground pollution, hazardous wastes, all pose a greater threat to a viable planet. Manchin’s IRA bill is a form of deception that distract people from addressing the more serious issues associated with 8 billion people aspiring to achieve a middle class lifestyle. Electric vehicles are no panacea. Nor is solar and wind energy.
+10000
Habitat loss and the ensuing loss of biodiversity—other species—is the most pressing and critical problem.
Demographic growth is a taboo topic. But 8 billion people clamoring for a middle class lifestyle spell doom for every other species on the planet. Forests, chaparral, fisheries, oceans, biosphere—getting depleted by the second.
Another worst part:
They are giving tax credits for solar parts.
https://pv-magazine-usa.com/2022/07/29/clean-energy-manufacturing-support-in-inflation-reduction-act/
Exactly what China is accused of, subsidizing solar.
The problem with this design is, your subsidizing parts not production.
Why break out sub parts of a solar system, central inverters vs string inverters vs micro inverters. And module parts and racking parts?
The Germans did for a long time what’s called FIT. Feed in tariffs. You get X$ Per. kWh for X number of years. With this idea you get the best installs, why? Because since you are paid for production, only the best designs, locations etc will done.
Complicated to do? No.
And you are guaranteed X return over time. Right now especially for residential customers, there is no contract and it can and are being changed without warning and not in your favor.
This concept, of direct subsidizing was tried in the 80’s with solar thermal. And 10’s of thousands or more of systems were installed and NEVER worked at all or poorly because it was all about the subsidy.
And they have removed the carried ITC credit for multiple years, meaning only high dollar people will actually qualify.
Just a terribly designed bill
That said there are some good things but the bar is so damn low.
Oil and gas leases on “millions of acres of public land and water” sounds ecologically destructive.
Manufacturing of anything—including EVs—creates significant amounts of pollution. This was from 2019:
Maybe the Degrowth movement is the only feasible remedy.
There are trade offs with that though. Electric vehicles have fewer parts and far fewer moving parts. Aside from the battery and normal wear items (brakes), the longevity of an electric vehicle over ICE is substantial. Maintenance costs will tend to be lower over vehicle life as well.
The longevity of Evs remains to be seen. There are plenty of Toyota and Honda gasoline powered vehicles on the road for 20-30 years.
This emphasis on EV’s is a good idea except that the electrical grid will have to grow to feed the EV’s – more power plants which will use fossil fuels belching more CO2. The one thing that will make sense is if we could remove CO2 from the power plant stacks just like we’ve done with SO2 emissions.
If we could provide tax benefits or subsidies for use of public transportation and build more mass transportation (trains and subways) in cities it will go a long way. We could also provide incentives for saving fuel.
Well we cut a lot of emissions over the last 30 years by shipping the dirty work overseas, which puts us in the enviable position of complaining that China and India aren’t doing enough. I assumed it was bad legislation but I appreciate the breakdown of it.
In the face of massive dislocation we’re still hung up on subsidies and weird attempts to nudge the “market”. If we really want to address climate / environment, declare it national security and use 50% of DoD’s yearly budget to restore and improve infrastructure, install renewables and upgrade fossil systems as needed, etc. etc. etc. This is just money to be skimmed by someone.
It’s odd that we want to rule the world, but only in a slumlord sort of way. The US we pretend to be would address global grain shortages by supplying the world and upping supply. It would invest heavily in climate / environmental improvements abroad. I don’t know if we can’t or won’t but anymore I figure it doesn’t matter.
Can. Won’t. I actually think that distinction does matter.
We have off shored a lot of “dirty” manufacturing to China and India and we point a finger at them for their not reducing emissions but little do the people in this country know that for all the off shoring we have not commensurately reduced our own emissions.
Tax credits mostly help the manufacturers and are a poor public policy vehicle. When the credits expire, the demand fizzes out!
The nation’s big corporations are slumlords and so is our nation!
We did not choose to ship our dirty work overseas. The Free Trade Supporters in power chose to do that to us. Millions of American thingmakers did not ask to be permanently disemployed.
I remember reading years ago an article in either Foreign Affairs or Foreign Policy ( its been so long I don’t remember which) by a Professor Economides ( is that name ironic or appropriate or what) which mentioned among other things that a unit of thingmaking production in China costs the emission of twice as much carbon as what that unit of thingmaking in America had used to cost. So since America was and still could be more carbon-emissions-efficient at making things than China was and is, we could reduce global net-net carbon emissions by reclaiming and bringing home all our industry held hostage in China.
But that could only work if we resigned from the Free Trade system and all its agreements and organizations and so forth, so we could reclaim the national economic sovereignty to legally reject and forbid Chinese carbon-dumping imports into our country which would be intended to underprice our own thingmaking in order to destroy it and keep outputting twice the carbon in China so as to keep us as China’s captive market. ( And same for India).
Outsourcing, offshoring and Free Trade are major causes of global warming, and we-the-people did not ask for these things nor did “we” offshore anything. Our hostile Free Trade rulers did that to us. So I feel precisely zero percent of the “guilt” for shipping our dirty work overseas, because that work was done cleaner here than it is now done overseas, and “we” ( or should I say “us”) never asked to ship it overseas to begin with.
We cannot target specific areas of our system. We cannot mold or shape our system to make it “green” or “sustainable.” This is the humanist fantasy that we are in control. Carbon emissions are only a part of the story. There are a dozen other parameters that are totally out of wack. Our “civilization” is a runaway train. We are not in control. Our only hope is a massive demographic collapse (which is underway). The system as a whole must undergo massive contraction.
“The system as a whole must undergo massive contraction.” Will undergo massive contraction. Fixed it!
Kim Stanley Robinson strongly disagrees with you.
Michael Hudson, Matt Taibbi and early on Thomas Frank have all spelled it out very clearly. The Democratic pols since the Clinton 90s see their job as killing any and all incremental reform of the rampant financial and environmental corruption that the 2 party duopoly creates. Meanwhile, the R’s openly advocate for Kleptocracy, gun killings, racism and American Taliban style treatment of women, gays, non-whites etc. unopposed (except via empty words) by the Dimmies and the “Overton Window” (clumsy as that is conceptually) continually moves right year after year. The Saker had an outstanding interview with Michael Hudson 2 days ago in which he spells out the preceding, link at https://thesaker.is/the-saker-interviews-michael-hudson-6/, I knew when the little National Propaganda Radio stenographers reported a “reform” linked to Mansion a few days before that that this is exactly the flaming bag of excrement that’d be dumped on the public’s door to look like “Oh, 18 months into Biden’s term we’re DOING something”!! I knew that either NC or The Jacobin would reveal the grisly details so thank you Yves and all for sharing this.
When will people accept that climate change is inevitable? If China is going to build 150 coal plants in the next 5 years and China at present is responsible for 31% of CO2 emissions what is the point? China plans on INCREASING emissions and CO2 emissions don’t stop at national borders. The U.S, Europe, and India together equal the CO2 emissions of China. Furthermore is Saudi Arabia going to stop selling oil? Are oil companies willing to lose business? Or the travel industry? How about agribusiness? Is Australia going to stop selling coal? The so called U.S. Green New Deal is just more pretend feel good nonsense.
I have yet to read anything that takes into account the magnitude of solutions that would be necessary in world freezing emissions much less reducing them.
The US emits far more carbons per capita than China. China also manufactures 40% of the world’s goods. I’d say that’s pretty impressive.
Their population will also be significantly reduced over the next 80 years. Funny you didn’t mention those facts.
Your comment is a violation of our written site Policies. We are strict about using valid forms of argumentation. You used a logically invalid strategy to finesse the fact that you can’t dispute Mike’s argument. You then doubled down by getting nasty.
From Wikipedia:
https://en.wikipedia.org/wiki/Whataboutism
I trust you will find your happiness elsewhere on the Internet.
Another example of an intractable problem that people don’t really want to solve – just have as an excuse to raise funds, campaign and spend money on favored constituents.
Human intelligence is proving to be a lethal mutation.
It’s the lack of wisdom that is the crux of the problem.
Here is an intelligent human named Oren Lyons giving a talk on the general subject of survival or not.
Is he not a human? Is he not intelligent?
Human intelligence is not the problem. WesterModern industrial growthism is the problem.
https://www.youtube.com/watch?v=po6urawfqzQ
For those interested, there is a free webinar next Tuesday Aug 9 that uses the EN-ROADS simulator to quantify the plausible impacts of this legislation on global emissions (hah!) Free registration here for 7:am EDT or here for 2 pm EDT, nominally 1 hour long. Links will reset time to your zone. Past ones have been worthwhile.
i email a weekly environmental news synopsis to 15 activists in OH, WV, & IL…here’s my opening comment last Sunday:
From the article: “It’s striking but not surprising that the US can annually approve, with bipartisan support, nearly $800bn in military spending, but not a climate finance plan…”Nearly every member of the “so-called” Progressive Caucus votes in favor of the massive military budget (every stinking Democratic in the House and Senate voted for the, again, massive military spending going in “BLIND” support for Ukraine), but spend to save the planet: HELL NO! Vote Blue No Matter Who, never again (personally, I stopped in 2016, and so should you).
Some thoughts on this article
1. My neighbour hates his Tesla. In a typical 250 mile drive he says it needed so many stops for a recharge and the car’s software is very picky on where to get the recharge! Electric incentives aside, this is still a new tech
2. Take what you can get: In a democracy with so much diversity there will be miriad of interests asking for their pound of flesh! This bill at least points the “car” in the right direction: of a green future
3 From Pelosi’s Taiwan visit it is evident that the ruling class see America as an empire ( for “good” in their mind, exceptional) and that is why large defence spending still is funded. To keep this world view of America alive.
warranted or not. this is not a military industrial complex but world view enables the complex to thrive
The abortion vote in Kansas also shows America is run on principles and lobbying and subsidies to certain industries or lack of is based on this principle.
The principles, in my view are
1. Capatalism is king
2. America is exceptional and has the final say in the world
3 Democracy is vital
4 Judeo Christian world view largely but other faiths are welcome in America
5 Abortion should be legal
6 Shift to green ok without personal sacrifices