Among the first things you likely heard about the Inflation Reduction Act was its size.
The bill, signed into law by President Biden on Tuesday, makes $369 billion in climate and energy investments — by far the largest such investment in American history. Its many supporters have called it “transformational” and a “game changer.”
But there are several ways to measure the size of a bill, and given how high the country’s emissions targets are, even many of the I.R.A.’s supporters will openly concede that it is, on its own, inadequate. With overall investments of $437 billion, it is just one-fortieth of the size of Senator Bernie Sanders’s $16 trillion Green New Deal campaign package, one-twentieth of the size of Jay Inslee’s $9 trillion proposal and less than one-third of the size of Biden’s Build Back Better Act, which passed Congress last fall. Adjusted for inflation, the clean energy provisions of the I.R.A. are only about three times the size of the clean energy spending tucked into President Barack Obama’s Recovery Act of 2009, and less than half the total size of the bipartisan infrastructure bill passed last fall. In fact, the infrastructure bill spent about half as much on climate and clean energy provisions as this one does, though it focused on long-term research and development rather than cutting emissions today.
But at the risk of playing Pollyanna, I think it is also possible to see the size of the bill — its relative smallness — as at least a mark of good news. A bigger expenditure would have achieved more, of course. But emissions trajectories are not narrowly a matter of public policy, and the broader economic and cultural landscape is so different now than it was just a few years ago that public investments of even this somewhat smaller scale appear poised to make an enormous difference.
That’s because those public investments are being made not against dirty-energy headwinds but with the support of much broader tailwinds — and pretty intense ones. Thanks to technological change and the plunging cost of renewables, a growing political and cultural focus on decarbonization and increasing awareness of the public health costs of pollution and market trends for things like electric vehicles and heat pumps, it’s genuinely a whole new world out there. Not that long ago, the upfront cost of a green transition looked almost incalculably large. Today it seems plausible that quite dramatic emissions gains can be achieved for just, say, $369 billion — with an estimated payoff of nine million new American jobs, to boot. The average American household might pay $1,800 less a year for energy, too.
This year, global investments in clean energy are expected to exceed those in fossil fuels; in the United States, investments in clean tech have roughly quadrupled since 2017. For 90 percent of the world, clean energy is now cheaper than dirty alternatives, and while countries like Spain are boasting about more than tripling solar power capacity by 2030, in Texas, solar output has grown 39-fold in just six years. Globally, renewable output has grown fourfold in the past decade. Ten years ago, when the United States endeavored to tackle the problem of climate change, it tried to do so largely by punishing the cost of dirty energy with a cap-and-trade system. This time, it’s giving a kick-start, or a boost of momentum, to an already ongoing green transition.
In the weeks since Senator Joe Manchin of West Virginia first announced his reversal and brandished the basic text of his proposed compromise, this strategic choice of carrots rather than sticks has received some deserved praise: It’s better and more popular to subsidize cheap, clean energy than it is to make the bad stuff more expensive. Sticks could be useful too, of course, since it is ultimately how much carbon we put into the atmosphere and not how much solar power we produce that determines the future of warming. But the power of carrots also just reflects some new realities: To simplify radically, a 90 percent reduction in the cost of solar power over the last decade means that the same amount of money now goes ten times as far.
Each of the three major analyses of the new law — by Energy Innovation, Rhodium Group and Princeton’s REPEAT Project — take slightly different approaches and make slightly different assumptions (about how quickly carbon capture technology might scale, for instance, or how much friction could slow down wind and solar build-out). But the three models make projections almost in unison: about 40 percent reductions in American emissions, compared to a baseline of 2005 levels, cutting about a billion tons a year in carbon by 2030. This is just a little more than halfway from where we are to where we’ve promised to be, which means that much more could have been done — and that even though the bill represents massive progress that was improbable-seeming just a few weeks ago, it also marks a significant shortfall.
The models may ultimately prove optimistic, given the complications of infrastructure build-out: “It can take more than a decade to build an interstate transmission line to connect renewable energy generation to major metropolitan areas,” Benjamin Storrow writes in Politico Pro. “Yet most models assume many of these projects will be built by 2030.” And it is fair to wonder about the uncertain economics of some of the bill’s technological bets, like carbon capture and storage, which could allow emissions from industry and power generation to be trapped and sequestered, and which some climate activists and environmental justice advocates distrust. Robert Bullard of Texas Southern calls it “unproven,” and Elizabeth Yeampierre of UPROSE calls it a “false solution.”
Jesse Jenkins, who leads the REPEAT Project, says he believes that the tech problems of C.C.S. have been solved and that, with tax credits, the bill will address its cost problem, leading to a dramatic scale-up in use. Julio Friedmann, a former Obama-era Energy Department official turned carbon removal advocate, says that a rapid scale-up of C.C.S. would be, while miraculous, also plausible.
CarbonPlan’s Danny Cullenward is less sure. The co-author, with David Victor, of “Making Climate Policy Work,” Cullenward says he’s broadly enthusiastic about the new law and believes that C.C.S. could play a significant role in the country’s decarbonization future. But, he asks, “What happens if we throw a whole bunch of money in subsidies into fossil-adjacent infrastructure? What do we lock in? What happens? Who builds what? You can tell a story where that goes well, and you could tell a story where that goes poorly. And the difference between those stories is administrative capacity and regulation that guides the massive amounts of money that are coming out of the federal government.”
With the I.R.A. now signed into law, debate among climate activists and technocrats will move to the permitting reform measures that formed a “side deal” to the major bill — a foreshadow of future fights at the state and local level about, among other things, C.C.S. infrastructure. And fights like these will invariably shape the ultimate impact of the bill. But even Jenkins’s bullish C.C.S. projections make up less than a quarter of the bill’s projected reductions. And the fact that this much climate progress appears even remotely possible for less than the annualized budget of the State Department, as Ben Dreyfuss recently put it, is a remarkable reflection of the state of green energy today, even without the new law. When it comes to emissions, we are no longer fighting an uphill battle, at least in the United States and many other countries like it. We are deciding how quickly to race downhill.
That speed really matters; as the writer and activist Bill McKibben put it, when it comes to warming, “winning slowly is the same as losing.” Simply moving in the right direction isn’t enough, and too much time has been squandered — within the United States and globally — to avoid what was once described as a catastrophic climate future.
But it is nevertheless better to be moving too slowly than not at all. And that direction of change both predates this bill and undergirds it. The headline projection of the I.R.A. impact appears, if inadequate by the standards of the Paris agreement, nevertheless impressive: a 40 percent reduction in just eight years. But already today the United States has reduced emissions 20 percent from 2005 levels, and was projected to reduce them further even without the benefit of the I.R.A. As recently as a few weeks ago, before the bill was revived, it might have felt like the United States was permanently stalled on climate action, but in fact the country was already moving to decarbonize, if not fast enough.
And it still isn’t moving fast enough, even trusting the optimistic models. A “fair share” analysis suggests the United States — today the world’s second largest emitter, and historically the largest by far — should be moving faster than any nation in the world. Instead, it is struggling to stay within reach of countries like Britain, which has already almost halved its emissions since 1990. If the United States achieves that 40 percent reduction, that’s still well short of the country’s target of a 50-52 percent reduction by 2030. The gap may seem relatively small, but it represents more than half a billion tons of carbon each year. That’s a lot.
To listen to the law’s supporters, though, it may be possible to close that gap even in the absence of major future climate legislation. As I wrote when it was first announced, the I.R.A. is a compromise, obviously and outwardly, tying new leases for wind power development to new ones for oil and gas, only moderately reducing the country’s demand for oil and gas over the next decade and investing less in environmental justice measures than Biden himself promised not too long ago. (Not to mention the “side deal” on permitting reform for pipelines and other infrastructure, which will likely produce the next big fight between climate activists and energy establishmentarians.)
But its basic bet — that many of these markets and technologies are close enough to tipping points that relatively small public support can get them racing toward inevitability — also means the ultimate impacts could be larger and far-reaching. The effects on prices and markets could make state and local action cheaper and easier, and even federal regulation more palatable, for instance. (In fact, the bill includes some unheralded provisions to help retire coal power more quickly, as Keane Bhatt, the policy director for the Progressive Caucus, has pointed out, as well as an under-discussed “stick” in the form of a fee for methane.)
The impact of its “green bank” and Energy Department loans could be quite large — some estimates have suggested they could run into the hundreds of billions, and the $27 billion handed to the Green Bank could catalyze ten times as much private capital. And because much of the I.R.A.’s top-line “investment” comes in the form of tax credits, its outlays — and impacts — could ultimately grow substantially if certain sectors (wind, solar and C.C.S., for instance) really do take off. This might not ultimately be just a $369 billion package, in other words, but something quite a bit bigger. Enough to get us to 50 percent by 2030? “I think we have a pretty good chance,” Jenkins says.
Personally, I’m more skeptical the country will hit those higher benchmarks, given how much would need to get done — and how right a million different things would have to go — on an extraordinarily tight timeline. But it is striking that, given where we were not that long ago, such a proposition seems credible at all. Here’s hoping.
Things to Read
Since Manchin first unveiled what became the I.R.A., what was initially a quiet murmur of criticism from climate activists has grown into something a little bit louder.
The provisions tying future auctions for wind power to leases for oil and gas development have been called “poison pills,” because they appear to lock in future emissions. But the ultimate impact is likely to be quite small. (Energy Innovation estimates at most 50 million tons of additional annual carbon emissions, compared with a billion in reductions from other measures in the bill.)
“At the same time as there are things in it that are not that great, it is the biggest climate win ever,” says Mary Annaise Heglar, on “Hot Take,” the climate podcast she co-hosts with Amy Westervelt.
David Wallace-Wells (@dwallacewells), a writer for Opinion and a columnist for The New York Times Magazine, is the author of “The Uninhabitable Earth.”