In a surprising about-face, US Sen. Joe Manchin (D-WV) agreed to support modified environmental legislation Wednesday evening after months of obstruction and what some Democrats and advocates have called bad-faith negotiation

Manchin’s support secures enough votes to pass the budget reconciliation package, which includes the bold climate measures, and it’s expected to be brought to the Senate floor as early as next week

The Inflation Reduction Act of 2022 is not nearly as ambitious as earlier iterations of the Build Back Better Plan, parts of which survived in the new bill. Even still, it’s being hailed as the most significant climate legislation ever passed in the United States, unleashing $369 billion in climate and energy programs over the next 10 years. To put that into perspective, the Pentagon received more than $800 billion in funding this year alone.  

“The investments outlined in the Inflation Reduction Act of 2022 would be the most significant investment in environmental justice and climate action in American history,” said Sen. Ed Markey (D-MA), a congressional champion of climate efforts, in a statement. “I believe this proposal passes the climate test: including emissions reductions, good-paying union jobs, and investments in justice for disadvantaged communities.”

The funding included in the bill will accelerate clean energy production in the US, with various tax credits, incentives, and subsidies carved out for wind, solar, geothermal energy, and much more. The authors of the legislation claim that, combined with other efforts, the bill will reduce greenhouse gas emissions in the US by 40% compared to 2005 levels, making it more likely for the country to reach its commitments under the Paris climate agreement

The Inflation Reduction Act of 2022 also includes proposals to lower health care costs for millions of Americans, strengthen tax minimums for corporations, and combat rising inflation. Environmental advocates expressed relief that leading Democrats managed to secure what appears to be successful climate legislation before the upcoming midterm elections potentially derail opportunities for action

“We’re very cautiously excited,” Jamie Alexander, director of Drawdown Labs at Project Drawdown, an organization focused on climate solutions, told Global Citizen. “This is a historic investment in climate solutions and clean energy and equity and all the things that we at Project Drawdown advocate for.

“This is far, far below the level of investment needed, but the federal government is only one tool in our toolbox,” she added. “We can also look toward private capital, state and local governments, philanthropic capital, and individual behavior change.”

3 Key Things to Know About the Inflation Reduction Act of 2022

  • This is the biggest US investment in climate action to date, with a focus on energy efficiency and renewable energy.  

  • The bill could accelerate global action on climate change by showing that the US is once again taking the issue seriously.  

  • The bill still includes various handouts to fossil fuel companies. 

So, What’s in It?

The Inflation Reduction Act of 2022 claims to deliver more than $300 billion in savings for the federal government through a combination of tax measures and spending adjustments. 

The biggest money haul will come from a minimum 15% corporate tax rate, a rule that was doggedly negotiated by Federal Reserve chair Janet Yellen alongside more than 130 countries as a way to prevent tax avoidance and evasion. When this tax floor goes into effect, it could net the US $300 billion over the next decade. Another $288 billion will come from a price cap on prescription pills for Medicare recipients, $124 billion will come from improved tax enforcement, and $14 billion from the closing of tax loopholes exploited by wealthy people. 

Those savings are what paved the way for Manchin, who drew a hard line at the bill needing to reduce the deficit, to agree to $369 billion in new climate spending. 

The climate investments in the bill primarily operate as tax incentives. US homeowners will receive tax credits for making their home more energy efficient through the purchase of heat pumps and other amenities, while citizens within a certain income range will receive rebates for buying both new and used electric vehicles. 

These consumer-side measures could have a significant impact on overall emissions. In fact, 13% of emissions in the US come from heating residential and commercial housing, 25% come from electricity generation, and 27% come from transportation, according to the Environmental Protection Agency. Improving energy efficiency in any of these categories could lead to significant emissions reductions. 

“I’m very happy to see big investment in energy efficiency, especially in homes,” Alexander, of Project Drawdown, said. “We look at climate solutions based on their timeliness and we have certain ‘emergency brake’ solutions — things we need to get going right now because they’re low-hanging fruit and super important, and energy efficiency is a big one.”

The bill also focuses on supply-side emissions. Companies producing solar panels, batteries, materials for wind turbines, and more will receive tax breaks as a way to accelerate the shift away from fossil fuels. Other companies will be incentivized to keep nuclear plants open, and install technology to capture greenhouse gas emissions before they reach the atmosphere. 

A major component of the bill, according to Alexander, focuses on curbing methane emissions by stopping leaks associated with natural gas production and distribution. 

Manchin used his leverage as the lone hold-out to win various concessions for the fossil fuel industry, such as mandating that new oil drilling leases be opened up in the Gulf of Mexico. Other fossil fuel handouts include making it easier to drill on public lands and securing promises to make it easier to get approval for fossil fuel pipelines.

“It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels,” Manchin said in a statement. 

The one-time coal lobbyist also made sure to strip other provisions from the bill. For example, the original Build Back Better bill included $150 billion for investments in housing, including $65 billion for public housing, which would have improved energy efficiency and reduced energy consumption for millions of families. That amount was scaled back to $1 billion, none of which can be applied to public housing. 

Another scrapped component was the Clean Energy Performance Program (CEPP), which would have required clean energy standards for utility companies. In light of the recent Supreme Court decision to block the Environmental Protection Agency from regulating factory emissions, the CEPP would have helped phase out fossil fuels by prioritizing renewables.  

Despite these eliminations and compromises, the bill is still a victory in the fight against the forces causing climate change, according to Alexander, who noted that it will create thousands of jobs and help transition workers out of the fossil fuel industry.  

“We have to take wins where we can get them,” she said. “This is not by any stretch what we dreamed of, or the goal. But this is a milestone and it should be celebrated, because this is heavy work and it’s been really hard this past year and we’re seeing the impacts of climate change, and to sustain ourselves we need to celebrate wins.

“But this is only a 40% reduction,” she added. “This isn’t getting us to exactly where we need to go — there’s a lot more that’s needed — but this is a huge step, and I think that's probably restoring people's faith in the US.” 

The Global Implications

US President Joe Biden’s credibility as a proponent of climate action hinged on his ability to pass legislation to reduce emissions. But as the Build Back Better Plan staggered through congressional committees over the past two years, major progress on this front seemed increasingly distant. 

This pattern of obstruction has historically undermined global climate action because the US is the largest historic driver of climate change, as well as the primary architect of the global economy. Without active US involvement in efforts to transition the global economy away from fossil fuels, other countries, particularly developing countries with minimal environmental footprints, have often felt like their climate efforts were in vain.

But now the Inflation Reduction Act of 2022 could provide a boost to other countries, especially as COP27, the United Nations Conference on Climate Change taking place in Egypt later this year, gets closer. 

“I think it can’t do anything but help accelerate other countries’ action,” Alexander said. “And remind, or perhaps show, that the US is in fact still committed and aware of our outsized impact on global climate change and taking responsibility for that.” 

This is especially critical amid the context of the Russian invasion of Ukraine, which has disrupted energy supplies worldwide, causing many countries to temper their climate commitments. The Democratic Republic of Congo, for example, recently announced that it would sell off parts of a critical rainforest to fossil fuel companies for exploration.

Forests, wetlands, grasslands, marine habitats, and all ecosystems need to be protected in order to ensure the integrity of the global environment. In the months ahead, countries, including the US, must raise the necessary funds to protect these areas.

Conservation efforts are threatened by ongoing industrial activity and the effects of climate change. Global emissions have risen to their highest level in recorded history and show no signs of slowing down, even though they need to be nearly halved by the end of the decade if we want to keep temperatures from going beyond the 1.5 degrees Celsius threshold.  

Even though it’s not perfect, the Inflation Reduction Act of 2022 could help turn the tide on emissions, rallying countries to support the kinds of investments needed for a just transition.

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