Posted on 15 September 2022
US President Joe Biden’s signing of the Inflation Reduction Act shows how climate progress can be made against the odds – and should serve as an example in the global response to the climate crisis, says WWF’s Manuel Pulgar-Vidal.
As advocates for climate action, we don’t get to celebrate wins often enough - the urgency and severity of the climate crisis doesn’t leave much room for that. And quite often, what progress is made is the result of inevitable compromises that may not feel equal to the scale of the challenge we face. But, we need to recognize a real win when it comes our way, even if it leaves much work still to be done.
For many in the climate movement, that is the case with the Inflation Reduction Act (IRA), signed by US President Joe Biden last month. Although the legislation was less ambitious than his original Build Back Better proposal, it remains a singular achievement. It will substantially move the needle on reducing US domestic emissions, puts American climate action on a firm legislative footing and, crucially, provides a vital shot in the arm to the international climate process at a critical time.
The IRA puts in train the largest ever single financial commitment to clean energy and climate solutions. It commits $369 billion in renewable energy tax credits and subsidies for energy efficiency, electric vehicles and clean energy manufacturing. It will target emissions reductions in disadvantaged communities and promises billions for environmental justice measures. Its provisions will cut an additional one billion tonnes of US carbon dioxide equivalent by 2030, and enable the country to reduce its emissions by around 40% below 2005 levels by 2030, within striking distance of the commitment in its Nationally Determined Contribution (NDC) to a 50-52% reduction.
Written in law
In addition to the policy details, the politics behind the IRA are also critical. Some of the climate measures undertaken by President Obama were passed by Presidential executive order – and were therefore vulnerable to reversal. While he too has leaned on his executive authorities, Biden has also succeeded in uniting his party to do what was needed to pass legislation through Congress. This puts the IRA’s provisions on firmer footing. The law also partially reverses the recent ruling from the US Supreme Court that limited the authority of the Environmental Protection Agency (EPA) to regulate emissions; the Court had ruled that Congress needed to pass legislation giving the EPA explicit authority to do so.
Biden and other Democratic leaders were able to forge this consensus partly by reframing climate action as an anti-inflationary measure. Certainly, expanded domestic renewable energy generation and electric vehicles will, over time, help to reduce inflation caused by fossil fuel prices. Their messaging in support of the bill also stressed its job-creation potential. This is an important message for advocates of climate action during tough economic times: acting to reduce emissions can increase employment.
The IRA offers a template as to how to pass climate legislation in the face of significant political opposition; this opposition will likely get stronger if an economic downturn takes hold, and if the war in Ukraine continues to drag on. Climate advocates should be prepared to work harder to make the economic case for the clean energy transition.
Keeping Paris in focus
The Act also provides a timely example of what countries need to do to keep the Paris Agreement process on track. The United States was one of many countries that have made pledges to the Paris process through their NDCs not yet backed up with sufficient domestic policy and regulation.
In this regard, the IRA allows the United States to lead by example. Its failure to pass domestic climate legislation had given cover for other countries to drag their feet. That excuse has now gone. This is particularly important given how the climate talks were left in Glasgow. While the objective of ‘keeping 1.5°C alive’ was met – just barely – it was clear that many countries urgently need to redouble their efforts this year. The IRA shows what needs to be done and how to do it.
In particular, we must hope that its passage can help rebuild bridges between the US and China. Their cooperation was vital in forging the Paris Agreement. That their recent disagreements have soured collaboration on climate is to be regretted. China has, in the past, decried limited domestic progress on climate in the United States, and the IRA directly addresses this concern.
Finding the finance
Of course, as a climate action advocate, the glass might not be half empty, but it is never entirely full! The IRA does not get the United States all the way to its NDC target; more policy and regulation will be needed. Congress has still not passed sufficient funding to meet Biden’s pledge to provide $11.4 billion in international climate finance annually by 2024. Making good on this promised climate finance is essential to maintaining trust in the Paris process.
We should recognise the breakthrough the IRA represents. We should applaud and learn from the deft political manoeuvring that got the legislation passed. And we should hold it up as an example to other countries as to how they can move towards meeting the goals of the Paris Agreement.