Stockholm (NordSIP) – In a dramatic turn of events, on 7 August, the U.S. Senate narrowly passed the Inflation Reduction Act, a USD 370 billion bill that has the potential to move the country away from fossil fuels and toward renewable energy. “It required many compromises. Doing important things almost always does,” comments President Biden in his official statement. “The House should pass this as soon as possible and I look forward to signing it into law,” he adds.
The Inflation Reduction Act is, admittedly, less ambitious than the USD 2.2 trillion Build Back Better Act initially envisioned by President Biden. Nevertheless, this hard-fought political victory for the president constitutes the most significant federal investment in history to counter climate change. Once enacted, the new law is projected to help cut the nation’s greenhouse pollution by roughly 40 per cent below 2005 levels by the end of this decade.
What is in the bill?
The bill, expected to pass through the House of Representatives later this week, would mean significant investments over ten years in tax credits aimed at steering consumers to electric vehicles and incentivising electric utilities toward renewable energy sources like wind and solar power. The legislation would also make billions available to those oil companies pledging to cut down their greenhouse gas emissions and penalise them for failing to do so. Green technologies such as carbon capture and sequestration, hydrogen, and small nuclear reactors would also benefit from the new legislation.
Significant resources would also be devoted to climate change adaptation, such as addressing the climate change-fuelled drought in the southwest threatening the energy and water security of the region’s residents. USD 60 billion would be earmarked for helping disadvantaged areas that are disproportionately affected by climate change, particularly in poor communities.
Former Vice President Al Gore calls the Inflation Reduction Act “a historic turning point”. “Decades of tireless work by climate advocates across the country led to this moment,” he says. From the early warnings of Moynihan in 1969, through countless congressional hearings, it has taken years of negotiations to reach the point where at least half of the Senate would vote for climate legislation. “I did not for a moment imagine it would take this long,” concludes the former VP.
