So, that’s how you do it! It looks like all it took for the U.S. Senate to finally approve President Biden’s ambitious climate agenda last week was finding a better name. (Well, that and a few months of negotiations behind the scenes, of course.) Apparently, ‘Build Back Better’ wasn’t catchy enough a phrase. Or perhaps it’s lost its lustre through extreme overuse[1]. The Inflation Reduction Act, however prosaic sounding, proved to be much more palatable to the senators. Never mind the equally inept acronyms B.B.B. and I.R.A.
It might be that mentioning the spectre of inflation was what saved the day. Lately, the term has completely dominated the news, as well as the minds of central bankers and common punters alike. Just a quick search for ‘inflation’ on Google Trends reveals a curve rising as sharply as the price of, well, basically everything.
Who knew headline inflation numbers would come in lower just a couple of days after the bill had passed, indicating that the peak might already be behind us? No one, it would appear, as the 8.5 % registered in June were lower than virtually any analyst had forecasted. Good timing, bill-wise!
Would the promise of fighting the scary inflation monster implied by I.R.A.’s name hold, though? As any angry Republican would tell you, throwing around easy money is precisely what causes prices to spike rather than subduing them. Well, according to independent research done by Penn Wharton, the measures proposed by the bill would very slightly increase inflation until 2024, only to decrease it thereafter. They also estimate that the I.R.A. would reduce the U.S.’ cumulative deficits by USD 248 billion over the budget window.
“The name, in fact, is fitting because there’s a direct connection between climate change and rising prices, no matter where you are in the world,” writes Manuela Andreoni in the N.Y. Times. She argues that less geopolitically sensitive renewable energy has the power to ward off the price shocks that fossil fuels are so prone to. Add the increasing cost of extreme weather, and it sounds pretty plausible that those billions in spending could help reduce inflationary pressures in the future.
You are, of course, allowed to be somewhat suspicious about the sudden change of heart in Washington’s corridors of power. I know I was. Reading news snippets on concessions and bickering certainly makes one wonder. Was it really just the bill’s name that got changed in the process? And is the I.R.A. truly the fantastic triumph of common environmental sense in the U.S. that it is hailed to be?
Rather than guessing, why not look at the facts instead? The aptly named Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT) Project scientists have been super quick at updating their estimates. They just published their preliminary report, The Climate and Energy Impacts of the Inflation Reduction Act of 2022. Comparing the emission reductions expected by the original B.B.B. plan and the bill that did pass, they estimate that by 2035 the I.R.A. should deliver more than 90 per cent of what its predecessor would have achieved. Pretty good, despite all the give-and-take diplomacy that has come to pass, right?
Whoever the genius behind this successful rebranding campaign, it certainly looks like he/she/they did the world a favour. I know it feels strange, but we now actually have a reason to be jealous of our American environmentalist brethren. Way to go, Mr President!
[1] ‘Build Back Better’ was first introduced at the United Nations Economic and Social Council in July 2005 by former United States President Bill Clinton, the Secretary-General’s Special Envoy for Tsunami Recovery. UN has been using it frequently since. The EU, too, has eagerly adopted the phrase for its recovery plan.
