‘Inflation Reduction Act’: What you need to know about major effort to fight climate change

For more than a decade, Congressional Democrats and a growing share of their political base have chased a dream: legislation to combat climate change, large enough to transform our society into one equipped to avert the worst catastrophes of a rapidly warming planet.

On Wednesday the dream made a giant leap toward reality.

In a stunning reversal from when he appeared to kill a climate deal just two weeks ago, U.S. Sen. Joe Manchin, a conservative West Virginia Democrat, announced support for the Inflation Reduction Act of 2022, a bill that would invest about $370 billion into a range of policies aimed at reducing U.S. greenhouse gas emissions. That would make it the most substantial effort by the federal government to tackle climate change in history.

A vote on the bill could come within a week, though supporters are bracing for any last-minute hurdles.

Early reaction suggests the bill could transform the American energy and transportation sectors. Tens of billions of dollars will go toward supporting renewable energy development, lowering the costs of electric vehicles, building out public charging stations, weatherizing homes, plugging leaks of greenhouse gases from pipelines and wells, lowering emissions from the agricultural sector, and supporting communities located near polluting industries.

In total, the measures could, by 2030, reduce U.S. greenhouse gas emissions 40% from where they were a quarter-century earlier. That would leave the nation within striking distance of the emissions reductions international scientists say are needed to avoid the worst effects of climate change. It could even set an example for other nations to also reduce emissions.

“It’s a hell of a lot … that seems to be targeted at all the right things,” said Jonathan Foley, executive director of Project Drawdown, a nonprofit that ranks the importance of climate solutions. “It’s a really good down payment.”

Foley also noted that the bill is designed with the economy in mind, with analysts predicting it will lower the U.S. deficit and have an anti-inflationary effect.

What’s in the bill?

An analysis released by Congressional Democrats says the bill will have $433 billion in investments: $369 billion for “energy security and climate change” and $64 billion for health care through an “Affordable Care Act Extension.” 

They say the bill will pay for itself and further reduce the federal deficit by raising $739 billion in new revenues, primarily by creating a 15% minimum tax on corporations and by reforming prescription drug pricing.

A more detailed summary highlights billion-dollar line items:

• “Over $60 billion” to support U.S. clean energy manufacturing, including $30 billion in incentives for wind, solar, and battery production. Plus, another $10 billion in tax credits for the construction of facilities that make electric cars and renewable energy technologies, and another $2 billion in grants to “retool” existing car factories for electric vehicles.
• Another $60 billion to invest in low-income communities that bear a disproportionate burden of pollution, including funds to reduce pollution from factories and ports and purchase cleaner public transportation vehicles.
• $30 billion in grants and loans to states and electric utilities to help them transition to cleaner forms of electricity.
• $27 billion for a clean energy technology accelerator to “support deployment of technologies to reduce emissions, especially in disadvantaged communities.”
• “More than $20 billion” in investments to support agricultural practices that reduce emissions.