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5 ways the Inflation Reduction Act would fight climate change

The Inflation Reduction Act includes hundreds of billions of dollars to fight global warming. Some climate activists are calling it "transformative."
Image: LADWP's Pine Tree Wind Farm and Solar Power Plant in the Tehachapi Mountains
Electric station operator Greg Bauman at the Pine Tree wind farm and solar power plant in the Tehachapi Mountains in Kern County, Calif., on March 23, 2021.Irfan Khan / Los Angeles Times via Getty Images file

More clean energy, less dirty energy, new punishments for methane leaks and billions of dollars for communities most in need of climate-related help — those are the provisions that have environmentalists celebrating what they see as a monumental step for U.S. climate action.

Senate Democrats on Sunday passed a sweeping bill, known as the Inflation Reduction Act, that includes hundreds of billions of dollars to fight climate change.

The package calls for major spending to tackle the climate crisis, in addition to extending health care coverage and reducing the deficit. On top of tax credits to provide incentives for electric vehicles and clean energy, the bill aims to expand renewable energy production and fund the development of technologies to remove carbon dioxide from the atmosphere.

While the climate part of the legislation was significantly pared down from the Biden administration's original ambitions in the Build Back Better Act, experts say that if the bill is enacted, it would be the largest investment to address global warming in U.S. history and that it would reduce the country's greenhouse gas emissions.

Dan Lashof, the U.S. director of the World Resources Institute, a Washington-based nonprofit research group, called the bill "transformative," adding that it was the culmination of decades of work to enact meaningful climate legislation.

"It would be hard to overstate what a pivotal moment this was with the Senate," he said at a news briefing Monday.

From cutting emissions to helping the U.S. economy make the transition away from fossil fuels, here are five ways the Inflation Reduction Act could actually fight climate change.

It includes huge investments in clean energy

The bill would devote $369 billion over 10 years for electric vehicle and clean energy tax breaks, a measure that Lashof said would establish clean energy as the most cost-effective option for Americans.

"If you look at the incentives across electric vehicles, electricity production from wind, solar and clean hydrogen, carbon removal — it really establishes an economic framework that makes clean energy the choice," he said.

The tax credits, which are designed to help pivot industry and consumers to renewable energy systems, include incentives for electric appliances, heat pumps and other technologies to increase energy efficiency in homes.

Consumers would also be eligible for $7,500 tax credits for buying new electric vehicles and $4,000 credits for used electric vehicles.

The provisions would help people lower their energy costs and, over time, help the country "transform" its entire energy system, Lashof said.

It would keep climate goals within reach

Climate experts say the bill could reduce U.S. emissions by about 40% below 2005 levels by 2030, an important step toward staving off the worst consequences of global warming.

President Joe Biden had set a goal of reducing greenhouse gas emissions in the country by at least 50% by the end of the decade. A preliminary estimate by the Rhodium Group, an independent research and data firm that tracks such targets, found that Biden's goal could be achievable with the Inflation Reduction Act and other measures at the federal, state and local levels.

"If Congress passes this package, additional action from executive agencies and subnational actors can put the US's target of cutting emissions in half by 2030 within reach," the report said.

Biden's targets to reduce emissions are part of the broader goals of the Paris Agreement, which aims to keep global warming under 1.5 degrees Celsius to limit irreversible impacts on ecosystems and human health.

"It could not come soon enough," Manish Bapna, the president and CEO of the Natural Resources Defense Council, an environmental advocacy group, said in a statement. "This law puts the nation's goals for combatting climate pollution within reach, while millions are suffering through yet another summer of extreme weather disasters."

It aims to curb methane emissions

While the bill is being hailed as a historic breakthrough, it does include some concessions that resulted from hard-fought negotiations with Sen. Joe Manchin, D-W.Va. Senate Democrats agreed to include new oil drilling leases in the Gulf of Mexico and off Alaska.

Still, the measure would introduce a fee that would penalize fossil fuel companies for excess methane emissions from drilling oil and gas.

Methane is a potent greenhouse gas that is released into the atmosphere when coal, oil and natural gas are mined and transported. Microbes can also emit methane in low-oxygen environments.

Emissions of methane have been responsible for about 30 percent of global warming since preindustrial times, according to the U.N. Environment Program.

It emphasizes environmental justice

The climate bill earmarks $60 billion for environmental justice initiatives in disadvantaged communities that are disproportionately affected by climate change. That includes $3 billion in grants to promote clean and accessible transportation and $1 billion for clean buses, garbage trucks and other heavy-duty vehicles.

The provisions would help front-line communities deal with air pollution and other important public health issues, said Christina DeConcini, the World Resource Institute's director of government affairs.

"Of course, it's not enough, but it's great that there's a start there," she said.

The bill also includes funding for rural communities and communities with fossil fuel-based economies to make the transition to clean energy.

It sends an important message to international partners

Experts agreed that if it is implemented, the Inflation Reduction Act would play an important role in signaling to the global community that the U.S. is serious about doing its part to fight climate change.

The measure not only would help the country catch up to aggressive climate measures introduced in places like the European Union; it could spur other countries to act.

In about four months, leaders from around the world will gather in Egypt for the U.N. Climate Change Conference to accelerate efforts to reduce emissions, implement adaptations and negotiate financing. The climate provisions in the Inflation Reduction Act could help send a message ahead of the meeting that the U.S. is ready to step up, said Nisha Krishnan, an expert on climate resilience at the World Resources Institute.

The bill would essentially put the U.S. in "a much better place to actually encourage these countries to stand by their existing commitments, but also to raise their ambitions," Krishnan said.