With global temperatures soaring to record highs, it might be worthwhile to check in on the progress of the Inflation Reduction Act (IRA), signed into law by President Biden one year ago.
Passage of the act was met with accolades. Mainstream environmentalists declared it a “game changer” and a “seismic shift.” But are we actually on track to avert climate catastrophe? How much money is being spent, and where is it being targeted? Are there trends we can identify at this early stage? To state the obvious, time is not on our side, and an assessment of where we stand in terms of benchmarks and emissions is crucial.
Arguably, the sector where the IRA has had the most immediate impact is the manufacturing of electric vehicles, identified as a primary goal towards “decarbonizing” the transportation system. For example, Ford Motor Company, whose profit last year was more than $23 billion, was given 9 billion taxpayer dollars to build an electric vehicleEV factory in Tennessee. Even with the substandard wages they will pay their workers in that “right-to-work” state, Ford claimed it needed this “incentive” to compete with Chinese auto manufacturers.
This is being touted as an early success story of the IRA, and it tells us something about the “theory of change” guiding the Act. To incentivize “decarbonization,” the government will take the risk so that private industry can profit. But with the Solyndra fiasco still fresh in everyone’s mind, the rule-making process is grinding along with bureaucratic caution. Even as fires, floods, and heat domes ravage communities, congressional staffers are working overtime to dot the I’s and cross the T’s. One year after the bill’s passage, the Treasury Department published nearly three dozen pieces of complicated rules.
Setting aside the corporate-friendly way the law encourages the buildout of this new industry, can anyone really believe it is “green”? Is there any accounting for the embedded emissions, not to mention the overall ecological impact, involved in replacing 275 million private vehicles with shiny new electric ones? Already 52 new mining and manufacturing projects have been announced — with $56 billion in investment proposed. A whole new supply chain will have to be created for battery components, with all the shipping and habitat destruction that entails. As System Change Not Climate Change’s Richard Smith points out in his book Green Capitalism: The God that Failed, “producing millions of electric cars instead of gas-powered cars would be just as ecologically destructive . . .”
A close look at the power sector and efforts toward electrification reveals similar dilemmas. It is true that 83% of new electricity generation built nationwide in 2023 comes from wind, solar and battery storage. But the majority of this was planned prior to the IRA. And according to a recent Princeton study, without a 60% increase in transmission capacity, 80% of this renewable energy cannot be utilized. At our current rate it would take more than a century to build the 4,000 gigawatts capacity we currently use. But to cleanly power those millions of new cars, heat pumps, and induction stoves the IRA promotes, not to mention the production of green hydrogen, we will need much, much more electricity from renewable sources.
This brings us to another divisive and formidable challenge facing implementation of the IRA, which is the permitting process. While the regulatory state still allows ecosystem destroying projects to be developed, it does set up various hoops which must be jumped through, and different jurisdictions have different hoops.
Contradictions and Red Herrings (aka Greenwashing)
These regulations, such as the National Environmental Policy Act, or the Clean Air, Water, and Endangered Species Acts, are tools which environmentalists have used to try to protect habitat. In certain cases, these regulations can delay and sometimes stop fossil fuel projects. Yet these same regulations are also being used to litigate the siting of renewable energy projects, the mining required to build them, and the transmission lines needed for distribution. The “inconvenient truth” is that each stage of this renewable build-out has impacts and no one wishes to see their locality become a “sacrifice zone.”
Further complicating the transformation, while the IRA has provisions designed to keep this supply chain “American Made,” U.S. capitalists shifted much of the country’s manufacturing overseas in order to decrease labor costs and discontinued other manufacturing to invest capital more profitably in banking and finance. The hard truth is that China has the supply chain, as well as the technical knowhow locked in already. In this sense, the green build-out is only heightening geo-political tensions.
Now we have to look at sectors that can’t be electrified, places where hydrogen is the big promise. Here we are talking about aviation fuel or steel and concrete production, processes that need dense energy. To “backstop” research and development of hydrogen (an emerging technology nowhere close to scaling up), the IRA provides, to quote Robinson Meyer of Heatmap, “extremely generous subsidies” — to the point where it will have less than zero cost to produce. Making blue hydrogen will require carbon capture and storage (CCS), something that is not “cost effective” and for which little infrastructure currently exists. Green hydrogen requires massive amounts of the clean electricity we aren’t yet making (see above). Then there is the question of new, specialized pipelines and storage facilities — expensive infrastructure yet to be designed, much less manufactured.
Yet another false solution is “direct air capture” an expensive and energy intensive scheme by which carbon is extracted from air using a chemical reaction, for which the IRA included $3.5 billion. As with hydrogen, this speculative technology was lobbied for by oil and gas companies — because it allows them to keep pumping while claiming to be “green” Occidental Petroleum has already begun construction on the first two direct air capture facilities, to be located in (wait for it:) Texas.
In all these scenarios we have the problem of scaling up in time. Had the corporations proposed and funded research into these unproven technologies decades ago, their success or failure would not be existential questions. Now we are racing the clock, and each choice of where to put resources has opportunity costs. And because Capital has done nothing but stall and defer climate action for as long as possible, the scale and speed with which society must now act to avert catastrophe guarantees protections will be ignored, accidents will happen, and the landscape will be abused.
There is still nothing like a national decarbonization plan guiding action in a strategic fashion. Instead there is a large pot of money waiting for private companies, who themselves are waiting for the pages and pages of complicated rules and IRS tax provisions to be written.
Shop ’til We Drop — Dead?
Returning to that “theory of change” guiding the IRA, the law is based on the premise that we can align profit-seeking with environmental goals and that economic growth can be “decoupled” from emissions. But as Smith warns, “no amount of tinkering with the market can brake the drive to ecological collapse. We can’t shop our way to sustainability”.
There has been much rhetoric around a Green New Deal or World War II-style mobilization to meet the challenge of rapid decarbonization. This implies centralized state planning and industrial policy matched with state financing. During the 2016 presidential campaign, Bernie Sanders proposed spending $16 trillion on such an approach. The IRA in no way resembles that strategy. While it directs billions of dollars in subsidies and tax incentives, it basically relies on the same thing that is driving the crisis in the first place — the profit motive — to now solve that crisis.
Policy wonks and classical economists go on and on about “cost competitiveness,” market price, budget constraints. But who is calculating the cost of business as usual? (Perhaps insurance companies are, after the latest hurricane or fire or flood, many of which are either going bankrupt or refusing to issue new policies.) What price should we put on the coral reefs being bleached around the globe? Anyone care to put a dollar figure on the lives of those dying of heatstroke, of climate refugees drowning as they flee ravaged landscapes, of species going extinct?
One year after the Inflation Reduction Act’s passage, it is clear those running it think they can decarbonize our energy system while maintaining the hegemonic rule of Capital. Sweatshops will be solar powered, the American middle class will add a new electric vehicle to their fleet, and we’ll all wait with bated breath for engineers and investors to save the planet with miracle technologies. Rather than mandated cuts to fossil fuel production, state financing will “de-risk” corporate profit-taking so that GDP remains in the black.
The task, for those wishing to supplant this “green capitalist” approach with a truly just and sustainable ecosocialism, is to first find the theoretical balance or synthesis between the Deep Green rejection of all industrial production, the “anti-extractivist” insistence on the rights of nature, and an anthropocentric workerism which embraces technological mitigation and GDP growth. Relinquishment need not mean austerity. Rather than simply controlling the commanding heights of the economy, we must scale down those heights. Rather than exponential growth, we must shift to what John Bellamy Foster describes as “zero net capital formation”
Having achieved consensus around a theoretical synthesis, the task would then be to build a mass movement powerful enough to “initiate a whole new stage of ecological civilization.” This movement, based on the creation of a society of substantive equality and ecological sustainability, is best described as ecosocialism. A big task indeed, but the only one with promise.
Dave Jones is a retired fishing guide and autodidact living in western Montana. He is the father of three amazing women and husband to a fourth. A founding member of the Zootown Zapatistas, he is active with DSA as well as with System Change Not Climate Change. Dave is also the author of the recently published climate fiction novel, Oblivion’s Cross, available on Amazon.