The climate and clean energy provisions in the surprise reconciliation package Democrats announced late Thursday are far smaller than the $555 billion in climate spending eyed in the initial “Build Back Better” plan that President Joe Biden unveiled last year.
Still, at a whopping $369 billion, it would be the most significant investment the U.S. has ever made to confront fossil fuel-driven climate breakdown and its mounting impacts.
“This will be, by far, the biggest climate action in human history,” Sen. Brian Schatz (D-Hawaii) said in a statement shortly after Democrats struck the deal. “The planet is on fire. Emissions reductions are the main thing. This is enormous progress. Let’s get it done.”
Senate Majority Leader Chuck Schumer (D-N.Y.) said it will be “the greatest pro-climate legislation that has ever been passed by Congress.” And in Thursday remarks at the White House, Biden called it “the most significant legislation in history to tackle the climate crisis and improve our energy security right away.”
The new agreement, now dubbed the Inflation Reduction Act and which is expected to come up for a vote as early as next week, would set the U.S. on course to slash its greenhouse gas emissions 40% by 2030, according to the one-page summary of the bill. The package comes on the heels of an analysis that found without additional policy actions, the U.S. is on pace to reduce planet-warming emissions 24% to 35% below 2005 levels by the end of the decade — far short of Biden’s 50% to 52% goal.
The bill includes more than 100 climate and energy provisions. The bulk of the spending comes in the form of clean energy tax credits, grants and loans. It provides $30 billion in incentives for companies to manufacture solar panels, wind turbines and batteries, as well as to process critical minerals. There’s another $10 billion in tax credits for the construction of new clean technology manufacturing facilities, up to $20 billion in loans to build clean vehicle manufacturing plants, and $500 million in Defense Production Act funds for heat pumps and critical minerals processing.
The package would lower the cost of electric vehicles for low- and middle-income Americans, with $7,500 tax credits for new EVs and $4,500 for used ones, and invest billions to electrify low-income households.
Additionally, the bill earmarks $60 billion to confront legacy pollution and invest in low-income and communities of color; $27 billion for a so-called “green bank” to boost clean energy and slash emissions, with a particular focus on disadvantaged communities; $20 billion for climate-friendly agriculture; and $5 billion in forest conservation grants.
It would also establish a fee on emissions of methane, an extremely potent greenhouse gas that is released from a number of sources, including oil and gas operations.
Sen. Joe Manchin (D-W.Va.) shocked Democrats and Republicans alike on Thursday when he gave his blessing to the scaled-down, $740 billion spending package, which will raise taxes on the ultra-wealthy to pay for investments in both climate and health care. The decision came just two weeks after Manchin, who has proven himself a relentless thorn in Democrats’ side, seemingly torpedoed what was widely seen as a last chance for the party to pass meaningful climate legislation.
In a lengthy statement Thursday and a subsequent interview Friday with West Virginia radio host Hoppy Kercheval, Manchin made it clear that his support hinged on support for fossil fuels.
“The Inflation Reduction Act of 2022 invests in the technologies needed for all fuel types ― from hydrogen, nuclear, renewables, fossil fuels and energy storage ― to be produced and used in the cleanest way possible,” he said in his statement. “It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels.”
Among other things, the bill would reinstate oil and gas leases that companies obtained during a November 2021 auction and which a federal judge later vacated after concluding that the Biden administration had failed to properly account for the climate impacts of the lease sale. It also ties future renewable energy projects on federal lands to ongoing oil and gas development, requiring the Interior Department to offer at auction at least 2 million acres onshore and 60 million acres offshore to oil and gas interests before it can proceed with wind, solar and other renewable lease sales.
Manchin also said he received a commitment from Biden, Leader Schumer and House Speaker Nancy Pelosi (D-Calif.) to reform the federal permitting process for energy infrastructure, including pipelines.
“I’m saying straight to you, without permitting reforms, without the ability for America to do what it does best — produce — there is no bill,” Manchin told Kercheval on Friday. “That is totally agreed upon and understood.”
Even with those fossil fuel concessions, climate advocates and environmental groups largely celebrated the package. Leah Stokes, a climate policy expert at the University of California, Santa Barbara, who has advised Democrats during the negotiations, called it a “game changer.”
“It would bring clean energy jobs to America and lower energy bills for American families,” Stokes wrote on Twitter. “It would get us 80% of the way to President Biden’s climate goal.”
But some green groups, including 350.org and Center for Biological Diversity, couldn’t see past the oil and gas mandates.
“This is a climate suicide pact,” Brett Hartl, government affairs director at the Center for Biological Diversity, said in a statement. “It’s self-defeating to handcuff renewable energy development to massive new oil and gas extraction. The new leasing required in this bill will fan the flames of the climate disasters torching our country, and it’s a slap in the face to the communities fighting to protect themselves from filthy fossil fuels.”