Economy · August 4, 2022

Inside the Democrats’ climate deal with the devil

Last week, Joe Manchin, the West Virginia senator whose deciding vote in the equally divided upper house led some to brand him “President Manchin,” and Senate Majority Leader Chuck Schumer surprised even the most unknown political junkies by announcing support for a climate law that had been declared dead just weeks earlier.

The 725-page legislation seemed like a brief response to a summer of extreme weather – a brutal heatwave and flooding in the United States – plus soaring inflation, a cost of living crisis, and sweeping Supreme Court rulings that overturned the right to abortion and limited the regulatory power of the Environmental Protection Agency.

Manchin, the main recipient of fossil fuel money in US Congress, had previously killed President Joe Biden’s most ambitious climate package. But there are signs that this time it might be different.

For one, this is now the Manchin package. He even called it the Inflation Reduction Act (extraordinary abbreviated to IRA).

It’s a far cry from Biden’s Build Back Better Plan or the 2019 Green New Deal, the Congressional resolution proposed by two Democrats, Massachusetts Senator Ed Markey and New York Rep Alexandria Ocasio-Cortez. The IRA includes nearly $ 370 billion in clean (and dirty) energy, as well as health and tax provisions that will cut prescription drug costs and enforce a 15% corporation tax on large companies.

But it has already been approved by key progressives in Congress, including Markey and Ocasio-Cortez. The IRA followed unprecedented sit-ins by Congressional staff calling on the party leadership to reopen climate negotiations before leaving Washington DC for the August recess.

Through tax credits and discounts, the IRA bill offers national incentives for green energy, including the production of electric vehicles, wind turbines, heat pumps and solar panels. It also includes a methane tax and establishes a national green bank, which would leverage private funding for green projects and free up approximately $ 290 billion in additional investment.

Democrats and climate experts say the package will cut carbon emissions by 40% by 2030 from 2005 levels. Overall, the proposed legislation will make access to clean technologies more accessible for people.

But the whole picture isn’t so rosy, or, in this case, green.

Unlike last year’s Build Back Better package, the IRA actually incentivizes fossil fuel production. The account that Manchin had killed the clean electricity program, which would penalize public services that have not switched to renewable energy. The “all of the above” energy strategy of the IRA bill invests in developments that will mean additional greenhouse gas emissions. New solar and wind projects are contingent on approval for the lease of oil and gas on millions of acres of land and public waters. And there is a provision blocking new drilling in the Gulf of Mexico and off the coast of Alaska. (Many climate groups are now mobilizing against these elements.)

Schumer has also agreed to support legislation that will simplify the approval of green energy and fossil fuel projects, such as the Mountain Valley Pipeline that Manchin desperately wants.

Unsurprisingly, then, the package was pushed and subsequently praised by a diverse capital coalition that includes Bill Gates and Exxon Mobil executives.

Hence, the IRA is a very dirty and risky compromise, but one that the Democrats are likely to accept.

This seemingly “moderate” approach of working alongside the fossil industry and even stimulating production is radically destructive. It is in direct opposition to a recent report by the United Nations Intergovernmental Panel on Climate Change, which states that we need “immediate and profound reductions in emissions” to keep global warming at 1.5 ° C.

‘Merica loves her cars

In typical American fashion, the IRA bill also affects automobiles. The big ones. Includes billions of dollars in electric vehicle discounts – $ 7,500 tax credit for a new purchase and $ 4,000 for used vehicles – and incentives for companies to manufacture and source vehicles, batteries and minerals in the states United States or a country with a US free trade agreement.

As Jael Holzman points out in E&E News, which covers energy and environmental policy, this requirement is likely to create major barriers to accessing credit. “The minerals needed to produce ready-to-market electric vehicle batteries – lithium, cobalt, graphite and nickel – are mainly mined, refined and processed in China and Russia or in less conflict-ridden nations such as the Democratic Republic of the Congo and Indonesia. they are not parties to the US free trade agreements, ”he stresses.

The bill also incentivizes the purchase of larger electric vehicles like trucks and SUVs, which are, as Aaron Gordon notes in Vice, “incredibly energy-intensive.”

In particular, there is no mention or support for other modes of transport such as trains, electric bicycles or even on foot. So much for investing in the transition of urban and public spaces to be greener and more enjoyable. The IRA bill is classic Americanah, but with a touch of green.

The proposed package has a they put in $ 1 billion for energy and water efficiency in affordable housing. Communities hardest hit by the climate crisis, housing crisis and cost of living crisis are being abandoned once again at a time when Democrats are bleeding the support of the working class.

How about the rest of the world?

It is surprising but not surprising that the United States can approve nearly $ 800 billion in military spending annually with bipartisan support, but not a climate finance plan for countries most vulnerable to the climate.

The United States is responsible for the largest share of historic greenhouse gas emissions, but Congress only approved $ 1 billion in climate finance in this year’s spending bill. (Biden has pledged to raise this to $ 11.4 billion annually by 2024, but that requires congressional approval.) The IRA is silent on global climate finance.

But it’s not just absence. The recent rise in US Federal Reserve interest rates to combat domestic inflation is exacerbating the global debt crisis in developing countries. This makes it even more difficult for those who are least responsible and most directly affected by the climate crisis to adapt to our rapidly warming planet.

But given the current composition and corruption of the US political system, the dire state of the planet, and the numerous setbacks of climate and social legislation, many progressives would have taken whatever serious climate investment. It’s certainly true that this is the largest renewable energy investment in US history, but it doesn’t really say much.

Next time we hope it is much bolder, fairer, global and ultimately pisses off the fossil fuel industry.