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Thursday Newsletter 8/4/22

Sen. Joe Manchin speaks to reporters about the expansive agreement he reached with Senate Majority Leader Chuck Schumer, Washington, August 1st, 2022.

J. Scott Applewhite/AP

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August 4th, 2022

Dear Readers,

Last week, Senate Majority Leader Chuck Schumer and the key swing Democratic Sen. Joe Manchin surprised everyone by announcing they had reached preliminary agreement on a major new bill dubbed the Inflation Reduction Act (IRA). Despite its modest name, the bill is arguably the biggest piece of climate legislation in history. In addition to committing to $300 billion in deficit reduction, in part by raising taxes on the wealthy, the IRA would invest around $369 billion to address “energy security and climate change,” promising massive new investments in clean energy alongside new pipelines and drilling opportunities for the fossil fuel industry. While the bill has generally been hailed by Democrats and condemned by Republicans, who seem disappointed that Manchin has changed course after months of obstructing President Joe Biden’s legislative agenda, the reaction on the left has been more complicated. Some climate justice activists welcome the bill, while others fear that it entrenches fossil fuel production and might ultimately be counterproductive.

For this week’s newsletter, I spoke with Alexander C. Kaufman, a reporter who covers climate for HuffPost and a member of the Jewish Currents Board of Directors, to help make sense of the pros and cons of the IRA and what it means for the wider climate justice movement. Our conversation has been edited for length and clarity.


David Klion

Newsletter Editor

David Klion: What was your main reaction to the announcement of the IRA last week?

Alex Kaufman: It’s extremely exciting that there will be any large-scale investment enacted through reconciliation. As a starting point in federal climate policy, the IRA is huge. According to an analysis by the consultancy Rhodium Group, which does emissions modeling, the IRA will have a significant effect on the trajectory of US emissions over the next decade.

But the scope of this bill is far from matching the severity of the climate problem. The initial Build Back Better bill that the Biden administration put forward was already a serious compromise from what a lot of progressives were looking for. The second, pared-down version of that bill was an even further compromise, and the IRA is a compromise from there. It represents a fraction of the $10 trillion that researchers agree rapid decarbonization would require. It includes many incentives for the fossil fuel industry that have debatable impacts. So the bill definitely pushes us in the right direction, but with important caveats.

DK: Much of the criticism of the IRA from the left has been about how it benefits fossil fuel companies, casting it as a devil’s bargain. How specifically does it do that, and how should critics make sense of the tradeoffs?

AK: The IRA does provide more money for the fossil fuel industry, both for distributing and producing natural gas. It also invests in carbon capture technology that has hitherto proven too expensive to scale and is widely criticized by environmentalists as a ploy by the fossil fuel industry to delay more effective approaches that would harm their profits. The bill also comes with other compromises: In exchange for his support of the bill, Manchin was able to get the White House and Senate leadership to expedite the completion of the Mountain Valley Pipeline, which will bring gas from the fracking fields of West Virginia to consumers along the East Coast. Activists have fought against this pipeline for years, not just because they fear methane leaks, but because the pipeline’s construction implies the long-term use of oil and therefore the abandonment of key climate goals.

That said, the reality is that our infrastructure systems are built around fossil fuels, and the US is a major producer and exporter of gas and oil. The likely rate of decarbonization was always going to look different in the US than in, for instance, the United Kingdom, which is politically and culturally quite similar, but which is in a very different place in terms of energy resources. It will be very difficult to move away from natural gas in particular. As it has become more reliant on renewables, the US has actually used more natural gas as backup during times when renewables aren’t generating or are experiencing supply crunches. So one could argue that the IRA’s fossil fuel incentives will only be easing usage that would have likely continued either way. Regardless, the hope is that the bill’s huge investment in electric alternatives will reduce gas usage in travel, heating, and cooking. Ideally, these investments will offset new demand for natural gas, and will eventually overtake the gas and fossil investments that this bill makes.

There is also lively debate about the IRA’s new incentives around carbon capture and direct air capture technology. These are two different types of technologies. Carbon capture refers to hardware that goes on, say, a power plant and catches the carbon dioxide before it enters the atmosphere. Direct air capture refers to machines that suck carbon out of the atmosphere, a step scientists say is absolutely necessary to avoid catastrophic warming given how much carbon we have added to the Earth’s gaseous layer over the past 250 years. The bill creates new incentives for both technologies.

Both are controversial. Carbon capture could extend the lifespan of fossil-fuel plants that could be replaced with renewables or other zero-carbon energy sources. It’s also really expensive. Direct air capture is a very nascent industry, and also costs too much to scale at this point.

It’s true that carbon capture is being primarily championed by the companies and industries most responsible for the climate crisis, and that direct air capture risks creating a moral hazard that will disincentivize the hard work of decarbonization—but given the scale of carbon already in the atmosphere, realistically these are technologies we need regardless.

DK: What does the IRA do to promote renewable and clean energy sources?

AK: Tax credits have helped bring down the cost of renewable energy. The IRA is giving a big boost to wind and solar energy by continuing to provide investment and production tax credits for these energy sources for the next ten years, which makes it a lot easier for private capital to take risks on wind and solar projects. The bill also extends the tax credits to new things like microgrids and batteries, which are very important—without them, we would need natural gas to back up renewables when the sun doesn’t shine and the wind doesn’t blow.

The IRA also incentivizes the domestic manufacturing of parts required in the renewable supply chain, from solar panel components to electric batteries to wind turbines. It creates an incentive for companies to be a part of the supply chain rather than just building capacity and then shutting down and moving production back to Asia when the tax credits expire.

Perhaps more controversially, the IRA also promotes technologies that, while not renewable, are low-carbon and could help achieve decarbonization—like advanced nuclear reactors and other technologies needed to keep nuclear plants open and safe. Depending on where you fall on the question of nuclear energy, this may be more of a gray area, and even grayer perhaps is that the IRA gives a lot of money to hydrogen production. Hydrogen is the most abundant element in the world. Hydrogen fuel, when burned, generates water as its byproduct. It is used in various petrochemical processes and industrial applications, but about 99% of hydrogen fuel production relies on coal or gas, which means it indirectly produces a lot of emissions. There is a type of hydrogen that is produced with renewable electricity and is emission-free. This is called green hydrogen, but it remains too expensive to scale since it requires huge amounts of renewable electricity to make and you lose about 30% of that renewable electricity in the conversion process.

The IRA promises huge investments into electrolyzer capacity to start producing more hydrogen with electricity. Hopefully, this will incentivize bigger and better breakthroughs in green hydrogen production. But the bill also gives plenty of money to the production of hydrogen overall, including from fossil fuels. So there’s a lot of concern over whether green hydrogen will serve as a fig leaf for the growth of an industry that’s essentially the fossil fuel industry with a mask on. However, this concern should not prevent us from promoting green hydrogen and getting as much of it as we can onto the market, since it has a lot of potential to decarbonize industrial processing, aviation, and perhaps even long-haul trucking.

Nuclear, direct air capture, and hydrogen are like the Horsemen of the Apocalypse to a lot of lefty climate people, and sometimes rightly so. But the political strategy has been to oppose this stuff across the board, which I think is wrong. It creates a warped debate, whereby the people who have the most urgency around addressing climate change disqualify themselves from seats at the table with the people who are making policy. Litmus tests around these things cannot capture the actual complexity of what needs to happen; they make it difficult to grapple realistically with the world as it is, and with power structures as they are.

DK: Since the bill hasn’t been passed yet, and it still might be trimmed by Sen. Kyrsten Sinema, it seems like professional climate advocates might feel limited in what they can say as they angle for the best outcome. What kind of position do activist groups find themselves in when the margins are this narrow, and when Manchin is calling the shots?

AK: The war in Ukraine, which triggered a global energy shock, was the turning point. Energy prices rose, causing the rationing of natural gas. This fuel shortage, which had very little to do with climate change and is causing immediate pain for people, changed the context within which the climate movement’s call to end fossil fuel usage was happening.

So the tenor of the discourse around climate change was already shifting. Then you have this bill, which has been so long in the making. Last winter, it seemed like it was poised to finally reach fruition before talks collapsed. Activists had been bracing for the possibility that nothing would get done, like in 2010, when Democrats abandoned their big push for a cap-and-trade market and spent the rest of the Obama administration promulgating regulations to deal with climate change that broke down as soon as Trump came to power. The dread of nothing happening had seeped in, so when the IRA was announced, the strategy of at least some groups was to give the bill their full-throated endorsement so that nothing would upset the possibility of achieving potentially historic gains, while also raising some concerns about what the bill fails to do. So those who are hailing the IRA today may soon find themselves criticizing how it is implemented once it comes into effect. That’s a normal and healthy thing.

On the other hand, you have groups which have more radical positionings and a different philosophical approach to climate change overall, who have been very quick to form a different flank and to criticize the IRA as nothing but a big fossil fuel giveaway with some nice cherries on top. Opponents of climate policy are trying to exploit this tension to cleave the progressive coalition and kill the bill. One newsletter found a Republican-linked dark money group was running ads urging the progressive “Squad” members to vote against the House version of the Manchin deal because it fails to achieve the climate aims Biden campaigned on and that supporters of the Green New Deal have pushed for. So it’s worth considering who the bedfellows are when opposing something like this.

DK: Should the IRA be seen as a step in the direction of the left’s vision of a Green New Deal, a setback for that vision, or an entirely different way forward?

AK: The Green New Deal is not a piece of real legislation. When it was put forward in late 2018, it was essentially a declaration of progressive principles that would ultimately go into an actual bill. Because it hasn’t been tethered to specific policy, the Green New Deal has meant different things to different people. But as a clear policy proposition, how closely does the IRA adhere to that framework and vision? Probably not close enough, but it is certainly influenced by the Green New Deal framework.

The Green New Deal helped reframe climate away from being an environmental issue—like the hole in the ozone layer or acid rain—into a problem of full-blown industrial policy requiring a shift away from a resource that is woven into the very fabric of our lives and our economy. That shift requires a degree of central government planning and investment. The very concept of a giant reconciliation bill that includes climate spending and other measures is certainly in line with the spirit of the Green New Deal. It’s a departure from, for instance, the 2010 Democratic push for climate legislation, which would have enacted a cap on emissions and the conditions for a market to trade permits to pollute. That was a very conservative approach. At the time, it wasn’t nearly as popular and it wasn’t as focused on potential job creation or growing certain industries. It was a very “invisible hand” way of dealing with climate change. The intervening years have shown us that we simply don’t have the time for that. A transition on this scale, with this many variables, simply can’t be left to the chaos of the market alone.

So while this bill is certainly not a serious step toward ecosocialism, it includes many of the core tenets of direct government involvement in combating climate change—promoting certain industries, investing adequate resources to make a transition happen, and limiting how much suffering occurs as a result of the upheaval in the energy system. In that sense, the Green New Deal framework has been adopted across the board and is widely understood as the correct way of going forward. For instance, one of the notable components of the Green New Deal was the fact that it tried to center the largely impoverished, often non-white neighborhoods and communities that have borne the brunt of pollution and are most vulnerable to storm surge, flooding, and general infrastructure decay. The IRA offers significant spending directed at communities facing environmental injustice.

But I’m hesitant to draw too direct a comparison. The IRA shows how commonsense the Green New Deal framework was, but it also shows how climate shifting from a regulatory problem to an industrial policy problem leaves ample room for existing inequities to continue. For advocates of the Green New Deal, redistributive justice is a central aim. The IRA, while it does include a lot of good spending on justice issues, is not a version of the Green New Deal as it was initially outlined.

DK: Going forward, what is the most effective and constructive role that climate activists can play to build on what this bill does?

AK: In the immediate term, it’s difficult to see what leverage progressives have, as passage in the Senate still seems to hinge on Sen. Sinema, who has signaled that she wants to strengthen some of the Manchin deal’s drought and water provisions. I’m no strategist, so perhaps there’s more room for negotiation in the House.

Upon passage of the IRA, there will be fights to be had over how it is implemented, and what the oversight of its implementation looks like. Given the history of regulatory capture in many levels of governance in this country, it’s an open question whether the spending will go where it can have the most impact, or where it will generate the most shareholder value. It will be important for climate activists to push for a role in that oversight. Presenting alternative viewpoints about how certain technologies can be used in a progressive manner—whether that’s hydrogen, or direct air capture, or even carbon capture—will also be important.

Historically, environmentalists have been very good at opposing things being built. The movement has been far less adept at building things. Downsizing and halting new, polluting projects are insufficient to deliver decarbonization. Yet already, you see many advocacy groups drawing red lines around certain types of technologies, dismissing them as false solutions or distractions.

This bill is full of incentives for many of those so-called false solutions, from carbon capture to hydrogen fuel to nuclear power. Many countries besides the US are incentivizing and looking to deploy these technologies. Are advocacy groups so sure that the dogma about these tools that has held for more than a decade remains true, given technological advancements, more investments, and growing demands? Are they certain that it’s worth opposing this bill over their inclusion? And if the bill passes, will the strategy be to oppose these things at all cost? Or is a more nuanced approach possible, where those whose interest is in protecting the vulnerable and creating a more humane world have a role in shaping how these tools are used?

Playing a constructive role on those things is critical, particularly if the midterm elections deliver Congress to the Republicans. It may seem naive to some to consider working with Republicans to enact any kind of climate policy, but it is fatalistic to waste any time waiting for the right makeup in Congress. We should enact as much as we can as quickly as possible, which means finding areas where there could be bipartisan support for further enhancements of different industries, sectors, technologies, or government programs that relate to climate change. We have more overlap with conservatives than many assume on issues like nuclear power, transmission lines, hydrogen, and even renewables, increasingly, as red states build and benefit from them. I’m not suggesting making untenable compromises in the name of any meager advancement. But we do need to think beyond the simplistic “100% renewables” position that has been a rallying cry of the left for a long time.

We should also rid ourselves of the narrative that this and only this will be the opportunity to enact climate policy. This is a live issue; it means all policy is climate policy and there’s plenty of work ahead, regardless of what this bill does and regardless of who is in control of Congress.