When the House of Representatives passed landmark climate legislation on Friday, President Joe Biden scored one of the surprise successes of his presidency. It was only last month that his ambitious agenda appeared to sink after a conservative Democrat and coal baron, Joe Manchin, refused to back him. His vote is crucial in an equally divided Senate. However, the climate proposals were largely resurrected in the form of the Inflation Reduction Act (IRA), co-authored by Mr Manchin, which Congress approved.
America’s first major climate law doesn’t come too soon. This is the country’s best and last opportunity to achieve its goal of halving greenhouse gas emissions by 2030 and, with it, a world where net zero by mid century is possible. After Donald Trump, Mr. Biden can take up the torch of global climate leadership for the United States. But the act reveals the limits of his power.
The Democrats‘ original $3.5 billion plan was to expand education, fight poverty, cut health care costs and fight climate change. That was whittled down to a $1.75 billion bill that the House passed last year. But it got nowhere in the Senate. Mr. Manchin has refused to support social security programs and his centrist colleague Kyrsten Sinema has refused to support tax hikes. Only $490 billion of climate and health investments remained.
That deserves a little cheer from progressives. Mr. Biden is leading a tough policy of state intervention in the economy. The law gives the federal government the power to negotiate lower drug prices for the first time. Significantly for the climate, it represents a new US industrial policy that subsidizes carbon-free electricity generation via tax credits. It also acknowledges that the United States lags behind China in green technology – spending $152 billion less on renewable investments last year – and focuses on ways to encourage clean energy manufacturing. .
Politics in the United States is unfortunately far too influenced by the power of vested interests. The United States remains dependent on fossil fuels, which generate 61% of its electricity. Its shale gas industry seeks to replace Russia as Europe’s main energy supplier. The result was that fossil fuel lobbyists won concessions in climate legislation. The trade-off is to tie renewable energy development to new oil and gas extraction, the disproportionate cost of which many communities will bear.
Nonetheless, for every tonne of emissions caused by the provisions of the Fossil Fuel Act, the nonpartisan think tank Energy Innovation claims that 24 tonnes of emissions are avoided through its green provisions. That should help energize Mr. Biden’s base ahead of the midterm elections. Despite Republican antagonism, climate action enjoys broad support in the United States. A Pew Research Center poll suggests that 58% of voters think the federal government is doing too little to “reduce the effects of global climate change, compared with just 18% who say it is doing too much.”
To be a truly transformative president, Mr. Biden will have to remake society. What the act demonstrates is that he does not – yet – have the votes in his own party for such a program. Mr. Biden’s climate plans could fail as he relies on the spending carrot rather than the tax stick to support an energy transition. Yet the wasteful consumption of the rich will have to be reduced through progressive taxation to free up resources for socially useful spending. Ultimately, the climate emergency requires fundamental economic restructuring. Mr. Biden’s new environmental law is a good start, but there is still a long way to go.