When Build Back Better was killed by Joe Manchin, a lone recalcitrant coal country senator, American progress on climate change seemed to have stalled and Joe Biden’s presidency had faltered.

Then something really surprising happened. On a quiet Wednesday afternoon, Senate Majority Leader Chuck Schumer and Joe Manchin announced they had a budget deal, eluding the thousands of reporters and Washington insiders who make their money giving you the scoop.

The so-called Inflation Reduction Act (IRA), which includes US$370 billion in climate spending in the form of grants and tax credits over a decade, was passed by the Senate and bedroom. President Biden is expected to sign it on Tuesday, August 16.

Biden was jubilant. The IRA “is tackling the climate crisis and boosting our energy security, creating jobs making solar panels, wind turbines and electric vehicles in America with American workers. It lowers energy costs for families in hundreds of dollars every year,” he said.

These investments could help the United States meet its goals of reaching net zero emissions by 2050. Combined with existing central and state government action, it could reduce emissions by 41-44% below targets. 2005 levels by 2030, compared to 25 -34% without. However, that’s still less than the 50-52% Biden has targeted. As the United States is the largest cumulative emitter of greenhouse gases in the world, it is also likely to fall short of what the country should provide as its fair share.

Hope for the green economy

Analysis by Energy Innovation, a think tank, indicates that the IRA will create at least 1.5 million new jobs in 2030, mostly in manufacturing, construction and related services.

More will need to be done by localities, businesses, and at the state level for the United States to meet its climate goals. Still, analysts are optimistic about the bill’s potential to catalyze action. For example, $27 billion paid into a new Greenhouse Gas Reduction Fund – essentially a green bank – can be leveraged to lend more and stimulate more private sector investment.

Bill contains $60 billion to advance environmental justice in disadvantaged communities

The bill also contains $60 billion to advance environmental justice in disadvantaged communities facing pollution. It has the potential to fuel a low-carbon transition and development within communities that have long been neglected and where the potential for economic growth is considerable.

In the past, technologies developed in the United States have been commercialized in China and Europe. This bill aims to change that by relocating green industrial manufacturing and stimulating new consumption. For example, by subsidizing electric vehicles with batteries made from minerals mined, processed or recycled in the United States or in countries with which it has free trade agreements. That said, the United States still relies heavily on Chinese manufactured goods for clean energy.

Fossil fuel concessions

But a deal with Manchin, who personally benefits from a family coal business and is a major recipient of political donations from the energy industry, was never going to come without a cost.

Democrats agreed to new spending and support for fossil fuels, including leasing federal land for drilling in the Arctic and off the Gulf of Mexico, something President Biden promised not to do during the election campaign last year. Democrats also promised legal changes to speed development of specific fossil fuel projects, including the Mountain Valley Pipeline, which carries gas through Manchin’s home state of West Virginia.

These concessions have been fiercely opposed by groups representing the areas and communities affected by the new boreholes and installations. Bineshi Albert, co-director of the Climate Justice Alliance, said: “Hardly fought measures for environmental justice that support our communities are now positioned alongside things that harm us, essentially holding us hostage to the needs of the fuel industry. fossils. Brett Hartl, director of government affairs at the Center for Biological Diversity, called the bill’s support for fossil fuels a “climate suicide pact.”

But many of the changes to licensing provisions that would be most helpful to fossil fuel companies must be separately passed by Congress in the coming months. Democrats will be under pressure to oppose it. And Republicans, usually in favor of concessions to industry, are also threatening to block them out of spite, after suffering a rare legislative setback.

Biden may also have a role to play. Supporters are still calling on him to declare a “climate emergency”, unlocking additional presidential powers that could, for example, be used to prevent the export of gas overseas.


On the world stage, the United States has regained some credibility by asking other nations to deepen emissions reductions. Although for developing countries, many of which are facing post-Covid debt crises, there is a stark difference between the domestic spending the United States provides through the IRA and the climate finance that they will supply them; Biden has pledged to gradually increase that funding to a relatively paltry $11.4 billion a year by 2024.

Climate policy in the United States has entered a new phase. The battles to stop the development of oil wells, platforms, pipelines and export terminals will continue and intensify. Meanwhile, Democrats and the clean energy industry will seek to profit – politically and financially – from the renewed US effort to build a clean energy economy.

Jamal Raad, executive director of Evergreen Action, a think tank, called the passage of the Cut Inflation Act a “historic moment for climate action and a turning point in U.S. climate policy.” .

How the money is spent, who benefits from it, and what actions might follow will determine whether it is truly transformative.