Thank you for unpacking the specific programs contained in the Inflation Reduction Act in the article “What Does Inflation Reduction Act Mean for Californians?” Given the difficulties of American politics today, the lockstep opposition from Republicans and the overwhelming financial and political power of vested interests, this legislation is a triumph.
On climate, the billions of dollars in tax credits, rebates, investments, and loans will lower the costs of renewables and incentivize businesses and consumers to choose clean energy options. While this legislation will jump-start the transition away from fossil fuels, on its own it will not get us to our climate goals fast enough.
Despite the devastating impacts carbon pollution creates, fossil-fuel interests continue to do all they can to keep their business model going, leaving all the costs of the disease, death, and planetary disruption they cause to be borne by the public. Greenhouse-gas emissions continue to climb. Oil and gas companies continue to spend millions extracting ever more product, so much that if it were all utilized our planetary home would over-heat and devolve in uncontrollable catastrophe.
For decades economists have promoted a carbon tax as the only policy that could reduce emissions at the speed and scale necessary. Governments should do all they can to incentivize consumers and businesses to choose clean energy, but until the prices of fossil fuels include the costs of the damages they cause, they will continue to be used.
It is right to question whether this legislation will affect the climate crisis globally. No matter what actions the U.S. may take, the climate crisis is a global problem needing a global solution. Here again, economists have long recommended a policy solution: a border carbon pollution tariff. The European Community and Canada are beginning to implement such a policy. If enacted by the U.S., the world’s leading economy, it would incentivize all nations, including China, to price carbon pollution. Once the price of fossil fuels reflects their true costs they will be driven out of the market and quickly replaced by clean, affordable, renewable energy.