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Can the Inflation Reduction Act deliver Biden's Climate Justice Goals?
Inflation Reduction Act
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This last weekend, the US Senate passed The Inflation Reduction Act of 2022 (IRA), which, if signed into law by President Biden, will be the most ambitious piece of legislation to combat the climate crisis in the country’s history.

The IRA was passed along party lines in the Senate, with Vice President Kamala Harris casting the tie-breaking vote. Its success in the Senate came as a surprise after Democratic Senator Joe Manchin from West Virginia in July pulled the plug on a climate and tax bill. A few weeks later, however, Manchin unexpectedly pivoted and agreed to offer his necessary support for the legislation. Democratic Senator Krysten Sinema of Arizona, whose support was also uncertain, also agreed to support the bill at the end of last week. Significant compromises were made to bring the Senators on board, especially measures related to fossil fuel support deemed necessary to get the green light from Manchin. The Senate has sent the bill over to the House, where it is expected to pass before heading to Biden’s desk for a signature, which could come as early as this week.

The historic climate, tax, and healthcare package would invest approximately $369 billion in energy, security, and climate change programs over the course of ten years, and is a key pillar in the Biden administration’s domestic goals to combat the climate crisis.

The bill would also slash prescription drug costs by capping the amount recipients pay out of pocket for drugs and extend larger premium subsidies for low- and middle-income people covered under the Affordable Care Act. The government plans to pay for the investment through large corporate tax increases.

The IRA is a significant step towards achieving Biden’s goal of cutting greenhouse gas emissions by 50 percent from 2005 levels by 2030. Though not projected to achieve this objective in full, the bill is expected to reduce carbon emissions by approximately 40 percent from 2005 levels by 2030 through investments into domestic renewable energy production, tax incentives for electric vehicle purchases and millions in climate resiliency funding for Indigenous and Native Hawaiian governments, among other measures.

It also places a large focus on climate justice, with $60 billion allocated to address climate change in low-income communities and communities of color. This includes investing in zero-emission technologies, air-quality sensors, and technical assistance in reducing greenhouse gas emissions within these priority communities. Available funds will also be distributed to mitigate the negative effects of transportation infrastructure.

This past year, the Biden-Harris administration specifically highlighted the importance of climate justice, through an emphasis in the 2021 State of the Union address and by setting aside significant funding for climate resiliency in last year’s bi-partisan Infrastructure Bill. This emphasis comes alongside the government’s Justice40 initiative, announced last year, in which President Biden committed to delivering 40 percent of the overall benefits of Federal climate, clean energy, affordable and sustainable housing, clean water, and other investments to disadvantaged communities that have been historically marginalized, underserved, and overburdened by pollution.” The IRA would build upon this initiative and be a step towards fulfilling climate justice goals.

If passed through the House of Representatives and signed by Biden, the legislation would move the United States far closer to reaching its emissions reductions targets, but it is difficult to say if the bill would deliver on its climate justice goals.

The majority of the funds allocated to low-income communities and communities of color within the act will be distributed via competitive grant programs, which have historically been difficult for vulnerable communities to access. In a Transatlantic Climate Bridge (TCB) analysis piece, TCB co-lead Toby Bernstein highlights the difficulties communities face when navigating grant structures and how access to grants is contingent on knowledge of the grant structure and a capacity to successfully complete the applications to receive grants.

Communities gain access to funds by submitting applications to the federal government, which then ranks applications and distributes grant funds accordingly. While the process is designed to deliver funds to the most deserving projects, it relies on the abilities of community officials to write winning applications. This gives an unfair advantage to wealthier communities who have the resources, including time and funds to hire knowledgeable staff, to submit stronger applications.

Bernstein also remarks on the conceptualization of certain grants, which can include requirements of co-financing on the part of the community. This means that even if awarded the grant, communities may be expected to pay for a share of the project out of their own pockets, which can be up to 25 percent of the total cost. Low-income communities may not have the funds in their public budget to meet this threshold, and, therefore, these requirements have deterred communities from applying for grants in the past. For example, in 2020, the Federal Emergency Management Agency awarded funds under a climate resilience grant program to address risks from flooding, wildfires, and other hazards. However, most of the first round of funding was awarded to wealthy, predominately white communities.

There is no mention of co-financing in the Inflation Reduction Act for low-income communities, and Justice40 explicitly excludes any requirement for communities to offer up a specific portion of their own budgets. However, specific details of the grant programs have yet to be released, and it is unclear as to what requirements will be necessary for disadvantaged communities to receive funding.

Bernstein emphasizes how climate justice cannot be achieved solely from the top-down, and change from the bottom-up needs external support. It is imperative that any funding allocated towards low-income communities and communities of color be attainable and publicly known, otherwise the money will not contribute to climate justice goals. There are some local organizations that provide grant writing assistance programs; however, these services must be institutionalized to level the playing field nationwide.

A restructuring of federal funding schemes would also assist in achieving climate justice. By moving away from competitive grant schemes and engaging in direct transfers to communities, the government can directly fund those who need it the most.

Focusing on the accessibility of competitive grant programs will allow for a fairer distribution of federal funds, where money is awarded to communities most in need. If resources and support to navigate and submit successful grant applications are provided to vulnerable communities, then the Inflation Reduction Act has a chance to progress climate justice.

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Trisha Kershaw

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Project Assistant on the Transatlantic Climate Bridge at adelphi