“Whole of Government” Climate Approach Moving Forward With U.S. Senate Climate Bill Passage
A comprehensive legislative proposal designed to address climate change challenges and threats to the U.S. posed by global warming was passed by the U.S. Senate on August 7. The bill, called the Inflation Reduction Act, is awaiting a vote in the House of Representatives and an expected signing into law by President Biden. The Inflation Reduction Act also contains provisions for additional spending on healthcare, infrastructure, job creation, and vocational training for workers.
The details of the package are spelled out in some 700+ pages, with sections updating long-standing legislation (such as the Clean Air Act) and setting out specific rules and timetables for government agencies to enact, fund, and enforce. Some items in this package were previously part of President Biden’s ambitious “Build Back Better” proposals, which did not pass and were priced at about three times the size of this package.
How to pay for this almost US$900 billion package? The Senate approved new minimum income taxes on large corporations (those with $1 billion in profits) and another bucket with that amount in savings to be enjoyed by the government with new ability to negotiate drug prices for Medicare for a range of pharm products. The measures are designed to lower the government’s budget deficit over a decade by a projected $300 billion.
Included in the package are several items of keen interest to the ESG community:
Think “Clean” with many “clean” descriptions applied throughout the package, such as clean vehicles, clean energy, cleaner electricity, tax incentives for clean bonds, clean fuels, clean products, clean production, clean transport – all spelled out in detail.
Clean fuels getting financial support (through tax credits, bond financing, grants, and other means) include hydrogen, liquified petro gas, bio diesel, ethanol, natural gas.
Business and residential buildings will have incentives for greater conservation and climate protection through tax credits for doors, windows, HVAC, heat pumps. Also, help for battery storage for solar as well as for solar installations. There will be funds to help those states offering energy grants for consumers.
There are timetables, standards, limits, and other “prescriptions” for industry, with abundant opportunities spelled out for companies supplying the public sector. Some elements of the package begin immediately, others are to be phased in.
“Made in America” is a constant theme in the package, and there will be avoidance of products coming from “foreign entities of concern” and favoring of nations with which the United States has free trade agreements.
“Minerals for concern” are identified and actions spelled out for lithium, nickel, tin, tungsten, aluminum, barite, cobalt, fluorospar, and many others to be mined, manufactured, and recycled in the U.S.
The Eastern U.S., Western U.S., and independent Texas electric grids will be modernized.
Contractors doing infrastructure projects will be required to pay prevailing wages in the various regions where work is being done, and to hire a specific percentage of interns to be trained in the industrial crafts.
“Environmental Justice” is another theme in the package, with impacted low-income and minority communities receiving aid to address local needs for climate resilience and cleaning of past pollution. There are special credits for low -income communities to help combat air pollution and to help address energy conservation such as in schools.
Water is in focus: agriculture water use, and conservation are addressed. Rural America will be getting help to reduce nitrogen loss; reduce GHG emissions in ag and food; develop carbon capture; encourage the use of biofuels; and loans for electricity cooperatives (under the theme of “Rural Energy for America”).
Affordable housing is addressed through direct loans totaling $800 million out to 2028.
NOAA is designated as the point agency for developing climate forecasting, and there is funding for fixing docks in America’s ports, to rebuild fisheries, and to help address coastal area storm resilience.
This historic package passed by one vote margin in the U.S. Senate (the Vice President’s) and will be on the desks of representatives returning to the House this weekend. We have selected Top Stories for you that spell out the details and offer perspectives on what all of this means as the Biden Administration continues to expand the “whole of government” approach to climate change challenges.
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