The word on everyone’s lips is “transformative.” Even before many of its provisions have taken effect, the Inflation Reduction Act ranks as one of the most consequential climate actions in United States history. Its $370 billion in rebates, credits, grants, loans, deductions, and appropriations forge a new political alliance between climate and labor, and end a decade-long legislative fixation on a federal carbon price. It will remake the American automotive industry, reinvigorate the American mining sector, and remodel the American single-family home. And its dramatic path to passage sets a new standard for how much is still possible in a dysfunctional legislature.
Viewed as a climate law, the Inflation Reduction Act’s newness is undeniable for the simple reason that, until now, there has never been a dedicated federal climate law. But though it is a climate law, it’s narrowly focused on only one segment of the United States’s greenhouse gas emissions. The Inflation Reduction Act pays minimal attention to American agriculture and forestry. It barely gives a thought to the carbon-intensive layout of American cities, and it has nothing at all to say about how far Americans commute, or what Americans eat. Instead, it focuses doggedly on America’s energy systems, dedicating the vast bulk of its funding and its policymaking to promoting power production, jumpstarting electric car manufacturing, and accelerating the installation of electric appliances in buildings.
The Inflation Reduction Act is first and foremost an energy law, and viewed as such it looks much more familiar. Rather than aiming directly at decarbonization, the Inflation Reduction Act aims for more energy. In this way, it’s heir to a long tradition in American energy legislation that has sought to promote energy independence, or energy abundance, or energy dominance — call it what you will.
More energy, in the Inflation Reduction Act, means more of everything. With one hand, it devotes unprecedented resources to bolstering the spread of electric appliances, electric vehicles, and clean electricity. With the other, it attempts to guarantee a new era of American fossil fuel extraction, and passes lifelines to both coal power plants and gas utilities. Without question, the law’s support for clean energy dwarfs its support for fossil fuels. But to actually decarbonize the United States’s energy systems, that clean energy has to displace, not just outpace, fossil energy — and here the prospects for decarbonization get murkier.
The economic logic that transmutes more clean energy into fewer greenhouse gas emissions is both straightforward and compelling: cheap, abundant clean technologies will simply outcompete their fossil-fueled adversaries, becoming the generation technologies of choice for power producers, and the cars, stoves, and heaters of choice for American consumers. In lieu of restricting emissions — an approach the Inflation Reduction Act avoids almost categorically — we are left to play the market.
Historically, though, cheap and abundant energy technologies have not always inexorably driven their more expensive competitors out of business. Just as often, cheap energy has enabled new uses of energy altogether, expanding consumption rapidly enough to keep both new and old energy sources profitable. Sometimes, new applications for cheap energy emerge almost organically. Industrial Bitcoin mining, whose rise to global financial relevance was completely dependent on finding sources of dirt-cheap electric power, suddenly consumes more electric power than the United States’s largest cities. In other cases, energy entrepreneurs themselves have learned to prop up demand for their own products. In-sink garbage disposal and recessed in-ceiling lighting were both developed by electrical utilities seeking to boost residential electric loads.
American society is both astonishingly energy-hungry and incredibly skilled at finding new ways to use cheap energy. At the same time, climate change itself is driving greater energy demand: warming demands more air conditioning, aridification demands more water pumping, and as climate-exacerbated disasters destabilize existing energy systems, more and more resources are being devoted to redundancy. Recent years have demonstrated that, time and again, unpredictable events — wars, pandemics, elections — can also have unexpected energy consequences. As the size and shape of American energy demand shift, we face the prospect of clean energy without decarbonization. Unfortunately, this is precisely what the Inflation Reduction Act’s most concerning measures enable.
In a variety of ways, the energy law works to prevent the abundant clean energy it creates from displacing fossil energy. By stripping conditions from government support for hydrogen and carbon-capture technologies, it presents gas utilities and coal power plants with fiscal relief and climate alibis. By conditioning renewables’ access to public lands on large, regular public-lands fossil fuel leases, it guarantees energy companies another decade’s access to America’s cheapest fossil fuels. And the “permitting reforms” demanded in exchange for the energy law’s passage threaten to subvert some of the most effective existing tools for closing existing fossil fuel infrastructure.
As the law’s supporters have argued, relatively few corporations will rush to invest in new fossil fuel infrastructure in a market saturated with cheap clean energy. But by putting new incentives and access guarantees in place, the Inflation Reduction Act ensures that the fossil fuel industry can stay in the game long enough to capitalize on new energy uses, new crises, or new political conditions, should any emerge.
Several sophisticated economic models have attempted to forecast how the new law’s economic inducements will impact the United States’ greenhouse gas emissions, and all have converged on a nearly 40 percent reduction below 2005 levels by 2030 — a massive potential achievement. But models can’t account for events, and by a combination of choice, design, and political necessity, the Inflation Reduction Act leaves its ultimate success wide open to circumstance.
The energy system is shaped not just by rational economic decision-making, but also by wars, new technologies, political backlash — and, more important than any of these, changes in human culture, which actually, finally determines how much energy we think is enough for a person, and which uses and distributions of it are appropriate, just, convenient, or fun.
The Inflation Reduction Act is transformative. It will make a host of clean technologies cheap and abundant, and those clean technologies will displace some of their carbon-intensive predecessors. But whether we arrive at a low-carbon energy sector or merely a larger energy sector will still be a question of politics. The hard work of holding fossil power to account, rather than merely aiming to outcompete it, remains.
Josh Lappen is a PhD candidate at Oxford, where he studies the history of American energy and electrification.