The US passed a major climate law one year ago. Here’s how it’s going

Canary Media thanks KORE Power for its support of our special coverage of the Inflation Reduction Act’s first year.

A year ago this week, the Inflation Reduction Act, the first major federal climate legislation in U.S. history, was signed into law. At the time, the bill’s backers employed a familiar phrase to explain its significance.

With its hundreds of billions in clean energy and climate funding, the law was, they said, a ​“down payment”: an upfront expense meant to set the country on the path to its Paris Agreement pledge of cutting carbon emissions in half by 2030.

But just as a down payment on a house is both a big step toward home ownership and the start of an extended series of monthly payments, the Inflation Reduction Act is just the first step in a long process the country must undergo to meet its climate goals.

It’s a good thing, then, that the law has kicked off a stunning boom in clean energy.

Plans for more than 100 new clean energy manufacturing facilities have been announced in the U.S. since August 16, 2022, the day President Biden signed the law. Renewable energy developers are expected to build projects in the U.S. at a far faster pace than previously forecast. Companies from around the world are plowing billions of dollars into U.S.-based solar, wind, battery and EV ventures. Firms are crafting plans to scale up early-stage technologies like green hydrogen.

Government actors are not twiddling their thumbs, either. At the federal level, the U.S. Environmental Protection Agency has proposed stringent rules on vehicle and power-plant emissions meant to augment the law’s emissions-reducing power. The Department of Energy has made record-breaking cleantech loans. Meanwhile, a number of states have passed aggressive clean-energy goals and subsidies of their own. The Inflation Reduction Act has even nudged governments abroad to follow suit and subsidize renewables in their countries.

All of this activity should help move the planet’s most important needle by driving down emissions from the U.S., the largest historical emitter of CO₂.

A recent paper in the journal Science analyzes nine different models and determines that the climate law has put the country on track to cut emissions by between 33 and 40 percent below 2005 levels by 2030. That’s not enough to meet its goal to halve emissions by 2030, but it’s much more than the country would have managed without the law, the analysis concludes.

Still, nothing about the modeled outcomes is certain. The U.S. could fall well short of those emissions-reduction levels if recent momentum fizzles out, or it could ride the exponential rise of renewables right past them. It all comes down to how effective the Inflation Reduction Act’s subsidies turn out to be.

Financially speaking, the law is almost limitless; there’s no cap on many of its subsidies for clean energy generation and cleantech manufacturing. This arrangement could mean that the law pours far more federal funding into the energy transition than the government’s official estimate of $391 billion — Goldman Sachs projects that the actual number could end up at a cool $1.2 trillion.

Without a doubt, this shower of subsidies will help clean up the U.S. energy mix at a speed climate advocates had previously only dreamed of.

But the actual pace will depend on how fast the government can disburse the funding, how quickly companies can scale up to take advantage of that money, how willing and able consumers are to spend money on electrifying their lives, and how much resistance the law’s implementation meets from politicians and local communities alike. All of these factors have begun to play out this past year, but so much more will happen — or not — in the coming years to shape the law’s legacy.

That first measure — speed — has so far been limited by the painstaking process of administering the law’s subsidies, many of which take the form of tax credits. Over the last 12 months, the Internal Revenue Service has been dutifully fielding feedback and releasing guidance around the requirements companies and individuals must meet in order to receive IRA money. But even one year out, some crucial subsidies — most notably those for green hydrogen — have not yet been finalized.

This process moves slowly for good reason: The stakes are very high. Whether a subsidy has its intended effect or is a money-wasting disaster may hinge on a handful of words written into — or left out of — the tax code. In some instances, the intended effect of a subsidy is itself up for debate. That’s the case with electric vehicle tax credits; certain interests favor strict domestic-production requirements for EVs that prioritize rebuilding American manufacturing, while others want to accelerate EV adoption even if it means depending on foreign suppliers for the next few years.

But even once the rules for clean energy subsidies are finalized, not everyone will be able or willing to take advantage — or even be aware of the opportunities on offer. That’s especially true when it comes to the incentives meant to spur consumer adoption of climate-friendly products like heat pumps and EVs. As of April, 40 percent of registered voters said they had heard nothing at all about the Inflation Reduction Act, and another 21 percent said they had heard only a little.

Tools to help close this information gap do exist, like the Department of Energy’s energy savings hub and nonprofit Rewiring America’s online calculator, or even Canary Media’s newest column. But many Americans will still run up against a learning curve when considering home electrification, not to mention a cost barrier — and that’s assuming people are even sold on the benefits of ditching fossil fuels to begin with.

And then there are the political and social obstacles to implementing the climate law. Even though red states stand to gain the most from the law in terms of investment and jobs, congressional Republicans have attempted to defang it at every pass. Four states have outright refused to apply for Inflation Reduction Act funding, including Florida, where Republican Governor Ron DeSantis reportedly rejected more than $350 million in clean energy incentives from the law.

Some of this resistance might fade as clean energy jobs are created in Republican communities. In June, Georgia’s Republican Governor Brian Kemp defended his state’s thriving clean energy industry from Donald Trump’s criticism. And in West Virginia, an official from the state’s Republican, Trump-aligned gubernatorial administration recently hailed a new grid battery factory as the state’s largest economic announcement ​“in many, many, many years.”

But a wider political transformation is far from guaranteed, especially in skeptical states that may see less investment from the bill, and renewable energy deployment and factories will likely continue to face opposition.

Several other hurdles could prevent the Inflation Reduction Act from reaching its full potential. These include the interlinked challenges of permitting reform and power lines — right now, the U.S. isn’t expanding and updating its grid fast enough to support the huge amounts of clean energy capacity that are needed. This problem cannot be overstated: Much of the law’s emissions-reducing power will come from decarbonizing the grid, but that’s contingent on the U.S. building power lines at more than double its recent rate — an acceleration that the country has no clear path to achieving.

For well over a year, efforts to speed the permitting process for energy infrastructure have been mired in Congress as Republicans and Democratic Senator Joe Manchin of West Virginia have tried to exploit the moment to make it easier to build fossil infrastructure, while the rest of the Democrats have battled among themselves about how big of a poison pill they’re willing to swallow. The Federal Energy Regulatory Commission has started taking steps to get more clean energy on the grid, but without movement in Congress, it remains unclear whether transmission can be transformed at the massive scale the energy transition demands.

The 2024 U.S. presidential and congressional elections cast further uncertainty over the law’s future. If Republicans end up controlling both the presidency and Congress, they could roll back key clean energy incentives in the legislation, as they proposed to do during debt-ceiling negotiations in the spring.

Despite the many headwinds the Inflation Reduction Act faces, there’s plenty to celebrate on the anniversary of its passage — namely, the fact that the U.S., which is responsible for one-quarter of all CO₂ emissions since the Industrial Revolution, has finally directed some of its unprecedented wealth toward dealing with the climate crisis. The law’s massive investment in clean energy will help ensure the trend toward a carbon-free future becomes harder to resist with each passing year.

Headquartered in Coeur d’Alene, Idaho with clients on every continent, KORE Power provides functional solutions to meet the growing demand for green economic expansion and a decarbonized future. As a fully integrated provider of battery cells and clean energy technology and solutions, KORE drives the energy transition through direct access to superior tech, clean energy manufacturing, and unmatched support for clean energy jobs and resilient, sustainable communities worldwide. KORE Power’s robust portfolio provides the commercial, industrial, utility and defense markets with next-generation battery cells, advanced energy storage systems that scale to grid+, intuitive asset management, and EV power and charging infrastructure support.