Climate bill lauded; predicted to reduce nation’s carbon footprint by 40% within decade

Amid yet another punishing heat wave, the sweeping Inflation Reduction Act, which was approved along party lines Sunday by the Senate, represents a historic step in the nation’s fight against climate change by drastically reducing its climate footprint—while injecting billions of dollars into cities and counties.

Along with provisions that cap prescription drug costs for seniors at $2,000 per year no matter what and reduce insurance premiums for millions of people covered under the Affordable Care Act, among other things, the measure sets aside $370 billion to be used for clean energy initiatives. Its passage through the Senate has been lauded as necessary by advocacy organizations and administrators representing American cities, who are on the front line in the nation’s response to climate-related emergencies.

“With today’s vote, the Senate has begun to solve some of the biggest challenges facing American cities, including rising costs and dangerous climate change,” said Tom Cochran, executive director of the U.S. Conference of Mayors in a statement. “This bill is a huge win for our cities, and America’s mayors urge the House of Representatives to swiftly approve and send it to the president’s desk for his signature.”

The House is expected to take up the measure later this week, and after that—if it passes as expected—it would move on to the president’s desk for a final signature. Included in the money that’s set aside for clean energy initiatives, consumers would be encouraged to put their money toward green energy solutions through tax incentives, which would reduce the nation’s carbon footprint. Taken as a whole, it’s the largest investment in clean energy ever made by the federal government.

It’s projected by proponents to reduce carbon emissions by about 40 percent by 2030.

“Making federal energy tax incentives available to all utilities, including public power and rural electric cooperative utilities that serve nearly 30 percent of all U.S. retail customers, will ensure that American energy stays affordable, reliable, clean, and secure,” said Joy Ditto, president and CEO of the American Public Power Association. “We appreciate the relentless efforts to find the compromises needed to get this bill passed in the Senate and look forward to a vote in the House on Friday to get this measure to the president’s desk.”

If it’s signed into law, the bill would also allow Medicare to negotiate down prescription drug prices. It would also extend the expanded Affordable Care Act for three years (through 2025).

Besides climate change and medical costs, the legislation is intended to reduce inflation by cutting down on the federal deficit through taxation levers targeting large corporations and individuals making more than $400,000 annually. No one earning less than that would be impacted, according to a White House explainer. Funding for the bill would be made available by closing tax loopholes and cracking down on tax code violations, among other things. 

To that end, the Congressional Budget Office (CBO) predicts it’ll reduce the federal deficit by $305 billion through 2031, by leveraging more than $100 billion in savings and another $200 billion of gross revenue from stronger tax compliance.

“Overall, CBO estimates the legislation includes $790 billion of offsets to fund roughly $485 billion of new spending and tax breaks (as negotiators account for the policies, it includes $739 billion of offsets and $433 billion of investments),” the budget office noted in a statement. “Unlike prior versions of this reconciliation bill, such as the House-passed Build Back Better Act, this legislation would reduce deficits. Along with other elements of the bill, it is likely to reduce inflationary pressures and thus reduce the risk of a possible recession.”