Debating Government’s Role Mitigating Climate Change Beyond the Inflation Reduction Act
By Matthew Huber, Professor, Syracuse University, and Sheri Rivlin and Allan Rivlin, CEO and President of Zen Political Research
Climate Change Demands a Full-Scale Mobilization of the Public Sector
By Matthew Huber – Professor, Syracuse University
The Inflation Reduction Act (IRA) is certainly welcome, but it is woefully insufficient to address the climate crisis. In 2018, the Intergovernmental Panel on Climate Change proclaimed that preventing catastrophic warming “would require rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings), and industrial systems.” The term “energy transition” belies the complexity of climate action. What is required is a new Green Industrial Revolution and this transformation must be compressed into years, not decades. In contrast, the IRA is mostly a package of tax credits that aims to entice private investment and consumer purchases of electric vehicles or heat pumps. This falls far short for three reasons.
Tax Credits Are Not the Moonshot We Need
First, as economist Thomas Piketty recently said of the IRA, “We are talking about something very small.” The most generous estimates of the spending suggest $1.2 trillion spread out over ten years—that is, $120 billion/year or 0.4 percent of GDP. In contrast, some industry researchers project we need $4.5 trillion to decarbonize the U.S. power grid alone. Full global decarbonization would require $275 trillion over 30 years, “or about 7.5 percent of global GDP.”
Second, while similar large-scale emergencies like the Great Depression and WWII elevated public ownership and investment, the Inflation Reduction Act is likely to lead to further privatization of the energy system. Daniela Gabor called this policy framework the “Wall Street Consensus”: an effort to “de-risk” private capital investment with public resources. This maintains a market logic where needed climate investments take place only if they generate investor returns. One executive put it plainly, “It’s important to invest only when our return requirements are met.” This is not enough. Rising costs are threatening much needed wind investment among other forms of alternative energy.
Third, decarbonizing electricity requires coordination and planning, specifically building transmission lines to connect new, remote sites of clean energy generation to population centers. Yet, the IRA has no provisions that increase states’ capacity to engage in planning or socialize the interconnection costs. The Federal Energy Regulatory Commission (FERC) is trying to address this problem. However, the balkanized process is slowed by legal challenges, unaccountable regional transmission authorities, industry ties to state public utility commissions, and merchant generators seeking profit above grid reliability.
Incentivizing Private Investment is an Easy Solution, But Not the Right One
If climate change is the emergency scientists claim, the government should act accordingly and propose a full-scale mobilization of the public sector akin to a “Green New Deal”. The IRA is a new form of “market fundamentalism” that assumes if we simply establish the right incentives, private capital will create the energy transition for us. This is not going to happen. Historically, it takes public investment to build the required long-term infrastructure. We can learn from examples like the Tennessee Valley Authority and Rural Electrification Administration, which electrified most of the rural U.S. in a mere 15 years. The Inflation Reduction Act delays this required large-scale intervention.
The Inflation Reduction Act Helps Build Consensus for an Effective Climate Response
By Sheri Rivlin and Allan Rivlin – CEO and President of Zen Political Research
We strongly agree with the central assertion Mr. Huber makes in his opening remarks: Global climate change is an emergency that will cause damage on a scale much larger than Washington’s response to date. We do not know anyone who would disagree with the statement that the 2022 Inflation Reduction Act (IRA) will prove “woefully insufficient to address the climate crisis.” Far, far more will be needed. Mr. Huber presents a vision of a possible future where Washington leads the world in an adequate response. Yet, we will need to consider many possible paths to reach consensus on an adequate response to the climate crisis.
Mr. Huber expresses profound skepticism that our current path—where the federal government passes occasional legislation shifting private incentives with tax deductions, grants, and subsidies for lower carbon energy sources, and federal investments in cleaner energy infrastructure are made in partnership with regional, state, and local authorities—will ever be up to the task. Some of his critiques of the status quo are inciteful. But ultimately, we do not believe that he proves his case for abandoning our capitalist democracy. Pinning all our hopes on an industrial, social, and political revolution would amount to a federal takeover of the nation’s response from the private sector and state governments.
The Inflation Reduction Act Lays the Groundwork for Action
Just because Washington has not yet done enough does not prove that it never will. Predictions of the harm caused by global warming have been around for decades, but the pain is just being felt in the form of forest fires, droughts, floods, stronger storms, rising oceans, etc. Political will can be expected to increase as the costs intensify and are felt in more regions of the country. As Mr. Huber notes, Washington responded dramatically to the Great Depression and World War II, but he leaves out the Hoover Administration’s inadequate response from 1929–32 before FDR’s election and the years of 1939–41 when America sat out of the war in Europe. Our Pearl Harbor moment on climate has not yet arrived.
Mr. Huber is too critical of the Inflation Reduction Act legislation because he considers it in isolation from the political realities of 2022 and other legislation passed that year. He notes the IRA’s absence of investment in modernizing the electricity grid without noting the Bipartisan Infrastructure and Jobs Act’s $65 billion investment in the electric grid and $66 billion in sustainable transportation, transit, and rail networks.
Of course, this is not enough. But the political achievement in getting Sen. Mitch McConnell and Sen. Joe Manchin to support new spending for green energy, which passed the Senate with a vote of 69 to 30, should be seen as the best Washington could expect in 2022. This offers reason to believe that Washington may be able to act, probably too little and certainly too late, but far more than the totally inadequate response Huber predicts.
We Need a Climate Revolution Rooted in Democracy
By Matthew Huber – Professor, Syracuse University
I’m glad Ms. and Mr. Rivlin agree the Inflation Reduction Act is insufficient to address climate change. Frankly, when it comes to climate stability, this is the only question that matters. Their response also helpfully calls attention to Biden’s other important achievements like the Bipartisan Infrastructure and Jobs Act’s grid investments.
If the IRA is insufficient, the question is: what might be acceptable? The Rivlins are content to wait for a “Pearl Harbor moment on climate.” While they wait, they shrug their shoulders at the IRA as “the best Washington could expect.” Unfortunately, climate activists keep hoping in vain for such a crisis to arrive, but it never does. The grim reality is that climate change is not like war, but more of a slow cascade of highly localized disasters distant enough for the majority to overlook and move on.
We Need a New New Deal
So what do I propose? The Rivlins’ claim I seek to abandon “our capitalist democracy” and embark on an “industrial, social, and political revolution.” This is not really true. While I do advocate for what Bernie Sanders calls a “political revolution,” this would be a revolution rooted in democracy and based on a government that actually serves the population (as opposed to rich donors to both political parties). The revolution I have in mind would look less like the seizure of the state and more like FDR’s New Deal. As historian Eric Rauchway argues, the New Deal was primarily a program aimed at saving democracy from rising fascism abroad.
The New Dealers understood that overcoming the threats of war and fascism required confronting the power of the capitalist class and passing broad-based popular reforms. The New Deal also invested in communities by employing people and building schools, libraries, and, yes, electricity infrastructure. All this helped create a massive popular majority—democracy!—that kept the Democrats mostly in control of both houses of Congress between 1933 and 1995, except for brief periods when Republicans controlled both houses (1947–49 and 1953–55) or just the Senate (1981–87).
It’s Time to End Fossil Capitalism
Today, it is only this kind of political realignment—buoyed by a broad popular majority overcoming partisan gridlock and half measures—that can both save democracy and the environment. The key is the political courage to confront the oligarchic power of capital, but the Biden Administration seems unwilling to do so. If anything, Biden has been conciliatory to the fossil fuel industry, begging it to increase production to deal with gas prices. Moreover, the Inflation Reduction Act investments simply aren’t resonating with the public. Kate Aronoff explains, “A Washington Post–University of Maryland poll conducted in mid-July found that 57 percent of Americans disapprove of his handling of climate change; 71 percent heard ‘a little’ or ‘nothing at all’ about the IRA.”
Only a minority stands to benefit from continued fossil capitalism, while the majority of humanity bears the cost. This basic mathematical logic should point us to a revolutionary form of democracy where the state governed as if the people and the planet matter.
Bipartisanship and Cooperation Can Address Climate Change
By Sheri Rivlin and Allan Rivlin – CEO and President of Zen Political Research
We agree with Mr. Huber that climate change is a great threat and that we should be doing everything that is technologically, economically, and politically possible to address it. Reasonable people can debate what is politically possible as we are doing here. Earlier, we praised Mr. Huber for articulating the scale of the problem and offering his vision of an effective response. It is not the only path, and in Chapter 2 of our book, “Divided We Fall, Why Consensus Matters,” we describe a bipartisan path forward.
Our plan seeks to build bipartisan consensus for economic policies to address 1) economic inequality, 2) environmental sustainability, and 3) preserve our American democracy. The book’s most ardent appeal is to unite progressive Democrats, moderate Democrats, independents, and democracy-supporting Republicans to keep Donald Trump out of power. We praise progressive Democrats for highlighting climate change as the greatest threat to the planet. Sen. Bernie Sanders played a crucial role in passing the Biden Agenda in 2022, via bipartisan legislation (e.g., the Infrastructure Bill) and Democrats-only legislation (e.g., Inflation Reduction Act). We do not “shrug our shoulders” but rather state approvingly that the historic quantity and quality of legislation passed in 2022 was the best Biden and Sanders could accomplish in 2022. We agree that far more must be done and soon.
Politicians Ultimately Listen to Voters
Yet, there are too few votes in Congress to pass the Green New Deal (GND) and voters are sending conflicting messages. Mr. Huber believes politicians listen to oil companies, but mostly politicians listen to voters. The public has not reached “judgment,” as Daniel Yankelovich used the term, to support measures to fight climate change that would impose any cost on themselves. They do not want the planet destroyed, but they also like cheap gasoline. Poll results showing support for specific elements do not transfer to support for the entire GND package, and support is easily torpedoed by charges the GND would increase taxes and energy costs.
An environmental NGO professional recently confided her fear that everything that is politically possible is environmentally insufficient. This raises the question for the activist community regarding how we should talk about the legislation that passes. If we want to do everything possible but everything that is possible is inadequate, should we celebrate or criticize whatever proves possible by becoming law?
We agree Franklin Roosevelt’s passage of the New Deal should be emulated, but we must replace the myth that FDR was a bold progressive with a large Democratic majority with the truth that passage of the New Deal was a triumph of bipartisanship and incrementalism. FDR needed bipartisanship because the Democratic majority was an illusion including anti-progressive, segregationist southern Democrats. FDR built a bipartisan cabinet, including progressive Republicans like Harold Ickes, and passed the New Deal as a series of bills with shifting coalitions. President Biden is attempting to follow a similar path to success.
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