The Costly, Job-Killing Narrative on Climate Change Is Over
The name says it all. A landmark bill introduced in the Senate that includes historical climate and energy investments doesn’t have climate in its title at all. And in so doing, the “Inflation Reduction Act” could reframe climate solutions in a way that aligns with the facts — transitioning to renewable energy is affordable, available, reliable, and equitable. And according to an analysis by RMI, the investments in this bill will help drive down energy cost inflation.
For years, opponents of climate action have rehashed the same old messaging about climate investments, claiming they are “costly” and “big government handouts” — while analyses, including from RMI, have repeatedly shown the opposite. Clean energy sources are cheap, getting cheaper, and can slash energy costs quickly. The robust nature of this package will bolster our energy security and invest in our manufacturing capacity — all of which can stabilize electricity prices for the long haul.
This bill makes significant and needed investments in energy efficiency, renewable energy production, and many more low-carbon climate solutions — across nearly every economic sector like electricity, transportation, buildings, and industry.
These down payments are about more than taking a bet, they are specifically tailored to the challenges we face today. Over half of today’s inflation is due to supply-side factors that are the direct result of decades of underinvestment and neglect. This bill is a major step toward undoing that legacy.
Earlier this year, RMI showed that clean energy tax credits for wind, solar, and storage — which are in this bill — would save American households $5 billion annually by 2024. Additionally, the tax credits and rebates for building electrification, efficiency, and electric vehicles will lower energy costs significantly by shielding us against the fluctuating prices — and pinches — we have all experienced with fossil fuels at the pump and in our homes.
Moreover, unlike fossil fuel commodities, with volatile prices that can be upended by the whims of an autocrat, clean energy is supplied from manufacturing processes that improve as they scale; meaning that we can continue driving down costs by expanding production.
Since 2010, the deployment of clean energy technologies has exploded, reducing solar, wind, and battery costs by 85%, 55%, and 85% respectively. That means, the more clean energy projects that get built as a result of this package — and it will likely be a lot — the more prices will drop. Despite recent supply chain related price increases for these technologies, they can still produce significant further cost savings for American households.
Perhaps the Russian invasion of Ukraine was the biggest wake-up call showing how we must rapidly diversify our energy system towards clean energy technologies. When a security crisis and the consequential global market instability shook the world, we saw the cost of oil, gas, and coal skyrocket. The continued ripple effects across the economy are still driving inflation in our household energy costs. But it’s clear now that clean energy sources, clean technology, and a more diversified energy mix offer more insulation from those types of shocks.
The Inflation Reduction Act’s investment in American-made innovation and manufacturing will compound these consumer cost savings too. This legislation takes desperately needed steps to bolster US supply chains in electric vehicles, batteries, solar, and wind through investments in advanced manufacturing, critical minerals mining, and new technological solutions. This is key to ensuring the United States can build more of the technologies that will create millions of new jobs, slash energy costs, and help revitalize American regions through new export opportunities and induced demand.
Greater competition in the global marketplace for these goods will, in turn, help drive down costs, improve the quality of new technologies, and offer greater choice to American consumers and businesses. Today, just one country, China, dominates almost every segment of the solar and battery supply chains — stifling that cost-lowering competition and imperiling clean energy supply chain resilience.
And it goes without saying that its projected impact on carbon emissions — slashing domestic contributions by 40% — will be invaluable in terms of preventing costly, detrimental climate disasters. Since 1980, the United States has suffered 310 weather and climate disasters with overall damage costs reaching or exceeding $1 billion. We still have time to prevent this trend from continuing and worsening. This legislation gives us a solid foundation to do so.
It’s long past time that Congress recognizes the economic costs of inaction and the cost-savings of action. The Inflation Reduction Act does that. Congress and the President have a historic opportunity on their hands to help Americans’ pocketbooks, global energy security, as well as the planet.
The Inflation Reduction Act offers an incredible opportunity to accelerate a clean energy industrial revolution, while helping fight inflation. See our roundup of the bill’s far-reaching potential to transform the economy, from renewable electricity to cleaner industry.