Photo credits: YayaErnst

The recent Inflation Reduction Act (IRA) is properly recognised as the largest climate policy in US history. In this short essay I will first summarise and comment on its provisions, then outline the reactions to it, with a focus on labour unions, and will close by providing my own thoughts.

The IRA allocates around $370 billion over a period of ten years. About 75% of that is in the form of incentives (rather than direct investments or regulatory mandates) to advance the transition to ‘clean energy’ that includes renewables but also nuclear power, biofuels, hydrogen, and carbon capture and sequestration. These incentives focus primarily on advancing the production of clean energy but also on stimulating its consumption. Smaller energy investments focus on tackling pollution in poorer communities and on conservation and rural development.

The IRA also authorises as much as $350 billion of loans to be disbursed by the Department of Energy. While such loans have been around since the Bush Administration, the amounts and the likelihood that they will be used during the Biden Administration are much higher. Finally, its main regulatory provision is the designation of carbon, methane and other heat-trapping emissions from power plants, automobiles, and oil and gas wells as air pollutants under the Clean Air Act, one of the bedrocks of US environmental legislation, which the Environmental Protection Agency implements. Overall, it is estimated that by 2030 the IRA will help reduce emissions by around 40% of 2005 levels, compared to the about 25% reduction projected without it. 

However, the policy mandates that renewable energy siting permits cannot be approved during any year unless accompanied by the opening up of 2 million acres of land or 60 million acres of ocean to oil and gas leasing bids, respectively, during the prior year (for more details see 50265 of Act). In either case, the amount of actual leasing and drilling is subject to market dynamics rather than regulatory limits, while the Act also streamlines the permitting process for pipelines. The growing transition to electric vehicles will lessen the market for oil but the strategic repositioning of natural gas in energy production (as well as plastics) suggests that it (along with nuclear power) will be a long-term source of energy, including in the production of hydrogen. Nevertheless, overall, it is the prevailing view that the IRA will decisively transition the US into renewable energy as part of a broader energy mix.

The IRA is attractive to unions, particularly in building and construction, because it ties incentives to prevailing wage and apprenticeship requirements, even though it does not require union labour or facilitate unionisation. It also ties incentives and loans to the production of energy in the US, thus encouraging the reshoring of supply chains and upgrading the country’s place in the global political economy. The goal of enhancing US competitiveness, particularly towards China, also flows through the $1.2 trillion Infrastructure Investment and Jobs Act of 2021 and is at the heart of the $280 billion Chips and Science Act of 2022.

More than labour (although less than reshoring provisions), the IRA emphasises environmental justice. In addition to explicit provisions in the IRA, the strategic goal of the Administration is that 40% of climate and clean energy benefits of the IRA and the Infrastructure Acts will accrue to marginalised communities, as envisioned by the strategic goal of the Administration known as Justice40. However, much depends on the implementation of the IRA provisions, while Justice40 remains a work in progress at this point. While there is potential for just transition policies in these and other Administration policies, they are currently more implicit than explicit and are focused on coal. There are no provisions for the transitions that the IRA and the Infrastructure policies are enabling, particularly that to electric vehicles.

The IRA does not include regulations limiting the production and use of fossil fuels, whether that be a national renewable energy standard or a phasing out of certain kinds of technologies, as California is doing with gasoline vehicles. The IRA also does not envision the long-term reduction of energy production and use, nor social and ecological standards for the life cycle of ‘clean energy’ technologies, potentially offering a carte blanche to the renewable energy industry. It is worth noting here that the major utility-scale producers of wind energy in the US are the states of Texas, Oklahoma, and Iowa: all Republican and all hostile to climate policy.

Historically the IRA is much larger than the $90 billion for renewable energies included in the Obama Administration’s American Recovery and Reinvestment Act of 2009. On the other hand, the combined IRA and Infrastructure Acts are much smaller than the almost $4 trillion Build Back Better (BBB) agenda of the early Biden Administration which failed to get through Congress. Moreover, while we can see significant elements of the physical infrastructure component of the BBB in these two policies, its social infrastructure component has been reduced to a few important but limited provisions.

The reactions to the IRA have been somewhat, but not wholly, predictable. Many Republican Party leaders have expressed opposition but others, including state leaders and green capital, see opportunities. It is worth noting that both the Infrastructure and Chips Acts were supported by some Republicans and that in December of 2020 the outgoing Trump Administration and the Republican Senate extended tax credits for renewable energy as a part of its pandemic relief policy. The majority of the Democratic Party sees the IRA as a major win and is building an electoral agenda for the November 2022 Congressional elections around it and the other Acts. The more progressive wing of the Democratic Party has voted in support of the Acts while pointing out that they fall short of Biden’s BBB and, to a far greater extent, Bernie Sanders’s Green New Deal. For them the IRA is a missed opportunity that calls for more political action. Most environmental justice organisations and some environmental organisations have taken the same critical approach. On the other hand, most of the largest environmental organisations have supported the Act (see BlueGreen Alliance below), although with some caveats.

Focusing on unions, the AFL-CIO – the umbrella organisation of the US labour movement – and the North American Building Trades – generally opposed to climate policy – are strong supporters and highlight the employment opportunities. The BlueGreen Alliance (BGA) – the largest national organisation of unions and environmental organisations – is also strongly supportive, as these Acts reflect its long-standing goals of green industrial policy, reshoring, and employment. Its support is evident both in its statements and in its commissioning of a study to highlight the job opportunities. Still, the BGA sees significant room for further improvements. The Climate Jobs National Resource Center, which brings together unions in a number of states, has also voiced nuanced support of the Act, highlighting its labour provisions and seeing it as an opportunity to advance labour rights, a climate economy and more social equality. The Labor Network for Sustainability (LNS), a small but visible labour environmentalist NGO that represents the most progressive wing of labour environmentalism, sees the IRA as the foundation for further mobilisation while recognising its limitations as well as the anti-climate nature of many of its provisions. The eco-syndicalist wing of the labour movement has also been supportive along similar lines as the LNS.

On balance, the IRA and the other Acts are significant interventions because of their size, their goals, and the role of the state in driving the green industrial transition. If implemented as intended, they will rearrange the balance between fossil fuel and renewable energy forces in the US. But it is not clear that this emergent ‘clean energy’ hegemonic bloc will coalesce around eco-social priorities as much as green industrial policy.

It is very unlikely that the renewable energy, labour and environmental justice elements of the IRA, and even the other Acts, would have been included without the persistence of progressive efforts. However, the forces behind these Acts are disparate and conflicting. Now the task of the progressive movement is not only to turn these Acts into stepping-stones toward more profound eco-social change. It is also to prevent these policies from consolidating a future whose significant desirable elements obscure equally significant social and ecological costs. For example, it is worth noting that the National Labour Relations Act of 1935 (NLRA) and the Fair Labor Standards Act of 1938, the cornerstones of US labour law, left out agricultural, domestic and tipped workers – disproportionally affecting African-Americans, immigrants and women to this day. As I see it, the challenge facing eco-social forces in the US is not only to build and expand on the renewable energy policies of the IRA but, also, to contest their socially and ecologically unregulated implementation in order to minimise the purchase of success for some people or places at the expense of others.