Above: Schumer and Manchin’s Inflation Reduction Act agreement promises investments in clean energy and the jobs that go with them, but the deal’s not all positive.
Westerners are glad that this package includes programs that address climate change and positive oil and gas reforms but are dismayed by some of the agreement’s problematic provisions.
On July 27th, 2022, Senate Majority Leader Chuck Schumer and Senator Joe Manchin announced an agreement on a new budget reconciliation agreement entitled the Inflation Reduction Act (IRA) of 2022. This package contains historic investments to combat climate change and build America’s clean energy economy. “The new clean energy programs and funding in the IRA will provide much needed relief to rural communities in South Dakota,” said Rick Bell, a member leader of Dakota Rural Action from Rapid City SD and chair of the WORC Clean and Renewable Energy Campaign team.
Westerners from the Great Plains to the Pacific Coast are glad that this package includes programs that will reduce carbon emissions, make communities more resilient to climate disasters, increase taxpayer returns from onshore oil and gas leasing, help ensure timely remediation of new wells, and speed up the renewable energy transition. The bill would invest $369 Billion in funding for energy and climate change projects including:
- Extending renewable energy tax credits until 2025, and establishing new credits for all zero-carbon power generation from 2025-32. The bill also expands the current credits to allow use by rural electric cooperatives, state and local government agencies and other tax exempt entities, and provides larger credits for projects in low-income communities and communities historically dependent on fossil fuels.
- Providing $12.8 billion to help rural communities invest in clean energy, including $9.7 billion for rural utilities to enhance the long-term resiliency, reliability, and affordability of rural electric systems.
- Allocating $440 million to tribal communities for electrification, energy development and climate resilience.
- Improving the onshore oil and gas program by increasing minimum bonds, rental rates, and royalties.
“A benefit of this bill is that it would create direct incentives for co-ops to bolster our investments in grid modernization, renewables, battery storage and other energy technologies,” Bell said. “The IRA would also make critical investments in energy security and it develops cost savings and job-creating clean energy solutions for the future of all our communities—both rural and urban.”
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Unfortunately for Westerners, it’s smaller than the Build Back Better Act passed by the House last year, and includes a number of problematic provisions that encourage continuation of fossil fuel production that would exacerbate climate change.
“The Western Organization of Resource Councils is encouraged that the Inflation Reduction Act holds promising proposals to make long-overdue improvements to our country’s oil and gas program, including increasing bonding levels, royalty rates, and discouraging wasteful practices that release harmful methane into the air,” said Barbara Vasquez, a leader with the Western Organization of Resource Councils from Cowdrey, Colorado. “But we are extremely concerned about a requirement to make unspecified changes to permitting that would undermine the National Environmental Policy Act. And we find it truly perverse to make clean and renewable energy development subservient to a guaranteed level of future oil and gas leasing.”
A few of the provisions that concern Western leaders, include:
- Provisions that tie the fate of renewable energy development on federal lands and waters to continued leasing of federal oil and gas (Sec. 50265), propping up an industry that pollutes water and air, and exacerbating the climate crisis.
- Inclusion of carbon capture as eligible use of funds for energy development projects
- A promise by Senator Schumer to take future action on an undefined permitting reform bill which would severely restrict public involvement in the permitting process.
The agreement is still a long way from becoming law. Before it hits President Biden’s desk, it has to make it through an amendment-adding circus called “Vote-o-rama” where it could be substantially changed. It also has to pass the narrowly divided Senate where Senator Manchin or Senator Kyrsten Sinema could torpedo it.
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