The Inflation Reduction Act, just signed by President Biden, will mark the most significant step the nation has taken toward a comprehensive national energy strategy. More important, this legislation will ensure a federal effort to reduce our reliance on fossil fuels, the primary cause of climate change.
Indeed, according to a recent analysis by the REPEAT Project at Princeton University, the Inflation Reduction Act would cut U.S. emissions by 3.8 billion metric tons of carbon dioxide equivalent by 2030.
This legislation also communicates to the business community that the federal government will support private investments in clean energy. This is essential if we will unlock the scientific advances required to one day be a nation — or even a planet — that is carbon neutral. We can get there only by funding the science that will lead to the development of energy sources that do not pollute.
Understanding just how critical the Inflation Reduction Act is to the renewable sector, Bill Gates, the founder of Microsoft and Breakthrough Energy, a foundation to advance business investment in clean energy, wrote in the New York Times: “Through new and expanded tax credits and a long-term approach, this bill would ensure that critical climate solutions have sustained support to developing new industries.”
Opponents of the Inflation Reduction Act assert this legislation either does too little or would be ineffective. But these criticisms ignore something amazing that is taking place in California, where a government policy to reduce carbon emissions and spur economic investment in clean energy technologies is working.
Implemented in 2011, California’s Low Carbon Fuels Standard (LCFS) was designed to reduce emissions from transportation fuels, the largest source of greenhouse-gas emissions. The program is a massive success, with more than 75 million metric tons reduced to date and is on track to achieve its stated goal of reducing the carbon intensity of transportation fuels in California by at least 20 percent by 2030.
The Golden State’s LCFS quietly, but constructively, affects the lives of Californians by bringing more fuel options to drivers. The LCFS gives drivers a break from high gas prices by reducing demand for gasoline and diesel, increasing the supply of lower-cost biofuels, and by bringing more efficient vehicles like EVs and hydrogen vehicles into the market.
The LCFS also means cleaner air to breathe, especially in low-income neighborhoods where air quality tends to be worst, and provides community resources. According to the California Air Resources Board, “21.2 (percent) of incentives went to customers in underserved communities, 10 (percent) to customers in low-income communities and another 10 (percent) to customers in disadvantaged communities.”
Building on these impressive achievements in reducing carbon emissions, CARB — the agency that oversees the clean air program — recently announced that it is redoubling its efforts on the LCFS to achieve carbon neutrality from transportation fuels by 2045 or even sooner.
California’s LCFS has created more than $10 billion in credit value that flows directly from petroleum refiners and importers to producers and manufacturers of clean fuels, vehicles and technologies. In other words, it is spurring economic growth in industries racing to slow carbon pollution.
The message I like to deliver is that the state’s LCFS has proven to be an effective policy, and a similar federal policy could expand the effects of the Inflation Reduction Act. If we could add to the public/private partnerships created by the Inflation Reduction Act with a National Clean Fuel Standard — technology and fuel neutral — then imagine the massive carbon reductions our nation would achieve in the next 10 years.
The Inflation Reduction Act could set off a movement to establish a national energy policy that lowers carbon emissions every year with both existing and new technologies. In fact, in coordination with other key stakeholders, my organization has been pursuing a federal clean fuel standard bill to be introduced in the Senate.
When the Inflation Reduction Act, just like California’s LCFS, begins to show progress and economic benefits, I am confident lawmakers on both sides of the aisle in Congress will support these carbon-reducing policies. After all, a clean and sustainable economy is stable and profitable, and often good business transcends political ideologies.