How to Make Sure Federal Climate Money Helps Everyone

By Farah Stockman | August 13, 2023

https://www.nytimes.com/2023/08/13/opinion/federal-climate-funds-ira.html

Larry Towell/Magnum Photos

After President Biden signed the Inflation Reduction Act one year ago, Teslas began popping up everywhere in Cambridge, Mass., where I live. More solar panels appeared on my neighbors’ roofs. Mini split units that heat and cool became all the rage. In wealthy places, the tax credits that have been rolling out because of that landmark law nudged people who were on the fence to make big purchases that will reduce greenhouse gases.

But in the neighborhood in Detroit where I’m renovating a house with my cousin, I have yet to spot a Tesla. People seem more focused on keeping a roof over their head than affixing solar panels to it. A contractor tried to talk us out of installing a mini split. “Gas is cheaper than electricity,” he said. We installed one anyway, but it doesn’t look likely that we’ll get a tax credit for it: Only owner-occupied residences are eligible, my tax preparer told me, and we don’t live in the house. That’s a hangover from the past, when tax credits aimed at encouraging energy efficiency largely excluded landlords and renters.

The result is that more than half of Detroiters — and most New Yorkers, for that matter — can’t take advantage of this particular provision. Landlords, who could play a big role in retrofitting old buildings with insulation and low-carbon technology, might be eligible for other kinds of tax credits and programs in the law. But it’s a headache to figure out how to participate. I suspect most landlords won’t even try. Landlords don’t typically pay heating bills; tenants do.

It’s an example of how the Inflation Reduction Act, which Mr. Biden called the “biggest step forward on climate ever,” can advantage those who already have advantages and leave the poorest out in the cold. The law, which passed by the skin of its teeth last summer, might one day be spoken of in the same breath as the Great Society or the New Deal. But if we are not careful, its enormous benefits could bypass those who are most in need.

To be clear, there’s a lot to love about the Inflation Reduction Act, despite its flaws. It is projected to reduce greenhouse gases by 42 percent by 2030, from a 2005 baseline, compared with the roughly 27 percent reduction that was projected without it. That gets the country closer to the Biden administration’s goal of cutting emissions in half by that date.

The law is enormous in scope and ambition. It addresses deep-rooted issues by providing billions of dollars to assist communities that have suffered from environmental harm. (It also authorizes the U.S. government to negotiate some Medicare prescription drug prices. At long last!) It offers incentives for companies that manufacture new, green technologies on U.S. soil — like the Form Energy factory in Weirton, W.Va., which will make batteries that store solar and wind power for electrical grids. It makes it possible for low-income communities to harness renewable energy in ways that can generate a steady stream of income in the future, like the wind farm planned in North Dakota at the Standing Rock reservation, which is expected to nearly double the annual revenue of the Standing Rock Sioux Tribe.

But this is not your grandma’s environmental protection law. To pass, it had to be all carrots and no sticks. It contains almost no restrictions on greenhouse gas emissions. Instead, it’s a mind-bogglingly vast basket of incentives for corporations and households, big cities and rural towns, nonprofit organizations and utility companies. The goal is to create a coalition of the willing that will transform the way energy is produced and consumed. That puts the onus on communities and individuals to organize themselves to take advantage of this law, which polls show the general public doesn’t understand very well. For low-income places, making use of this law is an even heavier lift. Wealthier places with grant writers and planning commissions have a leg up on much of this funding.

To the Biden administration’s credit, a lot of smart people have put in a lot of long hours trying to unlock the law’s benefits for the non-Tesla set. For the first time, a tax credit is available for used electric vehicles. The Environmental Protection Agency is spending billions on setting up a green bank to make borrowing money to buy solar panels as easy as getting a car loan. The Inflation Reduction Act changes the rules starting in January so that consumers qualify for electric vehicle tax credits on the front end — when purchasing a qualifying vehicle from a dealer.

“Your general observation that a place like Cambridge might have been able to jump on this from the get-go is a point well taken,” John Podesta, who oversees the implementation of the Inflation Reduction Act, told me. “But I think we are doing everything we can to ensure that the benefits of these programs are reaching moderate- and low-income communities.”

He said that programs are being rolled out right now to help renters and that renters benefit from the law in other ways, including jobs created from all this new support for clean energy, declining energy costs and lowering emissions overall.

There are a lot of tools tucked in the nooks and crannies of this law that could help low-income communities that want to make the green energy transition. But they are complicated, and to make the most of them, it is up to leaders and activists to identify them, organize around them and turn them into reality.

Stephanie Gidigbi Jenkins, the vice president for strategy for Communities First, an alliance that helps underserved groups unlock federal funds, told me that the administration has gone the extra mile to reach out to communities that don’t normally get access to federal funds, even setting up a special network that provides technical support. But the jury is still out about whether it will be enough to move the needle in places like Detroit.

“It will take a generation to really understand what these investments will mean,” Ms. Jenkins told me.

This whole-of-government push on climate change has led to an atmosphere of innovation beyond the new law. One of the most creative ideas is the notion that — instead of building a gazillion power plants to meet peak demand when all our cars have gone electric — we should pay communities for the energy generated by their solar panels or pay them to conserve energy by doing small things, like turning off their hot water heaters for a few hours. This concept, called virtual power plants, has been championed by the Department of Energy.

It has sparked the imagination of J. Phillip Thompson, a former deputy mayor of New York who is also a professor of urban planning at M.I.T. He is trying to establish a virtual power plant in eastern Brooklyn that he hopes will create an income stream for residents, including renters. He sees the potential to fight and mitigate not only climate change but also poverty and inequality.

“We have to figure out how to use it,” he told me. “Because if we don’t, wealthy communities will go green, and low-income communities will stay brown. Unless we do something intentionally to make sure that it is fair, it will bypass poor communities.”

This past spring, Mr. Thompson teamed up with Elisabeth Reynolds, a former Biden administration official, to teach a class at M.I.T. that sent students to work with local officials across the country to identify federal funds they might be eligible for and help them apply for them.

The students were both inspired by the once-in-a-generation potential for transformation that lay in front of them and unnerved by the speed with which the money was being disbursed.

“The scale and volume is unbelievable, unfathomable,” Dylan Cohen, a graduate student at M.I.T., told me. But some of the deadlines come up so quickly that it was virtually impossible for places that weren’t already shovel-ready to applThere are good reasons to allocate the money quickly. Fighting climate change is a race against time. It also might be a race against Republicans who want to claw the money back. The students’ experiences still prompted some soul searching, about the trade-offs that take place every day as this enormous, contested American investment unfolds.

“What does it mean to have all this money and to have it not go out equitably?” Mr. Cohen asked.

Good question. Will the I.R.A. be remembered as a gift to the rich? Or a law that lifted up the least of us?

That depends on what we do with it, right now. In other words, it depends on us.