President Joe Biden’s major climate initiative, the Inflation Reduction Act, could get derailed if budget fights in Congress end up shutting down the government next month.
On Wednesday night, the U.S. House approved a short-term funding bill that avoids a shutdown on Friday but it’s unclear whether a broader, long-term deal can get passed. U.S. House Minority Leader Kevin McCarthy, a Republican who hopes to be majority leader in January when his party takes control, attacked spending plans while some Senate Republicans have yet to signal their support.
“Enacting significant pieces of legislation like the IRA takes a lot of people,” a Biden administration official said. “Even threats of a government shutdown are disruptive and destructive.”
Failure to approve funding would force thousands of government employees to stop working, which would hurt efforts to establish programs and distribute money for various clean energy and climate-related initiatives totaling about $360 billion.
For example, the Treasury Department is working on finalizing rules for which vehicles and components are eligible for tax credits of up to $7,500 for electric vehicle purchases starting next year.
Once they take over, Republicans in the House will also have a chance to scrutinize how IRA money is being spent through hearings, which could also stymie implementation.
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Clean energy programs may be slowed down by Washington politics but they won’t be stopped. Incentives in the Inflation Reduction Act to build in America have already spurred BMW, Honda and Hyundai to announce billions of dollars in investments to build or expand battery production in the U.S.
And while Republicans have criticized the environmental provisions in the IRA, the jobs created under the plan are harder to attack. The legislation could generate an average of about 21,000 jobs per year in Pennsylvania, 17,000 in Michigan and 4,000 in Nevada, according to the Political Economy Research Institute. Those are all key presidential electoral states.
The View From The States
The action is shifting to the states, which will play a major role in determining how and when the IRA investments are implemented, according to Sophie Kahler of the National Caucus of Environmental Legislators. She cites everyone from regional power grid operators to state regulatory commissions as key actors in deciding what projects are approved for pollution reduction grants and other programs.
- States will decide how grants and other funding from the IRA gets funneled to local communities. Here's a good breakdown of how they can benefit.