Essay by Eric Worrall
According to The Atlantic, the IRA costs are just estimates. For many items there are no limits on the magnitude of federal climate subsidies available.
The Climate Economy Is About to Explode
A new report suggests that the Inflation Reduction Act could be even bigger than Congress thinks.
Late last month, analysts at the investment bank Credit Suisse published a research note about America’s new climate law that went nearly unnoticed. The Inflation Reduction Act, the bank argued, is even more important than has been recognized so far: The IRA will “will have a profound effect across industries in the next decade and beyond” and could ultimately shape the direction of the American economy, …
The report made a few broad points in particular that are worth attending to: First, the IRA might spend twice as much as Congress thinks. Many of the IRA’s most important provisions, such as its incentives for electric vehicles and zero-carbon electricity, are “uncapped” tax credits. That means that as long as you meet their terms, the government will award them: There’s no budget or limit written into the law that restricts how much the government can spend. The widely cited figure for how much the IRA will spend to fight climate change—$374 billion—is in large part determined by the Congressional Budget Office’s estimate of how much those tax credits will get used.
But that estimate is wrong, the bank claims. In fact, so many people and businesses will use those tax credits that the IRA’s total spending is likely to be more than $800 billion, double what the CBO projects.
Perhaps rosiest of all was the bank’s view of major risks to the IRA. The bill passed with not even a single Republican vote, but the bank concludes that the GOP is relatively unlikely to repeal the law, even if they take the White House in 2024. That’s because it would hurt their own voters most: “Republican-leaning states are likely to see the most investment, job, and economic benefits from the IRA,” the report claims.
With the US National Debt topping $31 trillion for the first time, a blank cheque for climate troughers is nothing to celebrate.
Renewable energy expenditure does not deliver value. All the “uncapped” federal subsidy money will achieve is enrichment for Chinese solar and wind turbine manufacturers and rare earth miners, enrichment for a handful of wealthy US corporatists, higher US interest rates, to contain the inflationary surge triggered by all that government money, more national debt, and no lasting benefit for the US economy.