On August 16, 2022, President Biden signed into law a historic agreement to address climate change as part of the Inflation Reduction Act (IRA) of 2022. Two years later, it has become clear that this law has at least one major governance shortcoming that Congress, the President and supporters of the bill need to address.
As its title implies, the IRA’s primary purpose is to reduce inflation by reducing deficits, primarily through new taxes on corporations, a stock buyback tax, and a substantial increase in IRS funding for enforcement and tax collections. The IRA also addresses climate change by giving massive subsidies to green energy projects, mainly in the form of tax credits, but it also provides billions of dollars in grant and loan programs.
When the IRA was nearing passage, I wrote that the bill, while far from perfect, represented a significant step forward in addressing climate change by providing much needed investments in renewable energy development, building public charging stations for electric vehicles, weatherizing homes, plugging leaks of greenhouse gases- like methane- from pipelines and wells, and supporting other climate mitigation strategies.
I have also been concerned that the IRA pumps billions of dollars into unproven and extremely expensive technologies, such as carbon capture and storage and direct air capture. Many groups, including PEER, are worried that these technologies will allow the fossil fuel industry to keep drilling, fracking, pumping, transporting, and burning fossil fuels while sucking away precious money that could otherwise be spent on legitimate climate strategies, like supporting clean energy, building efficiency, and protecting intact ecosystems.
So, while the jury is still out on the law’s overall effect on net greenhouse gas emissions—in other words, how well the law is working—waste, fraud, and program failures in the IRA are inevitable because so much money is being pumped so quickly into climate change programs.
To maintain public support for federal climate programs, these failures must be kept to a minimum.
Here is where the one major governance issue I mentioned earlier comes in. Currently, government agencies need more capacity to manage the direct spending, grants, and loans associated with the IRA.
I have already heard from EPA and Department of Energy employees that they often lack the staff to provide adequate oversight for the grants and loans they are managing. Many in Congress are already pouncing on any actual or perceived missteps by the government agencies managing IRA funds to gin up opposition to climate change programs.
This is all happening during a presidential election, while the pressure is on these agencies to move money quickly out the door. Out of $145 billion in direct spending on energy and climate programs in the IRA, the administration announced that only $60 billion in tentative funding decisions had been made as of April 11, 2024.
As we move closer to the election and Congress struggles with its annual appropriations, PEER will be one of many groups advocating for higher staffing levels at the Environmental Protection Agency, the Department of Energy, and the Department of the Interior. These agencies are critical to the success of the IRA.
We will also be pushing for bigger budgets for inspector generals. These watchdogs have been publicly raising the alarm over their lack of resources to monitor IRA funds and mount audits and investigations to uncover wrongdoing. While President Biden’s fiscal 2025 budget request would provide inspector generals with more money to do their work, some point out that even these proposed increases will fall short of what is needed.
It will be months before we know the final budgets of the federal agencies. In days past, Congress would pass a budget for the fiscal year beginning October 1st of each year. This year, it is likely Congress will be forced to pass stop gap spending measures until a new president and Congress are sworn in in January.
That is less than ideal. But it does underscore how important this election is. One party believes the government has a critical role in protecting public health and the environment, while the other wants to bring a “wrecking ball” to the federal government.
It also serves as a reminder that fighting climate change and supporting a good government go hand in hand, and this election, both will be on the ballot.
Tim Whitehouse is the Executive Director at PEER.
