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A year in, landmark U.S. climate law is driving energy transition but hurdles remain


One year ago, President Biden signed the most significant piece of climate policy in U.S. history. It's called the Inflation Reduction Act. The law aims to shift the U.S. economy away from fossil fuels and slash greenhouse gas emissions. NPR's Camila Domonoske covers cars and energy, and Rachel Waldholz is an editor on our climate team. They're here to tell us how it's all been going.

So let's start with you, Rachel, and let's start with the basics. What does this law do?

RACHEL WALDHOLZ, BYLINE: Well, it's a really big law, so it's doing a lot. But, essentially, I think of it as this giant basket of incentives that's aimed at getting all of these different parts of the economy to cut their greenhouse gas emissions by making that cheaper than using fossil fuels. So basically, the federal government is spending hundreds of billions of dollars to subsidize renewable energy and other technologies. I spoke with Jesse Jenkins. He's a professor at Princeton who worked on the law, and this is how he put it.

JESSE JENKINS: In essence, it puts clean energy on sale for households and businesses and industries all over the country, lowering the cost of adoption of everything from electric vehicles to solar panels to the manufacturing facilities.

CAMILA DOMONOSKE, BYLINE: And I'll just jump in here - this is Camila - to note that this law passed last year with only Democratic votes. Republicans now control the House, and many of them want to repeal these climate measures, both because of the price tag associated, which has been growing, and because they simply don't believe the U.S. should be rapidly shifting away from fossil fuels.

MARTÍNEZ: All right. So a really ambitious law - Camila, what are we seeing in year one?

DOMONOSKE: Yeah, so two really big things are happening. And I cover business - this is based on both looking at data and talking to individual businesses, right? The first is the shift to clean energy is happening faster than it was expected to. And the second is that more of the manufacturing involved in that big change is happening in the United States. That was another big goal of this law. It takes time, obviously, to go from starting a factory to having a finished product, but a lot of projects are getting launched.

WALDHOLZ: Yeah. And while the law provides a lot of economic incentives, though, there are a lot of noneconomic hurdles for these projects. So this law is pumping a ton of money into things like renewable energy and electric vehicles, but those projects face issues. You know, clean energy projects - they need land. They need permits. They need to connect to the grid. Those are all huge challenges. So everything is moving faster, but there are definitely still hurdles. But, overall, you know, what we'd say is that we are definitely seeing investment starting to happen, especially around electric vehicles and around manufacturing for batteries and the components for solar panels.

MARTÍNEZ: All right. So that's the big picture. But what about for me, the little person? Camila, if I'm considering maybe an EV or solar panels, I mean, what's in it for me?

DOMONOSKE: Yeah. So for electric vehicles, there are federal subsidies - a consumer tax credit of up to $7,500. That is a famously confusing tax credit to figure out if you qualify for. It should get a little easier next year, when you're able to get it at the dealership, right upfront. There are also tax credits available right now for things like electric heat pumps or solar panels if you're upgrading your house to be greener. There's also another program on the way. This is money for households that are under a certain income level. They're rebates on those same kinds of green upgrades to your home. But that federal money is actually going through the states, so it's taking some time to get it up and running, but it's on the way.

MARTÍNEZ: All right. Now, Rachel, we said this is a major climate policy, so how does it score on that front?

WALDHOLZ: Yeah, as a climate policy, it's a really big deal. Studies agree that it should help the U.S. significantly reduce its contribution to climate change by cutting emissions from fossil fuels. But, by itself, it's still not enough to meet the Biden administration's goal of cutting emissions in half by 2030. And that's important because that's the target that scientists say is necessary to keep warming low enough to limit warming and avoid the worst impacts of climate change.

So I think, stepping back, it's pretty extraordinary that we're having this conversation because, just a couple years ago, it didn't seem possible to go as fast as this law now suggests the U.S. is going to go, and yet the scale of the problem is so big that the U.S. needs to go even faster. So overall, the IRA - the Inflation Reduction Act - has really changed the conversation on climate change. For a long time, the question was, is the U.S. government going to act? And the answer now is yes. The Federal Government has put a ton of money on the table, and the question now is, like, whether the rest of society, other economic players, will pick up those incentives and run with them.

MARTÍNEZ: That's NPR's Rachel Waldholz and Camila Domonoske. Thanks to you both.

WALDHOLZ: Thank you.

DOMONOSKE: Thank you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.
Rachel Waldholz