Cut Inflation Act will reduce household energy insecurity, but it could do more

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On Tuesday, President Joe Biden sign the Inflation Reduction Act (IRA) into law. The IRA is a set of credits and regulations designed to provide relief to Americans grappling with rising prices and begin to steer the country away from fossil fuels that contribute to global climate change.

Climate and energy stakeholders are now debating the results of the law. The ERI includes potentially significant benefits for household energy bills and housing quality, as well as community equity – assuming its implementation begins by remembering that historical environmental loads and disparities in housing in our communities are also linked to our energy consumption, particularly our continued reliance on fossil fuels.

In 2020, 27% of US households experienced behaviors associated with energy insecurity. Whether it’s foregoing food or medicine to pay for energy costs, leaving their homes at an unhealthy temperature, or simply not using heating or cooling equipment, these households have made efforts unacceptable to keep the lights on.

Household fossil fuel use reflects the same underlying social inequalities. For example, in 2020, almost 58% of households experiencing behavior associated with energy insecurity used primary heating equipment such as a central air furnace or a built-in heater, which rely on fossil fuels such as as natural gas, fuel oil, kerosene or propane. Additionally, 37% of these households lived in houses with single-glazed windows and 35% had poor or no insulation.

Figure 2 shows the wide disparities in energy insecurity by income, race, and housing status. Most notable is that families with incomes below the national average have an energy insecurity rate of 30%, compared to 14% for wealthier households. Native American and Black households suffer from these conditions at nearly twice the rates of their white counterparts (52% vs. 20%), with Latino or Hispanic households following close behind (47%). Similarly, disproportionate charges exist for households with children, renters and families living in mobile homes or apartment buildings.

Share of households experiencing household energy insecurity, 2020

The latest household survey from the Census Bureau confirms that the rates for all energy difficulties are higher now than the 2020 observations used above, and will likely increase in the near future, especially for tenants. Energy costs have exploded in the last two yearsand the moratoriums on utility cuts that many states imposed during the pandemic have expired.

The question then becomes: can the Inflation Reduction Act eradicate these energy inequalities before they worsen?

What the IRA does for disadvantaged communities

The Inflation Reduction Act is the largest explicit investment to mitigate climate change in federal history. Indeed, by most modelsthe IRA reduces our current greenhouse gas (GHG) emissions by 38% to 40% below 2005 levels, which is a significant (albeit partial) leap forward. The goal of the Biden administration 50% reduction by 2030 and net zero emissions by 2050.

The bulk of the expected emissions reductions will come from the funding and regulatory provisions of the bill for the decarbonization of transportation and industrial energy uses, as well as the direct transition of our energy production and transmission to alternative sources. cleaner and more renewable. But the IRA is also committing $9 billion in residential tax credits, rebates and other investments for building new electric and energy-efficient homes, replacing fossil fuel-dependent systems in existing homes with electric equivalents and training a workforce for the jobs needed to do it.

These policies shift the upfront costs from households for technologies such as heat pumps, air conditioning and induction cookers to payments that families can use immediately, effectively reducing the costs of these technologies, which in its turn, will allow households to save a average of $1,800 per year. These changes in payments are also fair, both directly (with significant increases in incentives for disadvantaged communities and households earning less than 150% of the area’s median income) and indirectly, by making these incentives more accessible to households. low-income people in the form of direct aid. while wealthier households can access better targeted tax credits.

American homes representing 6% of the country’s GHG emissions (or, more precisely, 20% also taking into account the generation and distribution of electricity consumed by households), these improvements in electrification and energy efficiency will help us to significantly reduce the reduction targets.

In addition to these household savings, the ERI provides resources for a range of other community benefits, including: monitoring and reducing pollution, monitoring environmental disparities, clean energy investments in disadvantaged communities and l commitment to environmental improvement and community development.

What is the IRA does not for disadvantaged communities

Despite the admirable actions of the IRA mentioned above, many pointed out that there are several things that the the law does not— in particular in response to the concerns of the environmental justice community on ongoing allocations and rationalization of permits to the fossil fuel industry for continued extraction, as well as for other industries whose pollutants can cause further damage.

Moreover, the law does not invest in public transport, affordable housingcommunity-owned energy generation or other equitable interventions in our built environment that activists were hoping for, especially given their omission from last year’s report Infrastructure Investment and Employment Act (IIJA). And IRA rebates do not cover the full cost of the technologies needed to reduce energy insecurity – a critical dimension for the lowest income households who cannot afford any upfront costs and may not reap the benefits. benefits of the IIJA’s expansion of weatherization.

In short, the ERI simply does not meet all the expectations of the policy and advocacy leaders who helped enact it, and we need more.

What is the IRA could do

Despite the IRA’s flaws in household and community equity, advocates can keep the administration’s feet on fire when it comes to implementing the law. In particular, program rules for implementing tax refunds may more aggressively require targeted outreach and engagement with low-income communities. Administrative bodies such as the Ministry of Energy could provide the necessary resources to local community groups, which can serve as key intermediaries to help residents apply for these benefits. These agencies can also find the top-up funding needed to ensure that the maximum number of households benefit from system upgrades, and that homeowners are monitored to ensure that the benefits they receive do not result in no rent increase or relocation. In short, they can harness the power of the large number of houses occupied by energy-insecure and historically disadvantaged households.

Likewise, observers can be sure that the new program rules for funds for environmental justice and community development efforts require prioritizing communities that may suffer from pollutants that the IRA does not address. For example, tribal nations and rural communities near federally leased oil fields and urban neighborhoods adjacent to polluting manufacturing facilities have already been suffering for decades. These resources could be channeled for capacity building through a range of environmental, technical and legal channels to help places most at risk of extraction and exploitation. In addition, policymakers and stakeholders must remain vigilant to ensure that our decarbonization results stay on track. The models which helped justify the law.

Channeling IRA critics into such vigilance offers a second benefit: creating the political space for the next stage of climate and energy legislation. Ironically, much of the credit for the IRA’s passage is due to many groups who are now critical of it. These groups created the grassroots movement that allowed legislative visions such as the Green New Deal and Build Back Better to surface; their criticism of the IRA can ensure that this space remains open.

Ultimately, just as the ERI will only partially advance the country towards the goal of net zero emissions, it will only partially advance towards broader societal goals of fair and just investments in the climate and energy. Much work remains to be done to ensure that every home in the country can keep the lights on.

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