The Climate Bill is Big Step For the Energy Transition, The Economy, And a Rational Middle
There's a reason so many people in Washington and across the country were surprised, even shocked, by the new Senate bill to spend nearly $370 billion on energy and climate measures.
The bill would be “the most ambitious action ever taken by the United States to try to stop the planet from catastrophically overheating,” the New York Times reports. Backers call it transformative, while some analysts call it a mixed bag. The bill balances U.S. energy security while providing for the clean energy transition, and cuts U.S. greenhouse gas emissions by roughly 40% by 2030.
It’s packed with measures that would help boost the economy and balance our nation’s energy needs. And for people like me who want to see the nation end our hyper-polarization, the bill provides hope for a rational middle.
The new energy economy
Called the Inflation Reduction Act, the bill also includes about $300 billion in efforts to stem inflation. In a joint statement announcing the compromise bill, Senate Majority Leader Charles Schumer and Sen. Joe Manchin -- the key holdout to previous legislation -- said it “will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030.”
These are not two unrelated issues tied together with a bow. Energy markets and inflation are intertwined. Making domestic energy supplies available and affordable, while reducing carbon emissions, helps improve every aspect of the economy.
Some measures in the bill will help reduce the costs of energy for consumers. Others will increase manufacturing facilities, including for electric vehicles, as well as open up leasing for oil and gas. This means jobs. The United States has every incentive to push for these to take root here rather than overseas.
Lowering methane emissions and addressing environmental justice
There's much more in the bill as well. “For the first time, Congress would set some industry-wide limits on methane leakage,” Vox explains. “Oil and gas companies that emit above a certain level of methane across all operations trigger a fee that will escalate over time.” Many major oil and gas companies have already endorsed a plan to eliminate the industry’s methane footprint by 2030.
Methane reduction is just one of the measures that will especially help minority communities, which are disproportionately affected by pollution. A summary of the bill explains that it includes “over $60 billion in environmental justice priorities to drive investments into disadvantaged communities.”
Similarly, rural communities are too often left out of major projects as well. The bill provides billions to assist these in areas such as agricultural practices, biofuel production and grants to conserve habitats.
To be clear, no bill is perfect, and there are always some critics. Still, a lobbyist for the oil and gas industry told Politico that “the pros generally outweigh the cons.” And the bill is winning support from some environmental and faith groups.
The role of investors
This deal would not have happened without market pressures. Increasingly, investors have been pushing companies and funds to take swifter, more impactful action against climate change. Requirements for ESG (environmental, social and governance) disclosures are forcing companies to acknowledge and address numerous problems, including carbon and methane emissions. And investors recognize that many of the safest bets are those in the Climate Tech space. Just as climate change brings economic destruction, efforts to combat it bring economic strength.
Hope for new politics
As a longtime centrist, I often feel politically homeless -- and I’m not alone. There are millions of us who want to see more compromise and less grandstanding from Washington. It’s no wonder that support for a third political party has reached 62%, and a group of Democrats and Republicans are launching a new one.
I have long seen that particularly when it comes to energy, the loudest voices on opposing sides predominate. Some lawmakers antagonize the oil and gas industry, which is powering America and investing in renewables. Other lawmakers antagonize climate activists, portraying them as out of touch with reality.
But most Americans agree that global warming is happening and caused by human activities. Most want to see real action that helps to address it while keeping the economy strong and jobs plentiful. So for many, this bill provides some hope. Maybe it is still possible, even in today’s political climate, to find room in the rational middle. Compromise always means giving up something. But if this bill makes it to the president’s desk, it will be a very important step forward.
Katie Mehnert is founder and CEO of ALLY Energy. She has served as an ambassador for the U.S. Department of Energy’s Equity in Energy initiative since 2020 and is an appointed representative of the National Petroleum Council.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.