The bitter fight to deliver a climate change bill to Joe Biden’s desk this summer pitted the White House and its Democratic allies against some of America’s most powerful industry lobbies and every Republican in Congress. It may prove to have been the easy part.
At the heart of the hard-won Inflation Reduction Act (IRA) is a $369bn package of climate investments that Biden called the “most significant legislation in history” to tackle the climate crisis. Estimates suggest it could cut US greenhouse gas emissions by 40% by 2030.
That monumental potential, however, comes with a monumental to-do list and a series of tight deadlines – not to mention high-stakes political decisions in an election season when Democrats are fighting to keep control of Congress.
Implementing the IRA “is a more complex policy challenge and management challenge than any that I’ve seen in my political lifetime”, Felicia Wong, the president and CEO of the Roosevelt Institute, told the Guardian.
One of the first tasks facing the Biden administration is the design and execution of $270bn worth of tax incentives affecting huge swaths of the US economy. At the same time, it must begin distributing close to $100bn in grants and other federal funds to cites, states, tribal nations, companies, non-profits and local communities. It must do so quickly since many programs created or supplemented by the IRA include rigorous timelines, such as a new $27bn greenhouse gas reduction fund, for which money must start going out the door no later than next February and be spent within two years.
And the administration must distribute all of this money and roll out all of this policy while simultaneously:
Coordinating across dozens of different departments and agencies.
Minimizing waste and fraud.
Investing in risky and uncertain technologies.
Smoothing diplomatic wrinkles with international allies who object to the law’s manufacturing and sourcing requirements.
Meeting the expectations of climate organizations and advocacy groups whose support for the IRA was contingent on promoting environmental justice and protecting workers.
Seeking to head off the inevitable attacks and investigations of congressional Republicans.
“It is a massive undertaking,” said Alden Meyer, a senior associate at the climate thinktank E3G. “It’s a very complex, detailed law. There are so many moving pieces to it.”
The person Biden named to take charge of this massive task is the longtime Democratic official John Podesta, one of Washington’s most connected players.
“This is just what [Podesta] was made for,” said E3G’s Meyer. “He knows what he’s getting into because he’s been involved in these kinds of things before, so he doesn’t have to learn on the job. He comes in knowing how to move the levers and make things happen and having the relationships with the cabinet secretaries and others that he needs to have.”
While often seen as a quintessential insider, Podesta also has a less-remarked-on track record as an outside agitator on climate issues. In May, the New Republic described Podesta as “quietly nurturing the climate movement’s next generation of leaders”, including members of the progressive Sunrise Movement. Ali Zaidi, who is now serving as Biden’s national climate adviser and working closely with Podesta on IRA implementation, said Podesta was “on the cutting edge of connecting the dots between climate action and other critical progressive objectives”.
Sam Ricketts, a climate policy advocate and longtime senior adviser to the Washington governor, Jay Inslee, said that Podesta’s outside efforts will be “just as important” in preparing him for his current role. Podesta has been “working in partnership with others throughout the climate community and the public sphere in designing and advocating for these policies he’s now charged with implementing”, Ricketts said. “He now gets a chance to climb inside the government and execute to make it a reality.”
‘Like going to the World Series’
The gears of government have already begun to turn. Podesta is managing a “core team” in the White House that “is designed to be fairly lean”, a senior administration official told the Guardian. Most of the staff working on the law are part of the agencies, though Podesta’s team includes “a small number of senior policy advisers with really specialized skills”, the official said. One team member who will start soon, for instance, is a marketing specialist hired to help the administration drive awareness of the “consumer-facing provisions in this law”, such as a new tax credit that encourages homeowners to install heat pumps.
But before they can take effect, many parts of the IRA require the administration to publish detailed guidance outlining how they will actually work. The administration appears especially focused on rolling out the $270bn worth of clean-energy tax incentives created or expanded by the law. Implementing these provisions, which will be led by the treasury department but require input and expertise from across the federal government, is “a mountain of work that needs to get done fast, and it needs to get done right, and it needs to have the appropriate guardrails so that the money is well spent and not wasted”, Podesta said at a 7 October event hosted by the Roosevelt Institute.
In recent weeks Podesta and his team have been “doing calls, looking for feedback, [and] looking for community input on how to design and execute on these tax credits”, Sam Ricketts, the climate policy advocate, said.
The treasury department has also issued six formal requests for public comment covering a range of tax incentives for consumers and businesses. Last week, the department announced that it would hold a number of meetings and roundtable discussions to share updates and gather external input.
“They have a lot of guidance to put out, and they need to put it out quickly to maximize the impact” of the tax provisions, Sarah Ladislaw, who heads the US program at the climate thinktank RMI, said. The fact that the treasury department set a 4 November deadline for submitting comments “shows that they’re moving quite expeditiously and trying to provide guidance as quickly as possible”, Ladislaw said.
Behind the scenes in the treasury department, Biden administration appointees and non-partisan civil servants are working around the clock. Shelley Leonard, a deputy tax legislative counsel, described the rollout as a “sprint” made particularly complex “because of the number of other agencies involved and because of the high-profile nature of everything that we’re trying to do all at once”.
The internal complexity is matched by external interest in how the guidance will take shape. Leonard recounted leading a recent webinar on some of the new law’s tax rules. She expected an audience of 40 people; in the end, some 1,600 people signed up.
“For tax nerds like us at treasury, implementing something as far-reaching and impactful as the IRA is like going to the World Series,” Lily Batchelder, the treasury’s assistant secretary for tax policy, said in a statement.
A ‘three-legged stool’ of oversight
Overseeing this frenzy of activity alongside Podesta’s team are agency inspectors general, who are responsible for investigating waste, fraud and misconduct in federal agencies, and the White House Office of Management and Budget (OMB). Together, they are taking what the senior administration official described as a “three-legged stool approach” to executive branch oversight.
Podesta’s implementation team is responsible for setting a tone for accountability and “send[ing] a very clear signal to the agencies” that they are expected to coordinate closely with their inspectors general “at the front end”, the official said. Meanwhile, OMB “will be the one supporting the tracking of resources and conducting oversight to make sure the agencies are both in shape to execute according to plan, and then delivering on that plan over time”, Jason Miller, OMB’s deputy director for management, said.
Asked how the White House was approaching oversight of IRA funding, Miller said that while the administration will watch where money goes – information agencies are already required to report publicly – it is particularly focused on tracking how the money is actually used. Oversight “is not just, ‘I’ve handed the dollars to somebody’”, Miller explained. “How are they spending those dollars? When are they spending those dollars? What are the outcomes that they’re getting?”
The administration wants to embed detailed reporting requirements into IRA programs and formalize those requirements before money is distributed. Miller said that this approach, outlined in two recent OMB memos centered on the rollout of the American Rescue Plan and the infrastructure law, reflects a lesson that the Biden team learned from the first Covid-19 package approved under the Trump administration: “It is very hard once those dollars go out the door to ask recipients to implement reporting requirements and provide data that you did not ask for upfront.”
‘An endless educational curve’
Successful implementation will require Podesta and the Biden team to balance spending the money quickly while also spending it effectively and equitably.
“One of the biggest tensions here is actually going to be speed because there’ll be many incentives to get the money out the door quickly,” said the Roosevelt Institute’s Felicia Wong. But “if speed is your only criteria, then you’re going to end up probably deeply shortchanging the democracy element of all of this because speed and input are often at odds”, Wong said.
“It is an uncomfortable tension to sit in,” Dana Johnson, the senior director of strategy and federal policy of We Act for Environmental Justice, said. “And in some ways it’s not really aligned with environmental justice, which says that … we move at the speed of trust” in communities. Because of the aggressive timelines included in the law, “the time that it takes to build trust is not there.”
Johnson’s comments reflect the fact that the greater existence of federal resources does not automatically translate into greater on-the-ground impact. Ozawa Bineshi Albert, a co-executive director of the Climate Justice Alliance, pointed to IRA provisions that invest in rural electricity and provide support for coal miners with black lung disease as examples of the types of programs that need to be locally targeted to achieve their potential.
“There’s some implementation that can happen uniformly, and then there’s some implementation that needs to happen very specific to the needs of certain communities,” Albert said. “Indigenous communities have a much different way of engaging with the government. What does that look like? What does it look like for communities who are experiencing land loss and displacement because of sea level rise? They can’t afford to not be consulted or have their experience shape the solution.”
The outreach challenge is exacerbated by the fact that significant portions of IRA money, such as $5bn in new grants to reduce climate pollution, will end up at the disposal of state governments. Some are controlled by Republican governors who might choose to reject the funding “instead of redistributing it to communities of color or low-income communities”, as Maria Lopez-Nuñez, deputy director of the New Jersey-based Ironbound Community Corporation, put it.
Moreover, discovering funding opportunities, applying for them and meeting their reporting requirements – the same requirements that help the government track whether money is being used as intended – can be complicated and resource-intensive. Working to take advantage of these opportunities “is almost an endless educational curve”, Lopez-Nuñez said. There is a risk that “programs don’t become dispersed based on need, they become dispersed on who … can afford the most skillful consultant to write the grant for them.”
In that case, the IRA could end up reinforcing, rather than disrupting, existing economic and racial disparities. Underlying this fear are the provisions of the law that extend federal support for fossil fuels, including provisions that offer new oil and gas leasing opportunities on public lands.
“Much of what is being built” through oil and gas permitting, or even through investments in new technologies like carbon capture and storage, “could be built on top of existing fossil-fuel infrastructure”, explained Roosevelt’s Felicia Wong. “The argument is that if environmental justice groups and if communities of color are always the ones who are harmed the worst by existing fossil-fuel infrastructure, this does nothing to change that power dynamic.”
‘You’ve got a product that is going to impact … millions of people’
Despite the complexity of the task ahead, for many in the climate movement the IRA’s passage has sparked an all-too-rare feeling: hope.
“I’ve been doing this for 20 years, and I have never seen more energy policy in one piece of legislation,” said RMI’s Sarah Ladislaw. “If you take the Inflation Reduction Act, the Bipartisan Infrastructure Law and the Chips and Science Act, it is the most comprehensive energy policy delivered in legislative form that I’ve ever seen.”
The law “could really transform the politics of climate change over the next several years as these huge programs roll out across the economy”, said Alden Meyer of E3G. “These programs are going to be so popular and so supported by both Republicans and Democrats that it will be hard to take them away.”
This enthusiasm is reflected within the ranks of the Biden administration. “You’re putting in a lot of hard, long nights,” said Krishna Vallabhaneni, the treasury department’s tax legislative counsel, who recently found himself sending an email about IRA tax provisions at 3.13 am. “It can be draining at times. But at the end of the day, you’ve got a product that is going to impact – and, you hope, in a positive way – [the] lives of millions of people.”
