The U.S. Supreme Court recently dealt a blow to the Environmental Protection Agency’s ability to regulate greenhouse gas emissions and pollution from power plants. This decision makes it more difficult for electric utilities to finance and plan their inevitable transition from costly, volatile fossil fuels to sources that are more affordable, reliable and cleaner.
But the ruling will not fundamentally thwart action by state and local governments, many of our federal agencies, or in a growing list of companies — all of which are acting on the evidence that clean energy and technology investments are good for long-term economic prosperity.
Most of us don’t need to look that far to see this investment trend playing out. Many states that made bold climate commitments in the previous election cycle are already meaningfully slashing emissions from electricity generation, buildings and transportation — while creating new sources of revenue and growing new jobs. Cities and municipalities are writing and making headway on robust climate and economic action plans, even across party lines. And American companies — including automakers, shippers and aviation companies — are renewing business strategies to invest in and deploy clean energy technology.
Now, it is Congress’s turn to send an even stronger investment signal by passing the clean energy financial incentives proposed in the reconciliation budget. These cost-effective, proven policies will prepare our communities to fight off the harms of a changing climate, create economic resilience in the face of inflation, as well as show the world that the United States can lead in the face of crisis.
Research shows that the proposed clean energy tax credits for the power sector would significantly slash U.S. emissions, catalyze $459 billion in capital investment and save American households over $5 billion in electricity costs every year.
The investments in question — such as tax credits for clean energy and electric vehicles — are critical to addressing the bottlenecks that are driving up prices and contributing to the worst inflation in 40 years. Boosting domestic demand for clean energy will help drive down the costs of these technologies because producers can finance large domestic manufacturing facilities that benefit from economies of scale.
Importantly, the proposed tax credit package also includes a series of consumer tax credits that will make it easier for Americans to purchase new electric vehicles, electric bikes and heat pumps — each of which are a way to ease the burden of rising prices for gasoline, oil and natural gas.
This package will help create resilient and reliable supply chains, providing much-needed relief at a time when constrained supplies are responsible for nearly 17 percent of headline inflation. Helping mitigate shocks in global markets — such as the significant volatility in EV battery prices in recent months — will increase the pace of domestic technological manufacturing and innovation.
What’s more, analysts show that offshoring our manufacturing capacity to China and elsewhere has made it more difficult to innovate and more expensive to build at home. Offshoring has also contributed to manufacturing’s decline as a source of jobs, investment and opportunity in this country.
There’s no denying that China is currently the dominant global player in the clean energy and technology supply chains. Congress can pass these incentives before it’s too late and make a strategic move to decisively recapture competitiveness in building the technologies of the future.
These types of investments are not inherently partisan in nature — and there’s no reason they should be. After devasting oil shocks in the 1970s, the United States effectively used tools like tax credits, energy efficiency as well as onshoring incentives, and continued to do so for decades, to boost our productivity, grow our economy and bolster energy security.
Investments are about building something new and exciting, not merely tools for avoiding worst-case climate scenarios. A strong reconciliation package is an opportunity to expand prosperity and ensure resilience across the country for years to come.
Despite the Supreme Court’s decision, the United States still has a powerful set of tools that can help us create jobs, fight inflation and strengthen regional economies across America, all while tackling climate change.
John Coequyt is director of U.S. government affairs at RMI, formerly Rocky Mountain Institute, an independent non-partisan, nonprofit organization working to accelerate the clean energy transition.