Illustration by Ben Kothe / The Atlantic
We celebrate when a law is passed that moves the USA in the right direction, but the biggest such law ever still is in the process of implementation. So, creativity and vigilance are still key ingredients to making the best of the law:
The Next Front in the War Against Climate Change
Clean-energy investment in America is off the charts—but it still isn’t translating into enough electricity that people can actually use.
On august 2022, the U.S. passed the most ambitious climate legislation of any country, ever. As the director of President Joe Biden’s National Economic Council at the time, I helped design the law. Less than two years later, the Inflation Reduction Act has succeeded beyond my wildest hopes at unleashing demand for clean energy. So why do I find myself lying awake at night, worried that America could still fail to meet its climate goals?
Because even though unprecedented sums of money are flowing into clean energy, our current electricity system is failing to meet Americans’ demand for clean power. If we don’t fix it, the surge in investment will not deliver its full economic and planetary potential.
The Inflation Reduction Act was historic in scale, investing 10 times more than any prior climate legislation in the United States. Our theory was that we could use public incentives to encourage major private investment in areas where technological innovation could pay big dividends. This in turn would make zero-carbon technology cheaper, disperse it more widely, and drive down emissions faster. During two years of intense, often painful legislative negotiations, I wondered whether we would ever get to test this theory in practice. We ran endless models, but the models only get you so far. If we provided the public incentives, would the private investment really come?
We now can definitively say that the answer is yes. Total investment in clean energy was more than 70 percent higher in 2023 than in 2021, and now represents a larger share of U.S. domestic investment than oil and gas. Clean-energy manufacturing is off the charts. Money is disproportionately flowing into promising technologies that have yet to reach mass adoption, such as hydrogen, advanced geothermal, and carbon removal. And, thanks to a provision that allows companies to buy and sell the tax credits they generate, the law is creating an entirely new market for small developers…
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