Written by Bennett Kirschner
The Inflation Reduction Act marks a major milestone in the effort to combat climate change across the country. By implementing more stringent taxes on wealthy corporations and earmarking billions in subsidies for the clean energy sector, the IRA addresses multiple social ills at once, from socioeconomic inequity to greenhouse gas emissions and poor air quality.
While we’ve heard so much about what it means for the country and the planet at large on a broader scale, we may not hear as much about the immediate impact the IRA will have on American citizens’ everyday lives. Here are just a few of the ways that the groundbreaking legislation could have an effect on your daily outlook in the coming years, if not sooner:
1. Pay Less at the Pump: In the spring and early summer, headlines were dominated by news of record-high gas prices across the country. Thanks to the war in Ukraine and supply chain disruptions, one of our most essential daily commodities had suddenly become a major source of financial strain and a driver of inflation. Environmental legislation that makes gasoline more affordable may sound like a paradox, but the IRA managed to do exactly that. By issuing hefty tax incentives for the purchase of Electric Vehicles (EVs) – up to $4,000 for used EVs and up to $7,500 for new ones – the legislation accelerates the adoption of a technology that might have otherwise been cost prohibitive for many, thus increasing access to cars that don’t depend on fossil fuels and reducing nationwide demand for gasoline.
Obviously, lowering gas prices doesn’t necessarily serve the environmental mission of reducing greenhouse gas emissions. But as long as EVs remain outnumbered by gasoline-powered cars, it’s vital that working class people be able to afford the fuel they use to get from one place to another. With the passing of the IRA, a temporary reprieve from higher gas prices has already been a welcome development for millions of Americans.
2. Decreased Energy Bills: It’s no secret that low-income households across the country have struggled to keep up with their energy bills for years. No one should have to spend a large chunk of their income just to keep their home at a livable temperature, and the IRA is designed to mitigate this exact pressure that so many American families endure on a daily basis. A series of initiatives, including electric grid renovations and investment in clean energy, will collectively make household electricity more affordable, while other tax incentives give Americans the chance to reduce the amount of energy their own home consumes on a monthly basis.
Most of those tax incentives are targeted at low- or moderate-income homeowners who might not otherwise be able to pay upfront for energy-efficient technologies that would save them money in the long-term. With the passing of the IRA, sizable income-based rebates for heat pumps, electric wiring, and electric kitchen appliances can help people purchase the appliances they need to reduce their monthly energy consumption at home. A perfect synergy between environmental and economic progress is achieved – those most in need of economic support are receiving it, and the nation collectively reduces emissions, one household at a time.
On top of these itemized rebates, a 30% tax credit for more intensive energy-efficiency upgrades could motivate millions to maximize their home’s efficiency. Rooftop solar panel installations have already reached new heights of popularity with homeowners, and the instatement of this credit gives those who haven’t considered renewable energy for their home even more reason to purchase and install solar panels. Complementary services like full-home energy audits and battery storage also qualify for this tax credit, giving many families the chance to pay less for their monthly energy bill and drastically reducing their own carbon footprint.
3. Better Air Quality: Though it hasn’t received as much attention, the IRA also took major steps towards reducing airborne pollutants that have severe long-term health implications for millions. Already, one study asserts that the transition to green energy spurred by the IRA and the resultant improvements in air quality could prevent 3,900 premature deaths and 100,000 asthma attacks in the next eight years. These prevented ailments will be disproportionately found in poorer communities, whose close proximity to fossil fuel-burning power plants makes them vulnerable to severe but avoidable respiratory illnesses. With this, the IRA once again embodies the phrase “environmental justice” by advancing economic equality and environmental welfare in one fell swoop.
But airborne pollutants don’t just exist outside of the home – the household tax incentives will help families reduce airborne pollutants inside of their homes as well. Even when turned off, gas appliances can leak carcinogenic chemicals into the home, causing higher rates of asthma in children. By incentivizing a full transition to electric appliances, the IRA is helping to improve air quality both outside and inside, so that all people, regardless of class, have a better chance at leading a healthy life. We spend so much time discussing greenhouse gas emissions’ long-term impact on our lives through climate change – poor air quality, on the other hand, has immediate repercussions on those who can’t afford to avoid it. The IRA marks substantive progress in addressing both.
4. Lower Health Care Costs: If you find it strange that health care legislation is a major component of sweeping environmental reform, you’re not alone. But the IRA did include several sections that focus on keeping health care costs down for people who depend on Medicare, Medicaid, and Affordable Care Act (ACA) insurance plans.
Subsidies for several ACA plans that were scheduled to expire at the end of 2022 were extended for three more years, giving approximately two million people the chance to keep their health care plans at their current rates.
Meanwhile, patients on Medicare and Medicaid will have an easier time affording the prescription drugs they need over the coming years, thanks to a number of initiatives: starting in 2026, the federal government will be able to negotiate drug prices with pharmaceutical companies for the first time in over 20 years;Medicare recipients' out-of-pocket expenses for prescription drugs will be reduced by an annual out-of-pocket medication spending cap of $2,000; Medicaid patients can no longer be charged any out-of-pocket cost for receiving a vaccine; and monthly insulin costs cannot exceed $35 for any Medicare or Medicaid patient.
Clearly, the IRA marks a major step towards attaining the worthy goals of environmental sustainability and economic equality. But meeting the emission reduction benchmarks set by the Biden administration in 2021 are by no means small tasks, and the IRA is in many respects only a start. In order to pass the Senate floor, this historic legislation did have to come with a number of caveats, including provisions that support the continued extraction and consumption of fossil fuels. Over the coming years, then, elected officials will need to pass more legislation to support environmental justice, while private companies will have to exceed their own emission reduction goals if the country is to fully combat climate change and support the Americans most vulnerable to its dangerous impacts
The IRA is estimated to reduce the US’s overall emissions to 60% of our 2005 emissions by 2030 – the Biden administration’s goal, set in 2021, was to bring emissions down to 50%. This sweeping legislation marks a major step towards that benchmark, to be sure, but more reform is urgently needed as we try to sustain life on this planet.
