WASHINGTON — It’s a pivotal moment for President Joe Biden’s climate agenda as he reaches the halfway point in his first term, with his administration planning to impose major climate policies touching everything from the cars Americans drive to the electricity they use.
Biden campaigned on promises to combat climate change, accelerate renewable fuels and decarbonize the nation’s power grids by 2035. As president, he’s pledged the U.S. will at least halve its greenhouse gas emissions by the end of the decade. The sweeping climate law known as the Inflation Reduction Act is set to massively help the U.S. reach that goal, policy analysts say, but success also depends on a host of other policies to force emission cuts and spur efficiency.
President Joe Biden signs executive orders after speaking about climate change issues Jan. 27, 2021, in the White House in Washington.
With the IRA’s enactment, action now shifts from Congress to federal agencies. Scores of new measures are needed to implement the law’s climate provisions, but officials are also racing to finalize separate, long-planned regulations around issues as disparate as emissions from power plants, vehicle pollution and business disclosures of climate risks.
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“Now it’s go time,” said Trevor Higgins, an acting senior vice president at the Center for American Progress. “Whether it’s the rules for vehicles or soot or smog, all of them have to get done.”
A combination of political and legal pressures makes 2023 a critical year for the administration’s environmental agenda. Although Biden has at least two years left in the White House to try to fulfill his climate commitments, major measures must be proposed and finalized soon to better ensure they survive legal challenges as well as anticipated Republican opposition in Congress.
Regulations finalized in the final six months of an administration are particularly vulnerable to being overturned through a simple majority vote in the House and Senate, under the Congressional Review Act. And if a Republican wins the White House in two years, the next administration may opt not to vigorously defend Biden-era rules in court. That puts a premium on earlier action.
Activists are urging the administration to hurry — especially in writing a raft of regulations targeting greenhouse gas emissions and other pollution from power plants.
“We don’t want to leave anything to chance,” said Charles Harper, a power sector policy expert at the advocacy group Evergreen Action. “The climate crisis is so urgent and these power sector rules are so vital to President Biden’s agenda.”
Work spans the executive branch, as Biden seeks to marshal a “whole-of-government” response to the climate crisis. At the Department of Energy, work is underway on energy efficiency standards that help cut power demand and related emissions. The Interior Department is honing its plan to stifle venting and flaring of natural gas from wells on public land. And the Securities and Exchange Commission has advanced a proposal to require public companies to disclose how they are managing climate-related risks.
The president is also under pressure to use special executive powers to designate marine sanctuaries and protect other lands, preventing an array of activity on them, including future oil and gas development. On his seventh day in office, Biden signed an executive order promising to conserve at least 30% of U.S. lands and waters by the end of the decade. But the administration “needs to act with more urgency to actually keep those commitments in sight,” said Jenny Rowland-Shea, director for public lands at the Center for American Progress.
The biggest challenge may be in finishing rules that haven’t yet been proposed — including measures limiting carbon dioxide emissions from power plants and vehicles. “They’re already running up against the clock for those,” said Amit Narang, a regulatory expert with Public Citizen.
The administration is also up against a regulatory process that is not designed for speed, with requirements for publishing proposed rules, subjecting them to public comment and other other steps that can span months, if not longer.
Officials held off proposing the power plant regulation while Congress developed the Inflation Reduction Act and as the Supreme Court scrutinized a related measure, since its ruling can help them divine the most legally durable approach.
And though the Environmental Protection Agency imposed new tailpipe emission standards on cars and light trucks through model year 2026, it hasn’t yet advanced the next tranche of requirements governing vehicles produced later this decade. The transportation sector is the largest source of U.S. greenhouse gas emissions today.
Stifling methane is a major priority in the climate fight because it’s a highly potent greenhouse gas. But the administration has moved slowly on advancing an EPA plan to clamp down on methane emissions from oil and gas wells. The EPA outlined an initial blueprint on methane in 2021, then only fleshed it out with a supplemental proposal released during a UN climate summit last November, setting the stage for possible finalization this year. By March, the agency also is seeking to propose its plan for assessing new fees of at least $900 per ton on methane released from certain oil and gas operations, under a mandate from the Inflation Reduction Act.
Republicans in charge of the House, including Speaker Kevin McCarthy of California, have also vowed tough oversight of the Biden administration’s energy and environmental policies — with hearings grilling agency officials and other scrutiny that could complicate rule-making.
Another challenge: simply recovering from staffing and operations cuts under the Trump administration. Agencies that develop environmental rules “had been decimated in terms of human capital; some of them had stopped collecting the data that you need to actually do the regulatory work,” White House National Climate Adviser Ali Zaidi said on the sidelines of the U.N. climate summit in November. “We’ve been doing the work of rebuilding that.”
What's in Democrats' big bill? Climate, health care, deficit reduction
What's in the 'Inflation Reduction Act'?
The biggest investment ever in the U.S. to fight climate change. A hard-fought cap on out-of-pocket prescription drug costs for Medicare recipients. A new corporate minimum tax to ensure big businesses pay their share.
And billions left over to pay down federal deficits.
All told, the Democrats' “Inflation Reduction Act” may not do much to immediately tame inflationary price hikes. But the package that won final congressional approval in the House on Friday and heading to the White House for President Joe Biden's signature will touch countless American lives with longtime party proposals.
Not as robust as Biden's initial ideas to rebuild America's public infrastructure and family support systems, the compromise of health care, climate change and deficit-reduction strategies is also a stunning election year turnaround, a smaller but not unsubstantial product brought back to political life after having collapsed last year.
Democrats alone support the package, with all Republicans voting against it Friday. Republicans deride the 730-page bill as big government overreach and point particular criticism at its $80 billion investment in the IRS to hire new employees and go after tax scofflaws.
Voters will be left to sort it out in the November elections, when control of Congress will be decided.
Here's what's in the estimated $740 billion package — made up of $440 billion in new spending and $300 billion toward easing deficits..
Lower prescription drug costs
Launching a long-sought goal, the bill would allow the Medicare program to negotiate some prescription drug prices with pharmaceutical companies, saving the federal government some $288 billion over the 10-year budget window.
The result is expected to lower costs for older adults on medications, including a $2,000 out-of-pocket cap for older adults buying prescriptions from pharmacies.
The revenue raised would also be used to provide free vaccinations for seniors, who now are among the few not guaranteed free access, according to a summary document.
Seniors would also have insulin prices capped at $35 a month.
Help paying for health insurance
The bill would extend the subsidies provided during the COVID-19 pandemic to help some Americans who buy health insurance on their own.
Under earlier pandemic relief, the extra help was set to expire this year. But the bill would allow the assistance to keep going for three more years, lowering insurance premiums for some 13 million people who are purchasing their own health care policies through the Affordable Care Act.
'Single biggest investment in climate change in U.S. history'
The bill would infuse nearly $375 billion over the decade in climate change-fighting strategies that Democrats believe could put the country on a path to cut greenhouse gas emissions 40% by 2030, and “would represent the single biggest climate investment in U.S. history, by far.”
For consumers, that means tax rebates to buy electric vehicles — $4,000 for used vehicle purchase and up to $7,500 for new ones, eligible to households with incomes of $300,000 or less for couples, or single people with income of $150,000 or less.
Not all electric vehicles will fully qualify for the tax credits, thanks to requirements that component parts be manufactured and assembled in the U.S. And pricier cars costing more than $55,000 and SUVs and trucks priced above $80,000 are excluded.
There's also tax breaks for consumers to go green. One is a 10-year consumer tax credit for renewable energy investments in wind and solar.
For businesses, the bill has $60 billion for a clean energy manufacturing tax credit and $30 billion for a production tax credit for wind and solar, seen as ways to boost and support the industries that can help curb the country's dependence on fossil fuels.
The bill also gives tax credits for nuclear power and carbon capture technology that oil companies such as Exxon Mobil have invested millions of dollars to advance.
The bill would impose a new fee on excess methane emissions from oil and gas drilling while giving fossil fuel companies access to more leases on federal lands and waters.
A late addition pushed by Sen. Kyrsten Sinema, D-Ariz., and other Democrats in Arizona, Nevada and Colorado would designate $4 billion to combat a mega-drought in the West, including conservation efforts in the Colorado River Basin, which nearly 40 million Americans rely on for drinking water.
How to pay for all of this?
One of the biggest revenue-raisers in the bill is a new 15% minimum tax on corporations that earn more than $1 billion in annual profits.
It's a way to clamp down on some 200 U.S. companies that avoid paying the standard 21% corporate tax rate, including some that end up paying no taxes at all.
The new corporate minimum tax would kick in after the 2022 tax year and raise more than $258 billion over the decade.
There will also be a new 1% excise tax imposed on stock buybacks, raising some $74 billion over the decade.
Savings from allowing Medicare’s negotiations with the drug companies is expected to bring in $288 billion over 10 years, according to the non-partisan Congressional Budget Office.
The bill sticks with Biden’s original pledge not to raise taxes on families or businesses making less than $400,000 a year.
Yet money is also raised by boosting the IRS to go after tax cheats. The bill proposes an $80 billion investment in taxpayer services, enforcement and modernization, which is projected to raise $203 billion in new revenue — a net gain of $124 billion over the decade.
Extra money to pay down deficits
With some $740 billion in new revenue and around $440 billion in new investments, the bill promises to put the difference of about $300 billion toward deficit reduction.
Federal deficits spiked during the COVID-19 pandemic when federal spending soared and tax revenues fell as the nation's economy churned through shutdowns, closed offices and other massive changes.
The nation has seen deficits rise and fall in recent years. But overall federal budgeting is on an unsustainable path, according to the Congressional Budget Office, which recently put out a new report on long-term projections.
What's left behind?
The package, nowhere near the sweeping Build Back Better program Biden once envisioned, remains a sizable undertaking and, along with COVID-19 relief and the GOP 2017 tax cuts, is among the more substantial bills from Congress in years.
While Congress did pass and Biden signed into law a $1 trillion bipartisan infrastructure bill for highways, broadband and other investments that was part of the White House's initial vision, the Democrats' other big priorities have slipped away.
Gone, for now, are are plans for free pre-kindergarten and community college, as well as the nation's first paid family leave program that would have provided up to $4,000 a month for births, deaths and other pivotal needs. Also allowed to expire is the enhanced child care credit that was providing $300 a month during the pandemic.
