(NewsNation) — While it’s not clear if the Inflation Reduction Act (IRA), which passed the Senate Sunday, will do anything to reduce inflation in the short-term, it does include what Democrats are calling the most substantial investment in history to fight climate change.
If passed by the House and signed by President Joe Biden, the bill would inject about $370 billion over the next decade into climate and energy programs.
Current estimates suggest the bill’s investments into low-carbon energy initiatives could help the country reduce greenhouse gas emissions to 40% below 2005 levels by the end of the decade. Without the bill, emissions were set to fall about 30% by 2030, according to an analysis by the Rhodium Group, an independent research firm.
The legislation includes billions of dollars in tax credits intended to spur investments in renewable energy production and curb the nation’s reliance on fossil fuels.
That includes $60 billion for a clean energy manufacturing tax credit and $30 billion for a production tax credit for wind and solar. The IRA also gives tax credits for nuclear power and carbon capture technology.
Renewable energy groups say the bill will create hundreds of thousands of new jobs in the clean energy sector and help strengthen the nation’s energy security for years to come.
An analysis by the American Clean Power Association, a renewable energy industry group, estimates that roughly 40% of the country’s electricity will come from wind, solar and energy storage by 2030 if the IRA is signed into law — up from 14% today.
The bill also includes tax breaks for consumers in an effort to incentivize more Americans to switch to renewable energy.
Those buying a used electric vehicle over the next 10 years will get around $4,000 in the form of a tax credit — Americans buying a new EV will get $7,500 per vehicle.
Automakers have warned that most EVs won’t be eligible for the tax credit due to a provision in the bill that requires qualifying vehicles to be assembled in North America, Reuters reported. After 2023, vehicles with batteries that have Chinese components would also be ineligible to receive credit.
New electric vehicles have become more affordable in recent years but the average price is still about $64,000, according to Kelley Blue Book. As car manufacturers invest in new EV models, those prices are expected to come down over the next decade.
Other provisions in the bill are targeted directly toward homeowners, who will be able to receive rebates worth thousands of dollars for installing things like solar panels and heat pumps.
The measures in the package are expected to contribute to a broader decrease in household energy costs by 2030, the Rhodium Group found. Between lower residential electricity bills and reduced spending on gasoline, the research firm estimates household energy costs could fall as much as $1,135 relative to 2021.
The bill will largely be paid for with new corporate taxes, including a 15% minimum tax on big corporations to make sure they don’t skip out on paying any taxes at all.
What’s less clear is whether the Inflation Reduction Act will actually reduce inflation.
A preliminary analysis by researchers at the University of Pennsylvania concluded that the bill’s “impact on inflation is statistically indistinguishable from zero,” although it would reduce cumulative deficits by $248 billion over the budget window.
The legislation faced unanimous opposition from Senate Republicans, who say the spending will do nothing to curb inflation and further hurt middle-class families.
“Their (Democrats) response to the runaway inflation they’ve created is a bill that experts say will not meaningfully cut inflation at all,” Senate minority leader Mitch McConnell (R-Kentucky) said in a statement Sunday.
On the other side of the aisle, majority leader Sen. Chuck Schumer (D-New York) celebrated the passage of the bill, which now heads to the House, calling it the “boldest climate package in U.S. history.”
The Associated Press contributed to this report.