Democrat bill gives $60B for ‘environmental justice’, tax credits for electric cars

After a whirlwind weekend of amendment votes the Senate on Sunday passed the Inflation Reduction Act, a paired-down climate and social spending bill that offers $369 billion for climate and energy funding. 

The $740 billion bill includes billions in new funding for the clean energy industry, ‘environmental justice,’ the agriculture industry and more. 

The bill passed 51-50, including Vice President Harris’ tie-breaking vote, after winning key approval from Sen. Joe Manchin, D-W.Va.

But Manchin’s stamp of approval was not without concession from climate advocates. 

The West Virginia moderate struck an agreement with Majority Leader Chuck Schumer, who agreed to take up pipeline permitting reform legislation before the end of the year in exchange for Manchin’s vote. 

That deal should clear the way for completion of West Virginia’s 303-mile Mountain Valley Pipeline.

The bill also mandated some federal offshore and on-shore gas leasing – before a ‘right of way,’ or lease, can be offered to the solar or wind industries, the federal government must have already offered up to 2 million acres of land for oil and gas leases in the year prior. This means the oil and gas industry could gain up to 20 million acres of federal land for drilling over the next decade. 

Manchin also touted to coal country West Virginia the bill’s $5 billion slotted for the coal industry to revamp plants and make them burn cleaner. 

The American Petroleum Institute gave the bill a partial stamp of approval, lauding at least the drilling lease provisions.

‘While we’re encouraged that the bill will likely open the door to more federal onshore and offshore lease sales and will expand and extend tax credits for carbon capture, we remain opposed to policies that raise taxes and discourage investment in U.S. oil and natural gas,’ CEO Mike Sommers said Monday.

‘Glaringly absent in the bill is permitting reform, which is required for America’s infrastructure needs and to bolster critical oil, natural gas and renewable supplies to meet our current and future energy demand,’ he added.

Here are the other climate highlights of the $750 billion Inflation Reduction Act:   

New taxes 

At least one new tax targeting the oil and gas industry was included in the bill – the oil and gas excise tax, or ‘polluter pays’ provision. Estimated to raise $11.7 billion over the next decade,  the money would go to a Superfund to pay for cleaning up the country’s most hazardous waste sites. Currently there are 1,333 such sites on the national priorities list in all 50 states.  

Taking effect January 2023, the new excise tax on crude oil will be 16 cents per barrel. 

The bill’s other pay-fors – unrelated to climate – include a  15 percent corporate minimum tax rate and $80 billion to hire 87,000 new IRS agents. 

And while drilling companies get more access to public lands and waters, the minimum royalty rate they must pay the federal government is increased from 12.5 percent to 16.6. 

A royalty is also added for the extraction of gas that is later burned off or released as waste instead of sold as fuel. 

Major tax credits 

The bill includes billions in tax credits for corporate manufacturers and individuals. One noteworthy credit for electric vehicle purchasers, however, caps at cars costing $55,000 or less and 40 percent of battery components must be sourced in the U.S. or one of its free trade partners. In addition all batteries in cars eligible for the rebate must be made in the U.S. by 2029 and Chinese-made parts must be phased out beginning in 2024. 

Some Republicans noted that the rebate is mostly a boon to the upper classes, as even with the tax break EVs are mostly out of the price range of ordinary Americans. Other rebates, however, are targeted at low-income households. 

$7,500 tax rebate for new electric vehicle purchases and a $4,000 rebate for used EV purchases 

$113 billion in extended tax credits that encourage construction of renewable electricity plants  

$10 billion in tax credits for facilities manufacturing clean energy technologies, like solar panels and electric vehicles 

$9 billion in home energy rebate programs, targeted and low-income households that install clean energy technology 

Expanded 45Q tax credit, offered to companies that engage in carbon capture and sequestration

Tax credit for new aviation fuel that offers at least 50 percent reduction in greenhouse gas emissions, between $1.25 and $1.75 per gallon 

Billions in grants for new clean energy and cleanup projects 

The legislation includes tens of billions to go toward competitive grants, a sizable portion of which go toward low-income communities that often pop up near polluting factories and plants and the agriculture industry, which his reponsible for around 11 percent of all greenhouse gas emissions, according to the Environmental Protection Agency.

$60 billion total for ‘environmental justice’ to clean up low-income areas, install new technologies and ensure ‘transportation equity’ 

$40 billion to reduce emissions in the agriculture industry 

$27 billion to finance new clean energy projects 

$1.6 billion to reduce emissions in the oil and gas sector 

$5 billion for states and localities to implement their own emissions reduction projects

$500 million to use the Defense Production Act for heat pumps and critical minerals processing 

$2 billion in grants to retool existing auto manufacturing facilities to manufacture electric vehicles

$3 billion for zero-emissions port equipment 

$1 billion to replace school buses, garbage trucks and other medium- and heavy-duty vehicles with zero-emission models

Billions to modernize federal agencies 

The bill includes billions to invest in green energy and technology for federal buildings and agencies, as well as create new jobs with the National Park Service. 

$3 billion for USPS to switch to electric mail trucks 

$2 billion for the Federal Highway Administration to invest in low-carbon construction materials on highways 

$250 million for the Fish and Wildlife Service’s conservation efforts 

$500 million for the National Park Service’s conservation efforts

$500 million to hire new employees in national parks 

$200 million for backlogged park maintenance

$3 billion for the General Services Administration to update government properties with low-carbon materials and invest in emerging clean technologies