The Inflation Reduction Act (IRA) was passed by Congress and signed into law by President Joe Biden on August 16, 2022, but the contents of the legislation are contradictory to its stated purpose. The real point of the IRA is the creation of an enormous renewable energy slush fund, paid for by deficit spending. The lion’s share of that spending comes in the form of tax credits to “green” energy sources such as wind and solar power, battery storage, and electric vehicle (EV) purchases. The IRA also directs substantial funding and subsidies for “environmental justice” initiatives and green lobbying groups, many of which are sketchy, newly formed entities.
After its enactment into law, President Joe Biden acknowledged the IRA had “nothing to do with inflation.” Rather, the green subsidies contained in the bill, which the Biden administration said would total $369 billion, amounted to what they described as “the most significant action…taken on clean energy and climate change in the nation’s history.” Since then, however, the price tag on these tax credits has increased substantially, with a wide range of predictions for how much they will ultimately cost. All credible estimates are significantly more than the Biden administration initially claimed, including one that puts the actual cost as high as $1.8 trillion.
For instance, in September 2022, the Congressional Budget Office (CBO) estimated the green energy spending in the IRA to be $392 billion, not $369 billion as the Biden administration claimed. This spending includes, to name some examples, investment and production tax credits for “clean” energy storage, carbon capture and sequestration, a tax credit for nuclear power production, credits for the production of “clean” fuels, a tax credit for electric vehicles, credits for manufacturing facility retrofitting, and direct expenditures on agriculture and forestry conservation programs, energy efficiency programs, industrial decarbonization projects, and the EPA’s Greenhouse Gas Reduction Fund.
As Heartland points out in its new report, The High Costs of Climate Scams: Assessing the Green Giveaways in the Inflation Reduction Act, the best way to eliminate the IRA’s enormous and wasteful subsidies would be a total and complete federal repeal of the IRA. Barring congressional repeal, which is a heavy lift even with Republican control of the Senate and House of Representatives, there are still a few ways in which state legislators can indirectly push back against these IRA subsidies and programs.
For instance, states could adopt the American Legislative Exchange Council’s (ALEC) model bill, “The Electric Reliability Act,” which would require new firm power to be brought online before closing existing firm power sources. Replacement of firm power plants that produce power on demand with variable wind and solar is insufficient to secure grid reliability with present demand, much less with the added demand likely to flow from the EPA’s de-facto EV mandate, which essentially requires that a minimum of 56 percent of new cars and trucks sold in the United States by 2032 would have to be EVs in order to meet the new emissions standards.
State legislators could also adopt a law requiring state energy commissions to forbid the closure of existing baseload power plants until it can be proven the added demand for electric power from the EPA’s new vehicle emissions rule will not hamper reliability. To achieve that goal, the owners of new EVs should pay a surcharge for ongoing grid updates and expansions rather than having general ratepayers subsidize the added strain that EVs are putting on the grid. State policymakers should also direct energy commissions to require that for every X percent in demand new EVs place on the grid, some amount of new on-demand power supply (coal, natural gas, or nuclear) should be added to the grid or existing plants be upgraded to supply more power. If necessary, before implementing these requirements, legislators should direct their respective states’ public utility commissions to study the concerns raised by added demand and the growth of intermittent power and issue reports open for public review and comment.
Legislators could also consider policies similar to those ensconced within the ALEC’s draft model bill, the Equitable Escalation of Electricity Demand Act. Because federal policies like the IRA, EPA emissions standards, and Department of Energy appliance efficiency standards are incentivizing and mandating the widespread adoption of EVs and electric appliances, grid operators project an imminent rapid increase in overall electricity demand, which will require large investments in power production and grid infrastructure.
The ALEC model bill states that the cost of technologies that demand large increases in domestic power, like electric vehicles—if they achieve widespread adoption due to IRA incentives and EPA mandates— should be borne by those who benefit directly from the new power supply, not ratepayers in general.
To both cover this cost and provide sufficient additional dispatchable power, this bill would place a fee on all new EV charging stations connected to the electric grid and all new electric vehicles sold. The fee would be separate from any fee levied on EVs for infrastructure construction and maintenance, and would be dedicated to the construction of new dispatchable power supplies to meet expected demand, without socializing the cost across all ratepayers.
One more way to push back would be to adopt ALEC’s “Act to Prohibit State Procurement of Electric Vehicles with Forced Labor Components” model legislation, developed with the help of The Heartland Institute. Aside from pushing back on Washington’s green schemes, adopting this model legislation would have the additional benefit of defending America’s principled and legally required positions upholding religious liberty and personal freedom, and outlawing child labor.
As the model legislation reads, “Taxpayer dollars should not be used to create demand for this inhumane practice, and states should restrict government procurement of electric vehicles unless the manufacturers responsible for the supply chain can show that the taxpayer dollars will not be used to buy a vehicle made with forced labor.” If states were to adopt this bill, it would essentially bar state and county agencies, and municipal governments from purchasing any electric vehicle for which the “slave and child labor free” guarantee cannot be transparently established—which applies to the vast majority of all EVs on the market. If this law is not adopted by the federal government, it should be adopted by all states and applied to the various political subdivisions of them: counties, cities, towns, et cetera.
Finally, legislators could consider barring the sale of EVs produced using child and/or slave labor in their state. Congress is charged with regulating interstate commerce, an authority it has compromised through its delegation of regulatory authority to agencies like the EPA and to states like California with waivers. When it comes to EVs, Congress’ interstate commerce authority clashes with other provisions of the Constitution that bar slavery and religious persecution, as well as with federal laws barring child labor. Because the EPA has recognized the authority of some states to set stricter clean air standards than federal law demands, states could fight for authority to uphold the Constitution and federal law in the face of federal regulations from the EPA that seem to undermine them in spirit and practicality, if not in letter.
