State climate action could be supercharged by the Inflation Reduction Act

Source: By Maxine Joselow, Washington Post • Posted: Thursday, August 18, 2022

There has been lots of talk about federal climate action. Don’t sleep on state climate action.

Unless you live under a rock, you’ve probably heard politicians and journalists talking about how the Inflation Reduction Act will advance the federal government’s fight against climate change.

But the landmark legislation, which President Biden signed into law on Tuesday, also contains a slew of smaller but significant investments in climate action at the state level. These lesser-noticed provisions could supercharge efforts to slash emissions and bolster clean energy across all 50 states, according to climate-conscious governors and advocates.

“These are perhaps the smallest and most exciting investments,” Washington Gov. Jay Inslee (D), who mounted a climate-centric presidential campaign in 2020, told The Climate 202.

“When the tale is told, I think these will be shown as the most effective provisions,” Inslee said. “These are not eye-popping numbers, but I think they will be eye-popping results.”

The legislation includes the following investments in state climate action, according to the U.S. Climate Alliance, a bipartisan coalition of governors committed to meeting the goals of the Paris agreement:

  • $8.6 billion for state energy offices to help consumers make energy-efficiency upgrades to their homes through rebate programs.
  • $7 billion for states, municipalities and tribal governments to deploy clean-energy technologies and cut emissions in disadvantaged communities through a Greenhouse Gas Reduction Fund, commonly referred to as a green bank.
  • $5 billion for states, municipalities and tribal governments to develop and implement plans to curb emissions through Climate Pollution Reduction Grants.
  • $2.2 billion for state and private forestry conservation programs to promote natural carbon sequestration, including by planting trees.
  • $1 billion for state and local governments to adopt building energy codes, including $670 million for net-zero energy codes.
  • $5 million for states to adopt more stringent tailpipe emissions standards for cars and light trucks.

“What’s monumental about this package is that it recognizes the role of states in confronting the climate crisis,” Casey Katims, executive director of the U.S. Climate Alliance, told The Climate 202. “Implementing this package is going to be no small task, but I know governors are up to the challenge.”

The Inflation Reduction Act authorizes $27 billion for the establishment of a national green bank to provide low-cost financing for clean energy infrastructure projects.

  • Of the $27 billion, states and tribes can apply for $7 billion worth of grants and loans “to enable low-income and disadvantaged communities to deploy or benefit from zero-emission technologies,” the legislation says.
  • Green banks already exist in several states, including California, Connecticut, Colorado, Florida, Maryland and New York, according to the Coalition for Green Capital, an advocacy group.

“What green banks have done over the last decade is help finance the pieces of the clean power transition: heat pumps, distributed solar, microgrids, electric vehicles and much more,” Reed Hundt, chairman and CEO of the Coalition for Green Capital, told The Climate 202.

In 2011, Connecticut established the nation’s first state-level green bank through bipartisan legislation. Since then, the Connecticut Green Bank has leveraged $288.4 million in state dollars to attract $1.85 billion in private investment — a ratio of $7.40 in private dollars for every $1 in public money.

Bryan Garcia, president and CEO of the Connecticut Green Bank, told The Climate 202 that the bank has prioritized helping low-to-moderate-income families reduce their energy bills by making their homes more energy efficient.

“In this context of talking about inflation,” he said, “we have actually helped families and businesses reduce their energy costs.”

Of course, states are not immune from the partisan divide over climate action that persists in Washington.

  • During the Trump administration, 16 states — almost all of them led by Democrats — and the District of Columbia strengthened their climate targets, according to ClearView Energy Partners, an independent research firm.
  • Under Biden, meanwhile, Republican-led state legislatures have sought to prolong the life of coal plants and punish businesses that divest from fossil fuels.

However, this dynamic could change as the Inflation Reduction Act spurs the deployment of more wind, solar and other renewable energy sources in red states, ClearView analysts wrote in a note to clients Tuesday.

“As renewables proliferate on GOP-represented grids,” they wrote, “their economic and political relevance to government officials seems likely to grow.”