The ‘Inflation Reduction Act’: Congressman Blumenauer Touts Historic Significance & the Triumph of Partnership & Rationality

Earl Blumenauer

In a surprise move before Congress’ August recess, US Senate Majority Leader Schumer and Energy Committee Chair Manchin announced a deal on budget reconciliation—the Inflation Reduction Act. TPR/VX News interviewed Portland Congressman Earl Blumenauer, who for decades has championed many of the provisions included in the agreement, to unpack what, according to Bloomberg NEF, “stands to be the most important US climate law ever.”  With a significant revamping of energy tax subsidies for renewables, storage, and EVs paid for by closing tax loopholes for the wealthiest Americans, Blumenauer extolls the agreement that puts the US on track to meet significant emissions reduction targets and unlocks trillions in private capital with clear incentives to finance the clean energy transition. Flash: the Bill—with a $102 Billion deficit cut—received this week a nod of approval from the Congressional Budget Office.

This past week a “deal” was struck between Senator Schumer and Senator Manchin on an Inflation Reduction Act. Please share your reflections on that Hamiltonian “in the room where it happened” agreement and its significance for U.S. energy policy?

Well, it is incredibly significant.

Hal Harvey at Energy Innovation did a fascinating analysis of what this means. It would reduce American emissions from 37 to 41 percent below the 2005 levels by 2030. It would close two-thirds of the emission gap from what the business-as-usual scenario had. It would add almost 1.5 million jobs, as people are concerned about dealing with complaints about the economy as a result of transitioning to a green future. What’s more, many people don't really focus on the health benefits, but 3,500 to 4,000 premature deaths would be avoided.

There are some who profess concern that there’s been some trade off for increased oil and gas supply provisions. Hal’s analysis points out for every ton of emissions caused by the new oil and gas provisions, there would be 24 tons of emissions that would be reduced.

It may not be what you or I would design, and there are certainly people who are deeply concerned about the nature of the climate  crisis who want more urgency and more action, but looking at the realities now and the fact that we have been unable to really budge the intransigent Senator from West Virginia, this is a remarkable compromise.

And for the things that we care about for a low-carbon future. It's not much of a compromise at all. It really puts us on track, so we can reclaim some of our global leadership. There's surely more that we need to do, but I think this is a remarkable development.

Before delving into some of the bill’s key provisions, Bloomberg states that it stands as the most important US climate law ever! What are you most pleased to see included in the Inflation Reduction Act?

As you know, I’ve been author of the provisions that we had in Build Back Better dealing with energy tax credits and the opportunities in terms of the 179D—The Energy Efficient Commercial Building Act that will have profound impacts for building efficiency.

The bill has also reinstatement of something near and dear to my heart: Superfund. We have a toxic legacy bedeviling communities across the country. This bill would reinstate the Superfund and adjust it for inflation.

 Even with the two and three-wheeled electric vehicle charging stations as we move towards electrification and energy storage, which is another opportunity particularly for those of us in the Northwest being able to use hydro to have energy storage. It expands the tax credit to include energy storage technologies, like battery-pumped hydrogen fuel cells.

The array of things captured in the legislation that we passed earlier in the House makes me very optimistic. These are things we can do. We know they're going to have an impact and can be readily implemented. It's not some bizarre undertaking.

I'm more than a little disappointed that our electric bike tax credits and the reinstatement of the of the commuter bike benefit did not make it. These loom large as we just opened the Blumenauer Bridge in Portland to encourage people to burn calories instead of fossil fuel, but I think we will get those because those aren't wildly expensive and people understand them.

On balance, being able to take the elements that we've worked on and put them into effect pretty quickly is remarkable.

Having worked on infrastructure in Congress for more than two decades, how does it feel to see this legislation near the finish line?

It's remarkable. We've been working on these provisions for decades, and a number of the ones that are fighting their way into the bill are ones that I authored in Build Back Better. There's a certain satisfaction, but we shouldn't be smug or complacent because we are in the middle of a climate crisis. You've experienced it dramatically in California, and it's made a difference in my community with forests being consumed by wildfire and people dying from extreme heat.

For the 25 years I've been in Congress, this is the single most dramatic energy package that we've hoped to pass. This is transformational, and it comes at a time when we desperately need it.

As you have been able to spotlight in the VerdeXchange Conferences over the years, the private sector is ready. They understand the opportunities for these investments. They're not hung up in ideological differences; they're waiting for clear and convincing signals from government because virtually all of them do require additional subsidy. Though it’s not nearly what we've done, for example, with fossil fuel extraction over the years. The signal from the private sector is clear and unmistakable, and they are poised and ready to go. There's a significant amount of private capital on the sidelines that’s waiting for clarity and partnership.

This legislation, if we are able to enact it, will provide both.

How are the Democrats likely to frame and message this bill should it be passed? Most Democrats and Republicans across the country know the term Green New Deal, but rarely do they know what it means. Will the Democrats be more successful in messaging the Inflation Reduction Act?

The Green New Deal is more of an aspirational slogan. I thought it was important and have been supportive of those efforts, but it's clearly not sufficient. Democrats, in messaging, are much better at talking about what we don't like, our shortcomings, and picking areas of sometimes intense disagreement, but I think we're entering a different era.

One of the things that has fascinated me is how the messaging on the Republican side is really posing challenges for them. We concluded our work in the house on a very high note. Republicans are in disarray in terms of messaging. They have chosen to demonstrate a fit of pique because Joe Manchin acted like a Democrat. This is outrageous to them.

Democrats have additional clarity here. This package was so unexpected. There are those who were literally in despair seizing on this moment because of what it represents. It's easier to message victory. It's easier to message carbon reduction. It's easier to message coming together cooperatively. I am quite confident that this is going to make a difference reinforced by the media who are intrigued and supportive, and they've done a lot of great analysis.

 I think this is going to be a high watermark going into the summer. It comes at a time when the political winds have shifted where the generic polls are positive for us. I think it's an interesting confluence that will help that messaging process.

Infrastructure was once a bipartisan issue that brought elected officials of both parties together. Then, there were many years in the House with no meetings of the Infrastructure Committee because it'd become so partisan. Speak to the dynamic among your fellow House members post-this compromise and what your hopes are in terms of infrastructure moving back to being a bipartisan issue?

It's a fascinating challenge. Republicans, especially in the House, were unable to embrace what was truly a bipartisan infrastructure bill. It wasn't as good as what we did in the House, but it involves $558 billion on everything from roads and bridges and transit to broadband and getting the water fountains in our schools improved, so they're not giving our children lead poisoning.

Yet, we found there were only 12 Republicans in the House who supported it, and they weaponized it. It was used against a friend of mine, David McKinney, Congressman from West Virginia, a state notably built on bags of money delivered by Robert Byrd over the years. He lost his Republican primary over it. It is troubling in one respect because there are Republicans who simply refused to embrace it. I think because of the power of the investments that are being made and the fact that it actually was crafted in partnership with Senate Republicans, we've got an opening to do a reset.

The business community is increasingly cranky about this. In California, we saw Kevin McCarthy took campaign money that he got in some cases from the industry and put the ballot measure on that would have stripped away some of the infrastructure investments. It lost, but it forced the industry to spend $60-$70 million to retain what they had. It engendered hard feelings. I think there's an understanding that we can't keep going like this, and the business community and media have picked up on it.

The fact is that we are moving forward right now with the utilization of these dollars. It's interesting that some of the people who voted no are touting some of these very packages. Particularly in areas of social media, people who “voted no but took the dough” are really being pummeled, and I think that's going to help a little bit.

Pivoting to another issue you’ve long been involved with—"sustainable agriculture.” What is in the bill, not in the bill, or still to be done to move us forward on your agenda for sustainable agriculture?

Well, it's interesting watching how this administration is making an adjustment, the recognition that our agricultural practices are a major source of carbon emissions, and so much of what we can, in fact, do to reduce the carbon output of agriculture actually helps the farmer, like being able to use cover crops, for instance. These sustainable practices enable them to reduce the petroleum and chemical inputs for fertilizer and pesticide. It opens the door for value added agriculture.

And I will be honest, Tom Vilsack was not my first choice to come back and be Secretary of Agriculture, but he's been phenomenal in the last year and a half. He gets it.

Soil health is understood as a dramatic opportunity to reduce carbon emissions while we improve productivity. These are increasingly becoming less controversial.

And also the diverse agricultural base of your state of California is being felt. They have been shortchanged by the traditional farm bills, because you have such a rich, complex, and diverse base of agriculture— fruits, vegetables, nuts, berries, wine— that's not just the big commodity crops. This is very important for California agriculture, and agricultural interests are becoming better organized in promoting what makes a difference for them.

We can’t close a TPR interview about Climate and Energy Policy without addressing drought in the West, flash flooding, raging wildfires, and extreme heat across the country. Will adoption of the Inflation Reduction Act  meet the moment?

It certainly is an important step forward. And again, I don't want to have the perfect be the enemy of the much better. This legislation starts us on a path with significant carbon reductions and enables us to get much closer to meeting goals that did not seem achievable three weeks ago. Well, that's a possibility now. It's not just aspirational and closes a lot of this gap.

What we needed was to be able to demonstrate progress, to give people some encouragement, to build on those partnerships, and to  unlock some of that private investment. And nowhere is that more evident than when we're dealing with agriculture, which has been dramatically disrupted. The supply chain challenges; the loss of tens of thousands of restaurants; the problem with workforce— it's really been a remarkable set of challenges. But these elements here help people. I'm proud that we were able to get grants to 100,000 independent restaurants with my legislation, but we can build on this.

And the most important thing I think is that this is building the momentum, that people see that things are possible. We've known for a long time what is the best set of policy prescriptions, but it's hard to implement the change. It's hard to get people's attention to go down a path that nobody else is going. Well, this is putting resources where they needed to be invested. It’s training attention on things that impact people on a regular basis. And this is another area of potential compromise and partnership.

What we do with agriculture, the supply chain, this is something that actually brings people together. This is something that folks can relate to, and some of our allies, some of the celebrity chefs and celebrity farmers are people who have a great deal of credibility with the public. And I think they're adding their voice in a time and manner that's going to help reinforce these efforts.

Make no mistake, I am encouraged. I'm not sanguine about the prospects overall. We've got our work cut out for us, but this is a major step forward at a time when we needed to send signals that all is not lost, and indeed there are things we can do. We have the capacity to make a dramatic reduction for a low carbon future. This is within our capacity. It is something that increasingly people understand and want to be a part of, and the public is getting behind these efforts.

Returning back to an earlier question, what is likely to be the political tagline for this significant bill—the Inflation Reduction Act?

For me, I want people to acknowledge the breakthrough—that this is an opportunity for sanity and cooperation to make the difference. There will be some support, not as much as I'd like, on a bipartisan basis. But there's going to be a united front with Democrats, with the administration, and with many people in the affected industries. I mean, these energy provisions started out as being bipartisan. Things that I've worked on for years had Republican support until things got a little toxic. Well, they can be bipartisan again.

For me, it's a breakthrough. It's rational action. It is reaching to meet the moment. And I hope that that overshadows this deficit reduction, although it should be noted that having common sense tax provisions that we've worked on for years like closing carried interest and having a realistic minimum corporate tax rate are things that are wildly popular, and they're the sorts of things that people want to hear.

So, I'm hopeful that people takeaway that partnership and rationality has apparently triumphed and we're going to be able to get down to work to make more rapid progress in ways that people will be able to feel and see.

"For the 25 years I've been in Congress, this is the single most dramatic energy package that we've hoped to pass. This is transformational, and it comes at a time that we desperately need it.”—Earl Blumenauer
“The private sector is ready…There's a significant amount of private capital on the sidelines that’s waiting for clarity and partnership. This legislation, if we are able to enact it, will provide both.”