A year in, landmark U.S. climate policy drives energy transition but hurdles remain

11:48+08:00, PM. Aug. 16, 2023 By Rachel Waldholz

Nicholas Hartnett, owner of Pure Power Solar, carries a panel as he and Brian Hoeppner (right) install a solar array on the roof of a home in Frankfort, Ky., on July 17. Tax credits from the Inflation Reduction Act will reduce the cost of installing rooftop solar panels by 30%, which will in turn lower monthly electricity bills. Michael Conroy/AP hide caption

toggle caption Michael Conroy/AP

Michael Conroy/AP

A year ago, Sonia Aggarwal watched from home as the votes came in on the U.S. Senate floor. Aggarwal was working as a White House aide, advising the Biden administration on climate policy. She'd been up all night, listening as senators debated legislation she and many others had spent more than a year trying to pass.

When Vice President Kamala Harris finally — 51 to 50 — on Aug. 7, 2022, Aggarwal was in tears.

With that vote, the country's most significant climate legislation made it through the U.S. Senate, a body that had stymied for decades. The bill went on to clear the U.S. House, and made its way to President Biden for his signature on Aug. 16, 2022.

President Biden signs the Inflation Reduction Act with (from left) Sen. Joe Manchin, D-W.Va., Senate Majority Leader Charles Schumer, D-N.Y., House Majority Whip James Clyburn, D-S.C., Rep. Frank Pallone, D-N.J., and Rep. Kathy Castor, D-Fla., in the State Dining Room of the White House on Aug. 16, 2022. Drew Angerer/Getty Images hide caption

toggle caption Drew Angerer/Getty Images

Drew Angerer/Getty Images

The law directs at least $369 billion — — toward incentives for nearly every sector of the economy to adopt renewable energy and other low-carbon technologies.

The goal is to make alternatives cheaper — and more attractive — than fossil fuels, said Jesse Jenkins, a professor at Princeton University who advised on the law.

"What the Inflation Reduction Act effectively does, is it aligns the full financial might of the federal government behind the push towards cleaner energy resources," Jenkins said. "In essence, it puts clean energy on sale for households and businesses and industries all over the country."

The law faces opposition among Republican lawmakers. It passed along party lines, with only Democrats voting in favor. Since Republicans gained control of the U.S. House this year, many have , arguing the price tag is too high, and transitioning away from fossil fuels shouldn't be a priority.

in China.

But both automakers and renewable energy developers face major challenges.

they'll be left behind in the transition to electric vehicles. Wind and solar developers say their projects face increasing opposition from local communities, some of it . The electric grid is also struggling to accommodate new projects, with many already for permission to connect.

, install solar panels and insulate homes.

The law makes the electrification of American households the "hinge point" of U.S. climate policy, said Ari Matusiak, the chief executive officer of Rewiring America, a nonprofit campaigning to cut household emissions, which offers an to the subsidies.

Some of the money is available now, as credits when you file your tax return. For instance, the law offers a tax credit of up to $7,500 for the purchase of certain electric vehicles and up to $4,000 for used EVs.

Credits, however, often cover only a fraction of the cost of major retrofits, like installing a heat pump.

Some benefits for low- and moderate-income households may not become available for months or years. The law creates a rebate program to reduce the up-front cost of electric appliances and home retrofits for households making up to a certain amount. Those programs will be administered by states, which have indicated it will take some time to staff up. Virginia's state department of energy it could take one or two years before the program is up and running.

Yes, the law reduces U.S. climate impact. But it's not enough.

Studies indicate the IRA will help significantly reduce U.S. greenhouse gas emissions. The think tank Rhodium Group the IRA could cut emissions up to 48% from their peak by 2035.

those targets are necessary to limit warming to 2.7 degrees Fahrenheit (1.5 degrees Celsius) above pre-industrial levels, and avoid the most catastrophic impacts of climate change.

The Biden administration is rolling out other efforts to close the gap. The Environmental Protection Agency has proposed to cut emissions from coal and gas-fired power plants, and to restrict emissions of methane, which is a powerful greenhouse gas.

Sonia Aggarwal is now the chief executive officer of the California-based environmental policy firm Energy Innovation. She says two things are true: the U.S. is moving faster than seemed possible just a few years ago. And it's still not fast enough.

But she sees the IRA ushering in a new phase.

"We have completely changed direction on our energy policy such that we will actually have a chance to meet our climate goals, which certainly was not the case even just a couple of years ago," Aggarwal said.