Inflation Reduction Act (IRA)

By David Schlissel and Anika Juhn - Institute for Energy Economics and Financial Analysis, September 12, 2023

Blue hydrogen hype has spread across the U.S., spurred by the billions of dollars of government funding and incentives included in the 2021 Bipartisan Infrastructure Law (BIL) and the 2022 Inflation Reduction Act (IRA). The fossil fuel industry promises that blue hydrogen, produced from methane or coal, can be manufactured cleanly and contribute to climate change mitigation measures. As we demonstrate in this report, the reality is that blue hydrogen is neither clean nor low-carbon. In addition, pursuing it will waste substantial time that is in short supply and money that could be more wisely spent on other, more effective investments for reducing greenhouse gas emissions in the immediate future.

In short, fossil fuel-based “blue” hydrogen is a bad idea.

Blue hydrogen’s environmental benefits rest largely on the assumptions baked into a Department of Energy (DOE) model named GREET (Greenhouse Gases, Regulated Emissions and Energy use in Transportation) that is the congressionally mandated evaluation tool for U.S. hydrogen projects. Due to a set of unrealistic and flawed assumptions, the model significantly understates the likely greenhouse gas intensity associated with blue hydrogen production.

Among the key shortcomings:

• It assumes an upstream methane emission rate of just 1%. This is far less than recent peer-reviewed scientific analyses have found and what has been demonstrated by numerous airplane and satellite surveys.
• It uses a 100-year Global Warming Potential (GWP). This significantly understates methane’s environmental impact in the short term, since its 20-year GWP is more than 80 times that of carbon dioxide (CO2).
• It does not include any estimate (either over 20 or 100 years) for the global warming impact of hydrogen, which works to extend the lifetime of methane and increase its atmospheric abundance. Hydrogen also has a 20-year GWP more than 30 times that of CO2.
• It does not include a full life cycle analysis (LCA) of all the emissions from the blue hydrogen production process. In particular, downstream emissions from the produced hydrogen and the generation of the electricity needed to compress, store and transport the hydrogen to the ultimate user(s) are excluded.
• It includes overly optimistic assumptions about the effectiveness of carbon capture processes.

Using more realistic numbers shows blue hydrogen to be a dirty alternative. For example, if we change just two variables—using methane’s 20-year GWP and a more realistic 2.5% methane emission rate—the carbon intensity of blue hydrogen calculated by GREET jumps to between 10.5 and 11.4 kilograms of CO2e/kgH2 (kilograms of carbon dioxide equivalents emitted per kilogram of hydrogen). This is between two and three times the 4.0 kg CO2e/kg hydrogen Clean Hydrogen Production Standard (CHPS) established by Congress and the DOE. Note that these already very high carbon intensity figures still reflect DOE’s overly optimistic assumption that hydrogen production facilities will capture at least 94.5% of the CO2 they produce. They also exclude the impact of downstream hydrogen emissions.

If more conservative assumptions are used, reflecting: 1) more realistic carbon capture rates; 2) downstream leakage of the hydrogen produced; and 3) downstream CO2e emissions from the production of the electricity needed to fully compress, store and transport the hydrogen to the site where it will be used, then blue hydrogen gets even dirtier, with a carbon intensity more than three times as much as the DOE’s clean hydrogen standard.

Given these results, IEEFA is extremely concerned that the current blue hydrogen hype is going to result in the funding of projects that exacerbate climate change and lock in our reliance on fossil fuels for decades. For this reason, we have undertaken a series of analyses into the emissions from blue hydrogen production based on current scientific knowledge of methane emissions and hydrogen leakage rates and the existing status of carbon capture and sequestration (CCS) technologies. This report focuses on the production of blue hydrogen from methane; a subsequent report will examine hydrogen from coal gasification.

Download a copy of this publication here (Link).

By Sydney Ghazarian - Labor Network for Sustainability, August 17, 2023

Welcome everyone! My name is Sydney, I am an organizer with the Labor Network for Sustainability, and I am honored to facilitate tonight’s Solidarity Call for United Auto Workers Union, which is currently bargaining for a fair contract with the Big 3 Automakers- Ford, General Motors, and Stellantis. 

What makes tonight’s call so special is that it’s a solidarity call by and for the climate movement because we recognize that UAW’s fight is our fight too.

What I love about the climate movement is that we are fighters. And our fight has spanned decades and across generations, and for the last several years, hundreds and thousands of us have rallied, door knocked, made calls, and done sit ins and direct actions to fight for a Green New Deal– which is a society-wide mobilization and just transition to decarbonize the economy while repairing historic harm and creating millions of high-paying, union jobs.

And I want to be clear: Without us fighting for a Green New Deal, there would be no Inflation Reduction Act and its historic investments in clean energy. But we also know that the IRA is not a Green New Deal, and falls desperately short of the Green New Deal’s vision of the world we are trying to build. Rather than massive investments in the public sector, frontline communities, and good, green, union jobs that uplift working people, the IRA invests primarily in private corporations– often the same ones responsible for perpetuating the climate crisis in the first place. 

Unlike the IRA, the Green New Deal understands that the implementation of climate policy, and how resources are distributed to achieve it, are key to ensuring climate justice and ensuring that millions of people are equipped to take that leap of faith away from fossil fuels and into a green economy. 

By Andrew Glasford, Lucy Burke, and Keir Milburn - Green New Deal Media, December 19, 2023

By Heidi Binko - Rural Urban Bridge Initiative, August 3, 2023

By Al Weinrub - Non Profit Quarterly, July 13, 2023

There are two very different (and antagonistic) renewable energy models: the utility-centered, centralized energy model—the existing dominant one—and the community-centered, decentralized energy model—what energy justice advocates have been pushing for. Although both models utilize the same technologies (solar generation, energy storage, and so on), they have very different physical characteristics (remote versus local energy resources, transmission lines or not). But the key difference is that they represent very different socioeconomic energy development models and very different impacts on our communities and living ecosystems.

Let me start by recounting some recent history in California—the state often regarded as a leader in the clean energy transition.

In recent years, California’s energy system has failed the state’s communities in almost too many ways to count: utility-caused wildfires, utility power shutoffs, and skyrocketing utility bills, for starters. Currently, state energy institutions are advancing an all-out effort to suppress local community ownership and control of energy resources—the decentralized energy model.

Instead, they are promoting and enforcing an outmoded, top-down, utility-centered, extractive, and unjust energy regime—the centralized energy model—which effectively eliminates local energy decision-making and local energy resource development. This model forces communities to pay the enormous costs of unneeded transmission line construction and bear the massive burden of transmission line failures.

Using the power of the state to enforce the centralized energy model is at the heart of California’s new renewable energy tyranny. And this tyranny has now spread to the federal level, as substantial public investment is now set to go toward large-scale renewable energy projects across the country. These projects will be controlled by and benefit an increasingly powerful renewable energy oligarchy. Being touted as a solution to what is popularly regarded as the “climate emergency,” this centralized energy model has actually failed to meet our communities’ energy needs, and at the same time has exacerbated systemic energy injustice.

By Jacob Whiton and Greg LeRoy - Good Jobs First, July 2023

Under a provision of the Inflation Reduction Act, some factories making batteries for electric vehicles will each receive more than a billion dollars per year from the U.S. government, with no requirement to pay good wages to production workers. Thanks to the Advanced Manufacturing Production Credit, also called 45X for its section in the Internal Revenue Code, battery companies will receive tax credits that they can use, sell, or cash out.

The 45X program alone will cost taxpayers over $200 billion in the next decade, far more than the $31 billion estimated by Congress’s Joint Committee on Taxation. On top of 45X and other federal incentives, factories manufacturing electric vehicles and batteries have also been promised well over $13 billion in state and local economic development incentives in just the past 18 months.

What do local communities get from companies in exchange for public money? The Biden administration says the IRA will create “good-paying union jobs,” but the federal tax credit has no job quality requirements for permanent jobs and doesn’t mandate companies pay market-based wages or benefits.

Good Jobs First did the math for five recently announced battery factories. Here’s what we learned:

• Total subsidies will range from $2 million to $7 million per job.

• Average annual wages, as announced, will be below the current national average for production workers in the automotive sector.

• The 45X credit alone is large enough to cover each facility’s initial capital investment cost and wage bill for the first several years of production.

Download a copy of this publication here (PDF).

By Rhiana Gunn-Wright - Hammer & Hope, Summer 2023

I’m an architect of the Green New Deal, and I’m worried the racism in the biggest climate law endangers our ability to get off fossil fuels.

This summer, the earth raged. Fires in Maui and Canada, floods in Delhi and Beijing, heat everywhere — this is the beginning of the climate impacts scientists have long predicted, and the U.S. is unprepared in terms of everything from infrastructure to public health. And if I’m honest, I raged, too. Never in my life have I wished more to be a cyclone, blowing away everything in my path, or an earthquake, shaking everyone to their core until they take seriously the concerns of Black and Indigenous frontline communities.

August marked a year since the Inflation Reduction Act passed, arguably the most significant climate legislation in U.S. history. But the racist compromises and the marginalization of Black people and their demands that facilitated the bill’s passage have seeped into the climate movement, sowing division and narrowing discourse in ways that not only threaten to keep Black people at the bottom of a new green economy but also undermine efforts to address thornier issues, such as who owns energy resources or how to navigate conflicts about resource distribution and land use, questions that money alone cannot answer.

By Betony Jones and David Roberts - Volts, June 16, 2023

Will the US clean-energy transition be hampered by a shortage of electricians, plumbers, and skilled construction workers? In this episode, Betony Jones, director of the DOE’s Office of Energy Jobs, talks about the challenge of bringing a clean energy workforce to full capacity and the need for job opportunities in communities impacted by diminished reliance on fossil fuels.

• Listen HERE
• Transcript HERE

By Yohan Min, Maarten Brinkerink, Jesse Jenkins, and Erin Mayfield - Blue Green Alliance, June 9, 2023

Researchers at Dartmouth and Princeton released a BlueGreen Alliance-funded report on the estimated impacts the Inflation Reduction Act will have on the U.S. wind and solar industry, including changes in wind and solar manufacturing, labor standards for clean energy workers, job creation, and demand for materials. Specifically, the report explores the impacts of the law’s clean electricity production and investment tax credits (PTC and ITC) and the 45x Advanced Manufacturing Production Tax Credit.

The report finds that the Inflation Reduction Act offers wind and solar developers an airtight business case to use U.S.-manufactured components and pay workers fair wages. It has always been the right thing to do. Now it’s also the most economical thing to do. 

By transforming the economics of wind and solar power, the Inflation Reduction Act will spur the creation of millions of new U.S. solar and wind manufacturing and deployment jobs, with strong incentives for fair wages and career pathways.

The findings show strong, unprecedented potential to build our clean energy future on a foundation of good jobs, clean manufacturing, a reliable industrial base, and greater equity.