By Alex Epstein
Want to know whether a candidate is truly supportive of American energy?
Here’s one simple test: Did they oppose the “Inflation Reduction Act”?
If not, then they supported one of the most destructive energy policies in American history.
- The “Inflation Reduction Act” is a 4-step recipe for destroying American energy1. Make us more dependent on unreliable electricity2. Impose new oil and gas taxes during an energy crisis3. Give the Environmental Protection Agency more power to restrict fossil fuels4. Give more power to anti-fossil-fuel activist
- Step 1 of the Inflation Reduction Act’s recipe for destroying American energy:Make us more dependent on unreliable electricity by1) reducing the supply of reliable electricity via solar and wind favoritism2) increasing demand for electricity via electric vehicle and other electricity subsidies
- We’re in a growing electricity crisis caused by shutting down reliable power plants and not replacing them with reliable power plants.The Inflation Reduction Act’s response to this crisis is to double down on one of its main causes: subsidies for unreliable solar and wind.¹
- Why is America shutting down too many reliable power plants?Two of the chief villains are the subsidies known as the Investment Tax Credit (ITC) and Production Tax Credit (PTC). These subsidies had expired. But the Inflation Reduction Act restored and extended them.
- The “ITC” and “PTC” solar and wind subsidies pay utilities to shut down or slow down reliable gas and coal plants whenever the sun shines or the wind blows. This defunds reliable plants, causing many to be shut down.The Inflation Reduction Act extends these ruinous subsidies indefinitely.²
- The Inflation Reduction Act pretends to be pro-nuclear by adding nuclear to its subsidized forms of energy. But since nuclear overregulation makes new plants cost-prohibitive, the Inflation Reduction Act’s endless “clean energy” subsidies = endless solar and wind subsidies = more defunding and shutting down reliable power.
- Here’s how massive the Inflation Reduction Act’s solar and wind subsidies are. They will pay up to 2/3 of the cost of wind turbines—the equivalent of paying $60-70,000 for a $100,000 electric vehicle! They also further subsidize solar and wind by paying 50%+ of hydrogen from solar and wind that’s nowhere near competitive.³
- Solar and wind subsidies not only drive the shutdown of reliable power plants and loot taxpayers, they also inflate electricity prices. Because solar and wind can go near-zero at any given time, they don’t replace most of the costs of reliable power plants—they add to them.⁴
- Even before the Inflation Reduction Act, government policy was already threatening up to 185 gigawatts of coal power in the next 7 years—about 1/5 of reliable capacity!—with the vast majority not replaced by reliable gas or nuclear.
- By increasing solar and wind subsidies the Inflation Reduction Act will ruin our grid even more.⁵
- Here are current projections through 2030 for retirements vs. additions of reliable electricity capacity.
Imagine looking at this disaster-in-waiting and saying “Let’s shut down even more reliable power plants!”
Yet that’s what every supporter of the Inflation Reduction Act effectively did.⁶
- At the same time the Inflation Reduction Act is hastening the shutdown of reliable electricity generation, it is—insanely—promoting far more use of electric cars via subsidies. California recently previewed the Inflation Reduction Act by telling citizens there wasn’t enough power for electric vehicles even at 3% market penetration.⁷
- To make matters still worse, the Inflation Reduction Act not only drives the shutdowns of reliable electric capacity while subsidizing us into using more electric cars, it also coerces us into increasing electricity use in many other ways: electric heating, electric cooking, electric water heating.
- If your goal was to ruin our grid you’d do exactly what Inflation Reduction Act does1) reduce the supply of reliable electricity via solar and wind favoritism2) increase demand for electricity via electric vehicle and other electricity subsidiesAnd that’s only the beginning of the Inflation Reduction Act’s energy destruction…
- Step 2 of the Inflation Reduction Act’s recipe for destroying American energy:Impose new oil and gas taxes during an energy crisisAt a time when we and the world desperately need more oil and gas the Inflation Reduction Act imposes 4 new taxes on the oil and gas industry that make production more expensive.
- The world is in the midst of an energy crisis—specifically a crisis of lack of fossil fuel supply, which has increased the cost of energy and increased Europe’s dependence on Russia. To help ourselves and our allies we need to foster fossil fuel production.Instead, the Inflation Reduction Act punishes it.
- The Inflation Reduction Act has 4 new taxes that make oil and gas production more expensive:1. Higher federal royalty payments2. A high and anti-drilling min. corporate tax3. A methane fee that penalizes US producers4. A “Superfund” tax to pay for impacts today’s producers are not responsible for⁸
- Anytime the government adds new taxes to the oil and gas industry it is increasing costs and thereby discouraging production.To do this anytime is suspect. To do it during an energy crisis where oil and gas are desperately needed is ruinous.
- Step 3 of the Inflation Reduction Act’s recipe for destroying American energy:Give the Environmental Protection Agency more power to restrict fossil fuelsThe Environmental Protection Agency’s use/abuse of its existing powers has crippled our grid and handicapped our fossil fuel industry. The Inflation Reduction Act gives the Environmental Protection Agency much more dollars and power to do far more damage.
- Arguably the largest single cause of today’s electricity crisis, in which reliable power plants are being shut down without reliable replacements, is the EPA—which has aggressively acted to shut down coal plants without considering the catastrophic costs of an unreliable grid.
- Thanks largely to irrational EPA actions, the next 7.5 years are scheduled to be a bloodbath of reliable capacity retirements. There are 93 gigawatts of announced coal plant retirements, plus up to 92 more gigawatts are at risk retiring early due to new EPA rules. That’s about ⅕ reliable capacity!⁹
- We need government to recognize our electricity emergency and immediately reform the EPA to do proper cost-benefit analysis on its actions so it doesn’t destroy our grid.Instead, the Inflation Reduction Act just gave the EPA Protection Agency more money and power to recklessly attack fossil fuel use.¹⁰
- Perhaps the single most destructive aspect of the IRA is its repeated language referring to greenhouse gases like CO2 as “air pollutants”—language designed to get the Environmental Protection Agency to further restrict fossil fuels under the auspices of the Clean Air Act.¹¹
- According to the New York Times, IRA supporters believe the language “makes pretty clear that greenhouse gases are pollutants under the Clean Air Act.” Which gives the EPA a virtually limitless mandate to restrict fossil fuel use in the name of preventing pollution.¹²
- The IRA not only increases the EPA’s power to irrationally restrict fossil fuel use, it increases its budget by billions of dollars. This means more agents to to delay, block, and prohibit domestic energy projects.
- At a time when the EPA’s use/abuse of its existing powers has crippled our grid and handicapped our fossil fuel industry, the last thing we need is more power and money for EPA recklessness.The IRA does exactly this and thus poses a truly dire threat to our grid and our prosperity.
- Step 4 of the Inflation Reduction Act’s recipe for destroying American energyGive more power to anti-fossil-fuel activists“Environmental justice” activists have handicapped US energy, especially crucial infrastructure like pipelines.The Inflation Reduction Act offers billions of dollars for activists to do more damage.
- One major cause of today’s energy crisis is the outsize power that various anti-fossil-fuel, anti-nuclear activists have to stop crucial projects: drilling rigs, power plants, pipelines, export facilities, etc.Instead of neutralizing these activists the IRA empowers them.
- The IRA authorizes billions of dollars to be given to anti-fossil-fuel, anti-nuclear activists under the banner of “environmental justice.” One of the main “environmental justice” outlets is “community-based nonprofits.” This is a slush fund for any activist cause the government wants.¹³
- The IRA provides billions of dollars in funding for projects and funding in “disadvantaged communities,” an undefined term that means the money can be directed to organizations and activists that help partisan machinery or undermine reliable energy at the executive’s discretion.¹⁴
- To get a sense of what “environmental justice” means in practice, a Biden-commissioned environmental justice report included “taking bold action to sunset investment by 2030 in fossil fuels…and nuclear energy…set requirements for 100% renewable electricity by 2030.”I.e., destroying US energy.¹⁵
- At a time of energy crisis when we need more energy development, the IRA is giving potentially 10s of billions of dollars to activists who have a limitless lust to stop fossil fuel and nuclear projects.And this is a law that was justified by many as progress on energy infrastructure!
- Summary: The “Inflation Reduction Act” is a 4-step recipe for making our energy expensive and unreliable1. Make us more dependent on unreliable electricity2. Impose new oil and gas taxes3. Give Environmental Protection Agency more power to restrict fossil fuels4. Give more power to anti-fossil-fuel activistsIt must be reversed.
- To call a law that makes energy expensive and unreliable the Inflation Reduction Act is as Orwellian as saying Freedom is Slavery.Rising energy costs mean higher costs for every industry, which means higher costs for ever consumer.The IRA is really The IA: The Inflation Act.
- We don’t have to speculate what the IRA will do to American energy. We can see it in Europe, where IRA-like policies have led to a lack-of-fossil-fuel crisis, including mass hardship, deindustrialization, fear of freezing this winter, and subservience to Russia.
- Any official or candidate who supported the anti-energy “Inflation Reduction Act” was at least one of the following: ignorant about what the IRA actually does, ignorant about American energy, or deliberately hostile to American energy.
- Any candidate who supported the IRA should be regarded as anti-American-energy until and unless they apologize and pledge to work to reverse it.If a candidate you are considering voting for supported the Inflation Reduction Act, tell them they must change their position.
- While opposition to the anti-American-energy IRA was along party lines, it shouldn’t have been. Democrats who care about America and our standard of living should oppose a policy that makes energy more expensive and less reliable. They can still apologize and pledge to change.
- Unfortunately, instead of admitting that the IRA was a horrifically bad policy that must be reversed, the politicians who supported it have been propagating a dozen myths to pretend that it was actually a spectacular victory for America.A refutation:¹⁶
- Bottom line: The Inflation Reduction Act is the energy litmus test for candidates because it1. Makes us more dependent on unreliable electricity2. Imposes new oil and gas taxes3. Gives the EPA more power to restrict fossil fuels4. Gives more power to anti-fossil-fuel activistsIRA support = anti-energy
3 The Production Tax Credit is worth up to $1.5 cents per kWh.
White & Case – Inflation Reduction Act Offers Significant Tax Incentives Targeting Energy Transition and Renewables
Assuming a low estimate of $6 per kg for unsubsidized hydrogen from zero-emission sources, the maximum subsidy for zero-emission hydrogen will be $3 per kg.