Biden’s IRA is intended to boost US jobs and create new supply chains, but it’s also upsetting global trade rules and blocking solar power.

Has there ever been a more hideous article of clothing than the cardigan sweater? OK, culottes, but fortunately we have consigned the 1780s and the 1980s to the dustbin of fashion history.
The cardigan, a button-front monstrosity named after the goat of the Battle of Balaclava2 — in cashmere, cotton or cable knit — is so cringeworthy that no less than an American president implied that it required a spirit of “sacrifice” just to don one. In a famous 1977 fireside chat, a cardigan-clad Jimmy Carter urged Americans to lower their thermostats, if not necessarily their fashion games. (In truth, I’m all for Carter’s idea of bundling up and dropping the heat to 65 degrees, and I’ll even wear a cardigan, so long as it’s made by Thom Browne.)
The failure of Carter’s conservation efforts didn’t stem from the uglification of Americans’ wardrobes, but of Americans’ roofs. The president who put solar panels on the White House wanted them on your house, too, pushing subsidies, a $100 million “solar energy bank,” and a goal of getting 20% of US power from renewable sources by the year 2000. That dream was dead even before Ronald Reagan had the panels yanked from his residence in 1986.

There are plenty of reasons that something as plainly sensible as solar didn’t catch on back then — panels were highly inefficient and frankly hideous. But today, given advances in technology and the Inflation Reduction Act’s tax credits and rebates, it seems like a no-brainer for many homeowners3and larger-scale energy projects. Why the hesitancy? Does it stem from climate-change denial? Feelings that solar is somehow non- (or anti-) American? Residual memories of the Era of Malaise?4
Actually, it may be something as simple as a waiting list. “An already bloated backlog of renewable projects awaiting approval from grid operators grew even bigger last year, spurred partly by the Inflation Reduction Act of 2022, designed to wean America’s economy off its dependence on climate-killing fossil fuels,” writes Mark Gongloff. “Until it’s cleared, the logjam will be an obstacle to President Joe Biden’s goal of decarbonizing the country’s power sector by 2035 and zeroing US greenhouse-gas emissions by 2050.” So, add carbon emissions to the list of things the Inflation Reduction Act isn’t reducing.
Power Overload
The amount of US energy generation and storage capacity seeking connection to the grid has soared, driven mainly by solar, wind and battery projects.
Luckily, we have one state we can always count on to take the lead in progressive causes and climate action: Not California, but … Texas?? Mark explains: “Texas, a national leader in renewable development — despite the best efforts of its politicians — offers some clues that may help explain why its connection queue is relatively short … Whisper it, but Texas also ‘socializes’ the cost of transmission projects by passing them along to all rate payers, as long as the projects can prove they’ll end up being a net benefit to consumers.” Socialist Texas? Somebody better warn the world’s sometimes-richest man before he moves his company there from Delaware.
I like to think that all politics is local, even Lone Star local, but climate change is global. And, increasingly, so is the Biden administration’s green policy. Consider White House climate czar John Podesta’s comments last week at the Bloomberg BNEF summit and Columbia University’s Center on Global Energy Policy.
“Podesta essentially called for the creation of a new trading system that protects green subsidies in the US, and in potential partners aligned with Washington, both from legal challenges and so-called carbon leakage,” Liam Denning explains. “The latter is where a country prices carbon in some way within its borders, raising the cost of doing business there, only to find its domestic manufacturers undercut by cheaper imports from a country with looser climate policies.”
This is clearly in line with the IRA’s goal of boosting US jobs and securing supply chains, but isn’t it to the detriment of American leadership in cutting emissions? For instance, “the cheapest route to decarbonizing transportation would be to flood the market with Chinese EVs. It would also be the fastest route out of office for the administration allowing it,” Liam argues.
The Editors are simpatico that “the administration’s goals are sound,” but question the execution. “The Environmental Protection Agency issued revised standards last month that aim to boost sales of EVs to half the US market by 2030,” they write. “In part, the change acknowledges faltering growth in US EV sales, despite generous subsidies. But it leaves EVs at the core of the administration’s climate-change strategy. That’s proving to be an error.”
And it’s hardly the only mistake, says David Fickling, especially in the wake of Treasury Secretary Janet Yellen’s trip to China last month. “One of the most distinguished living economists is rejecting what’s been one of the most fundamental principles of economics for more than 200 years: comparative advantage,” David wrote at the time. “If a country can manufacture goods at lower costs than you can, you shouldn’t raise tariff barriers. Instead, you should import the goods, and send back something in return where your industry is more efficient … It’s a protectionist disaster in the making — for both the US, and the planet.”
It’s Not All EVs
Clean technology is by no means China’s most significant export
Note: 2023 data.
“Capitalists shouldn’t retreat into their shells at the first sign of competition,” David adds. “Instead, they should treat every danger as an opportunity to up their game. It’s ironic that the US, which pretty much invented the spirit of ebullient boosterism, is now the nation retreating from it most rapidly.”
Sounds bad, but could this retreat lead to common ground? “However difficult it may be for US and Chinese officials to strike any deals when there is so little trust between their nations, they have little choice but to continue trying,” Minxin Pei argues. “Continued dialogue is relatively low-cost yet has greater potential than any other policy to produce beneficial returns. Doubters should recall that US-Soviet détente did not transform the two adversaries into friends. It was never intended to do so. What it accomplished was to avoid a calamity.”
Its other accomplishment was putting a nail in the Soviet coffin. Who has the better hand today? “China faces an ever-tightening cordon of alliances around its periphery,” writes Minxin. “Chinese officials rail against this US-led network as an unwelcome and destabilizing case of ‘bloc politics.’ In reality, there’s not much else they can do.” Except, it seems, use clean energy to dust off that dirty word, détente.
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