Global Project, Energy and Infrastructure Finance Group partner Allan Marks published an analysis of the Inflation Reduction Act in Forbes examining the tradeoffs between climate protections and fossil fuel provisions in the legislation. The main thrust of the Inflation Reduction Act is to promote cleaner and greener energy sources and technologies so as to reduce the greenhouse gas emissions that contribute to global climate change. Marks analyzes the bill’s various energy and tax provisions in the broader context of the energy transition, regulatory goals, volatile markets, and the current investment climate.
Overall, he says, the bill’s energy and climate provisions will stimulate investment in renewable energy and other clean technologies, including hydrogen and energy storage. Enactment of the bill or similar legislation is critical to the Biden-Harris Administration’s goal of reducing U.S. greenhouse gas emissions by 50% by 2030, Marks states, and the benefits of cutting emissions of carbon dioxide, methane and other greenhouse gases while protecting the economy and energy security “vastly outweigh the negative regulatory and environmental impact of the fossil fuel provisions.”
Marks notes, though, that the bill would tie all new wind and solar leases on federal lands and new offshore wind energy leases to a mandatory and massive expansion of new oil and gas leases over the next decade. Linking the two – holding new wind and solar leases hostage to expanded fossil fuel drilling rights – could slow or prevent the permitting of new wind and solar projects and throw up roadblocks to renewable energy investments. Proposed offshore wind projects could be especially imperiled. To Marks, “perfection should not be the enemy of the good,” yet “Congress seems to be driving with both feet pressed firmly on the gas pedal and the brakes at the same time.”
