It is amazing to me how little the Inflation Reduction Act has to do with inflation reduction. The name of the bill has to do with politics, not the actual content of the bill. Why do politicians do that sort of deception? They just can’t seem to help themselves. Some news channels are now calling the bill, more accurately, the “climate, health, and tax” bill.

            For its part, the New York Times says the Act is about energy and climate. They say “The Inflation Reduction Act is mostly a collection of subsidies for energy that does not emit any carbon, like solar, wind, and nuclear power.”

            For example, a homeowner can get a $6000 rebate on a typical $20,000 solar installation. A purchaser of a $40,000 electric car can get a $7500 rebate. (But there are all kinds of conditions on which cars and buyers will qualify.) Similar rebates (20 to 30%) are available for heat pumps, electric stoves, and energy conservation projects.

            Inflation reduction? People are being encouraged to spend a lot of money to get these rebates. People spending a lot of money is inflation producing, not inflation reducing.

            To the extent that people use such rebates to buy solar and heat pumps, the bill will reduce greenhouse emissions a bit. That’s good. But electric cars don’t help much because 80% of the electricity they use is still produced by coal and natural gas, which have lots of greenhouse emissions. The Inflation Reduction Act doesn’t convert a single coal plant to solar or nuclear.

            Individuals who earn more than $150,000, and couples who earn more than $300,000 aren’t eligible for the electric car rebate, and there are similar restrictions on the other rebates, too.

Surprisingly, the Inflation Reduction Act may be good for nuclear power. I say “may” because the provisions in the Act related to nuclear power are extremely complex, reflecting (I think) compromises between Senator Manchin and other Democrats. Keep in mind, though, that 20% of our electricity comes from nuclear, and nuclear is our largest source of pollution-free electricity. We really need a lot more nuclear to help fight climate change.

What the Act does for nuclear is create a tax credit to support existing nuclear generators and forestall closings that would lead to increased greenhouse gas (GHG) emissions. The availability of these tax credits may also improve access to financing for advanced nuclear projects. The Act also provides $700 million to support research of HALEU fuel, which is a new development that enables advanced reactors to be more compact, to refuel less often, and potentially to produce less waste.

Even more surprising, surely the work of Senator Manchin, the Inflation Reduction Act provides help to the fossil fuel industry. The bill requires that federal lands and offshore waters utilized for renewable energy development also be opened up for oil and gas drilling. (That’s the end of Biden’s anti-drilling pledge.) And a deal reached with Sen. Manchin includes concessions that allow a West Virginia gas pipeline. It would also ease the process for permitting new energy projects.

Moreover, the Act contains provisions that would expand oil and gas leasing, both on shore and offshore. The major oil companies, like ExxonMobil and Chevron, did not oppose the Act perhaps because components of the legislation will subsidize their decarbonization, or “net-zero” emissions programs, by providing money for technologies like carbon capture and storage, hydrogen, and advanced biofuels.

The Act includes billions of dollars in additional programs such as initiatives to reduce emissions from agriculture, drought relief, efforts to decarbonize manufacturing for products like cement and steel and a new fee on methane emissions to limit the release of the highly potent greenhouse gas from oil and gas operations.

Natural gas is given some breaks, too. Important because natural gas will still be needed to counter the variable nature of renewable generating sources such as solar and wind. And natural gas will still be needed for decades in Europe.

In what may turn out to be one of the more important parts of the Act to reduce climate change, the Act provides tens of billions of dollars for projects to capture carbon from power plants and industrial facilities like cement, steel, and fertilizer plants. Progressive critics oppose these carbon capture and storage (CCS) projects because they may help the fossil fuel industry. Such critics seem more interested in hurting fossil fuel than they are in helping to reduce greenhouse emissions.

Those are the simplified high points of the Inflation Reduction Act related to energy. The medical parts of the Act may be more important to some people in the short run, and the taxing of large corporations at 15% minimum is interesting, to say the least. However, providing billions for 78,000 new IRS agents is strange. Based on reports of the Treasury Inspector General for Tax Administration (TIGTA), that agency is a mess; doubling its size will only make a bigger mess. And if you believe they will only be going after the big guys with their newfound numbers, then I have a bridge for you to buy in Brooklyn. What that agency needs is a few new people at the top to straighten it out.

What the energy aspects of the Inflation Reduction Act lays bare for me is the great need for the United States to have a National Energy Policy. Look: we have no goals for energy independence, for how much nuclear power we will need, for getting electricity converted from fossil to renewable, for modernizing the decrepit electrical grids, for how all the millions of homes in America that cannot accommodate solar are going to be heated when oil and gas are made too expensive or scarce to be used.

            Therefore, a proposed National Energy Policy is the subject of my next Jack’s Journal article. Just Sayin’.