Since the Senate’s passage of the Democrats’ massive climate bill, backslapping and congratulations have been the order of the day among environmentalists from California to West Virginia. In their giddiness over the scale of the Inflation Reduction Act, they may want to pause to acknowledge the dynamics that allowed this moment to arrive.
The $370 billion package survived a political process that doomed many previous efforts because clean energy has finally become cheap enough to start moving the country away from fossil fuels.
“The cost difference between fossil and low-carbon energy has shrunk over the last 10 years in dramatic ways,” Michael Greenstone, who heads the Energy Policy Institute at Chicago, told me. “For the first time it has allowed modest policies to deliver real carbon reductions.”…
The Inflation Reduction Act relies on these new economics. Some of the clean energy tax credits, for instance, generate benefits that are three to four times as large as the costs
. That kind of cost-benefit balance was not true 10 years ago. “Climate policy is much less expensive today,” Greenstone said. “We are picking the fruits of that.”