The Cash Incentives in the Climate Bill Are Only Good if People Actually Use Them
Now that Congress has passed generous tax rebates for decarbonizing and buying EVs, the next step is getting people to decide to make the switch and take advantage of the money.
The environmental community scored a much-needed win recently in the Inflation Reduction Act, which just became law this month. And, taken in context, much of that fanfare is warranted given that the U.S. Congress was at a standstill earlier this year and was close to doing nothing on climate change this session. That anything came out of Washington this year on climate action was a near miracle.
The bill’s climate investments are, without question, historic. We haven’t invested in climate policy like this before. But an important piece of this bill will be meaningless if it stands alone. Specifically, what is missing from much of the climate conversation on the Inflation Reduction Act are the critical behavior change components of the bill and the obstacles that could potentially prevent the IRA’s much lauded emission reduction benefits from materializing.
Tax credits and upfront discounts for the wide range of behavior changes desired and expected in the IRA — from solar panel and electric vehicle purchasing to home weatherization and heat pump installations and more — are only as good as the public’s demand for them. Many of these behavior changes have been incentivized in the past. The IRA extends and expands many of these incentives, which is ultimately a good thing.
But if we didn’t get the necessary scaling up the first time around with these incentivized behavior changes, what makes us certain that this time around will be any different and at any faster pace and scale in order to reduce emissions substantially by 2030?
The IRA made important changes to tax credits to increase uptake, like rebate programs for low and moderate income households, more valuable incentives for heat pumps and electrification that includes electrical upgrades and EV tax credits available at the point of sale. These changes are intended to make behavior change simpler and more accessible. But more is still needed, like a game plan for ratcheting up our public engagement on these changes.
What’s a necessary complement, then, to this much hailed historic climate investment coming out of Congress, is an equally historic commitment to improve communications and campaign efforts to help the American public understand and seize the opportunity.
Because most of America isn’t going to go out this week or this month and get solar panels, an electric vehicle, a heat pump, an electric stove, a battery, or a newly weatherized home, even with the new tax incentives. This bill isn’t likely a trigger that suddenly stimulates new behavior across society, especially given inflationary pressures this year. If the public didn’t do this before, at scale, when similar incentives were in place, they’re not going to do so now just because of the media and political hype for this bill. And, if anything, the politicization of this bill, with votes along party lines, makes behavior change all the more challenging.
The American public might, however, pursue any of the myriad behavior changes assumed and expected in the IRA if they fully witness and understand the quality of life benefits that come with any of these choices. And that’s the necessary complement to the IRA. Similar to any other major federal effort that requires a chorus of pundits, messengers, and surrogates to push a policy forward, this is where influencers are needed.
Want Americans to swap out their gas stove for an electric stove, given the IRA’s upfront discount of $840? Let’s get the medical and culinary professions involved in talking about the health benefits of getting gas out of your house and the cooking benefits of induction stoves.
Want Americans to switch to an electric vehicle and leave behind their fossil fueled car, given the IRA’s $7,500 tax credit for new EVs and $4000 tax credit for used EVs? Let’s get the racing community — or even actors who race in movies — talking about how fun it is to accelerate in an electric vehicle. Let’s get economists and financial advisers talking about the thousands of dollars saved over the life of an electric vehicle versus a fossil fuel equivalent.
Want Americans to buy solar panels and battery storage, given the IRA’s extended 30% tax credit for both? Let’s get the libertarians, security officials, and doomsday preppers talking about the energy security and energy independence benefits that come with having your own solar and battery backup.
Want Americans to buy a heat pump hot water heater, given the IRA’s $2,000 tax credit? Or to weatherize their home, given the bill’s $1,600 upfront discount? Let’s get the builders and utilities, community groups, and neighborhood associations talking about how that’s the easiest way to lower your monthly energy costs and energy burden. That’s the low hanging fruit if you want to save on your energy bill. Given inflationary pressures right now, this can appeal to the public.
This education and behavior change effort shouldn’t be focused only on consumers but must also include contractors, auto dealers, the real estate community, local restaurant associations: every day influencers that are so well positioned to support this education effort.
This is the necessary work if the IRA’s billions of dollars in discounts and tax credits are to do what they’re intended to do in reducing planet-warming greenhouse gas emissions. Americans need to see how their daily life will be better, especially now, especially when financial times are tough.
As celebration over the IRA subsides and the hard work of bill implementation begins, the government needs to double down on conveying how these behavior changes are going to make meaningful improvements to people’s lives — from economic, health, security, and quality of life perspectives — and make sure credible messengers are doing the talking. That’s how we get people to make the switch.
Dr. Michael Shank is the engagement director at the Carbon Neutral Cities Alliance.