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Here’s how to make the Inflation Reduction Act benefit all
Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar
To help Main Street as well as Wall Street, money and effort need to flow into on-the-ground adaptation as well as emissions cuts.
Jesse M. Keenan is an associate professor and social scientist at Tulane University’s School of Architecture, whose research focuses on climate change adaptation and the built environment. Laurie Schoeman is director of climate and sustainability for Enterprise Community Investment.
The passage of the Inflation Reduction Act (IRA) is a momentous occasion because it comes at moment when U.S. communities from coast-to-coast are feeling the accelerated impacts of climate change.
The IRA is primarily about stimulating the emergence of a green economy through tax credits and direct investments that will accelerated the decarbonization of the old economy.
The challenge now for the Biden administration is to shape these programs in a manner that benefits not only Wall Street but also Main Street.
Growing the green economy is key, but we also have to think about how these investments can help struggling communities adapt to climate impacts. No part of this nation is unscathed from climate impacts - from dried-up wells to disappearing shorelines. Hurricane Ian is yet another reminder of how fragile our communities are.
You might think that some level of government is engaged in strategically coordinating climate adaptation for the United States. They are not.
Right now, it is the market economy that is doing most of the driving. That is a good thing on some level because it means that our economy is beginning to price climate risk and behaviors will respond accordingly.
However, it is also a dangerous precedent to put Wall Street at the driver’s wheel of making decisions about winners and losers when so many communities are struggling to stay afloat.
To get the most out of the IRA, we need strategic executive action to ensure that funding will advance the administration’s dual goals of climate mitigation and adaptation.
Federal agencies will need to appoint well-resourced leadership and staff to ensure the programs are shaped to be responsive to the needs of users from states and tribes to equity investors and banks.
The IRA made major investments in workforce training in the private sector, but now we need to turn our attention to the public sector.
Without the rapid training and hiring of program staff, the grand ambitions of the IRA will be bogged down by its own weight in everything from permitting to environmental reviews. Federal agencies have undertaken extensive adaptation and resilience plans and they need support aligning those plans with the investments of the IRA.
A major hallmark of the IRA is the provision of lending programs and green banks.
These programs offer a great deal of opportunity for investing in projects and infrastructure that support both climate mitigation and adaptation goals. However, existing federal resilience and adaptation programs are struggling to get money and resources to rural and mid-sized communities who simply don’t have the resources and personnel to be competitive in attracting and managing federal dollars.
To ensure that these lending program reach these underserved communities, the administration should engage local lending and development institutions like Community Development Finance Institutions (CDFIs).
Over 1,300 of these federally chartered institutions provide capital and resources to communities that have been traditionally underserved. Local financial institutions understand the intricacies of communities and can provide valuable insight into supporting local investments that have impact.
Finally, getting the most out of the IRA means demanding the most out of the IRA. That means making investments in a range of indicators that track not only greenhouse gas reduction but also a reduction in climate risk exposure.
For instance, we don’t want to invest in a biofuels plant located in a seal level rise inundation zone.
As the administration makes decisions about project qualification and selection, resilience and adaptation metrics can go a long way toward ensuring that we aren’t putting the green economy in the crosshairs of the worst climate impacts.
Getting the most out of the IRA means that we need to consider both climate mitigation and adaptation in making these once-in-a-generation investments. It means investing in government personnel and policies that connect those on the ground with coordinated federal adaptation resources and policies.
If we don’t consider adaptation and resilience in making these investments, then we run the risk of replicating the same mistakes of the past.
Investing in a new green economy means we need to be flexible enough to adapt not just our infrastructure, but we also need to adapt our institutions in order to serve the struggling communities who are on the frontlines of the climate crisis.
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