Resources - innovative ideas and engaging stories in environmental economics

Erik Calonius / US National Archives

Even though we still have a long way to go, the Inflation Reduction Act—if it passes in the House of Representatives and makes its way to the president’s desk—is an important step toward environmental justice.

The Biden administration has linked the climate crisis to environmental justice (EJ) since the passage of Executive Order 14008, titled “Tackling the Climate Crisis at Home and Abroad,” during President Joe Biden’s first week in office. The executive order established the Justice40 Initiative, which mandates that at least 40 percent of the benefits of certain climate and energy programs flow to disadvantaged communities. The executive order also set up the White House Environmental Justice Advisory Council, required agencies to make EJ an official part of their mission, and directed the Council on Environmental Quality to create a Climate and Economic Justice Screening Tool to identify disadvantaged communities. The word “justice” appears 31 times in the document.

But using climate policy to address EJ concerns has always been a bit of a “square peg in a round hole.” EJ concerns are community based and oriented around local air and water quality and associated health problems. Long-standing challenges include the existence of Superfund sites, lead pipes in drinking water systems, inadequate wastewater infrastructure, toxic air emissions, exposure of farm workers to pesticides, and other issues that are not connected directly to climate change. While research has shown that the impacts of climate change, such as tidal flooding, hurricanes, and extreme heat events, are disproportionately felt by lower-income, socially vulnerable populations, these problems can be addressed through effective adaptation and resilience programs—not through policies that reduce greenhouse gas emissions.

Furthermore, frontline communities are nervous about some of the climate policy options that are on the table, especially technological solutions such as carbon capture and storage, along with cap-and-trade policies and other market-based approaches. Essentially, the concerns boil down to this: EJ communities worry that these policies may facilitate the continued emissions of (non–greenhouse gas) pollutants from industrial facilities, add risks from pipelines and other new infrastructure, and lead to higher energy prices, without addressing long-standing environmental inequities. In a broader sense, the solutions imply continued decisionmaking about energy infrastructure that is worryingly distant from the communities themselves.

The current budget reconciliation bill, the Inflation Reduction Act of 2022 (IRA), goes some way toward addressing this mismatch between climate policy and EJ. The bill does so via two main methods highlighted below.

The IRA includes funding for the following:

Special provisions in the IRA include the following:

We have a long way to go to right the historical wrongs in many disadvantaged communities in the United States and to align the square peg of climate policy with the round hole of EJ. But the Inflation Reduction Act, if it passes in the House of Representatives and makes its way to the president’s desk, is an important step in the right direction

Senate Democrats claim that the bill provides a total of $60 billion for EJ priorities. Because of the many tax credits and some ambiguity in how certain provisions will be implemented, the actual figure may be somewhat lower. But the IRA also builds on the $1.2-trillion Infrastructure Investment and Jobs Act (IIJA) of 2021, which included several provisions for disadvantaged and underserved communities: $15 billion for the Drinking Water State Revolving Fund program to support the replacement of lead service lines; $3.5 billion for the US Department of Energy’s Weatherization Assistance Program; $3.5 billion for flood mitigation assistance grants from the Federal Emergency Management Agency for socially vulnerable or economically disadvantaged property owners; $3.5 billion for the cleanup of Superfund sites; and $1 billion for a Reconnecting Communities Pilot Program to address problems in communities that have been separated by highways. Moreover, if federal agencies adhere to the Justice40 guidelines, significant spending in other programs should flow to disadvantaged communities.

Does the bill, together with the IIJA and Justice40, address all EJ concerns? No.

For one thing, federal spending alone cannot do that. Many problems can be addressed only at the state and local levels.

States are responsible for permitting industrial facilities, for example, and a central worry in the EJ community revolves around the cumulative environmental impacts from such facilities. A landmark New Jersey law, adopted in 2020, addresses these issues, and New York recently has followed suit, but it remains to be seen whether this trend will spread to other states. States also often have discretion in how they spend the federal money they receive, which in many cases does not guarantee that the states will direct the funding toward frontline communities. Justice40 holds great promise, but bumps have disrupted the road to implementation, including criticisms of the Climate and Economic Justice Screening Tool that’s intended to identify disadvantaged communities, along with the slow pace of progress within some federal agencies in identifying covered programs and deciding what constitutes “benefits.”

Finally, many EJ organizations are worried that the IRA’s funding for more “timely and efficient environmental reviews” will limit one of their options for weighing in on federal projects. These organizations also are disappointed in the continued development of oil and gas resources on federal lands and the provisions related to carbon capture and storage, bioenergy, and other technologies in both the IRA and the IIJA. (See here and here, for example.) A path forward on these and other technologies, and the potential role they may play in solving the climate crisis, needs to include deep and serious dialogue with EJ organizations and frontline community members.

In summary, we have a long way to go to right the historical wrongs in many disadvantaged communities in the United States and to align the square peg of climate policy with the round hole of EJ. But the Inflation Reduction Act, if it passes in the House of Representatives and makes its way to the president’s desk, is an important step in the right direction.

Inflation Reduction Act: Examining Electric Vehicle Subsidies for Medium- and Heavy-Duty Vehicles

Exposure: Environmental Justice Research, Policy, and Advocacy

The Economics of Environmental Justice, with Samuel Stolper and Catherine Hausman

Income Inequality Is a Key Driver of Decreased Residential Electricity Consumption

Sign up to receive our Resources Radio podcast and On the Issues newsletter every week.

Become an RFF donor and receive our print magazine three times a year.

We use cookies to provide you with a better service. Carry on browsing if you're happy with this, or find out more.