Environmental Justice via Industrial Policy

This piece was first published at the Center for Progressive Reform on November 8, 2023. It is reprinted with their permission.

This summer, we marked the one-year anniversary of the Inflation Reduction Act (IRA), the United States’ most significant climate change law. Many advocates for environmental justice, myself included, were disappointed by several features of the Act, including the greenlighting of certain fossil fuel infrastructure projects. Nevertheless, the law unlocked unprecedented streams of investment into clean energy via tax credits and direct spending mechanisms.

In this post, I process these components of the Act from an environmental justice perspective, one year in. How have they opened new spaces for progress toward environmental justice, and what new challenges do they present? I contend that the Act represents not just a slew of new initiatives, but a new theory of environmental justice that bears closer scrutiny as it moves from paper to practice.

The Biden administration vocalized a strong commitment to environmental justice from the outset with an executive order that prioritized environmental justice in agency decision-making. President Biden also staffed his agencies with many strong environmental justice proponents. But for the first several years, these actors were constrained by existing statutes, precedent, and a U.S. Supreme Court hostile to innovative agency action (leading to, for example, a kerfuffle at the Federal Energy Regulatory Commission over an attempted revitalization of natural gas pipeline permitting guidance to include environmental justice considerations).

Then came the memorable 2022 summer of frenetic negotiations that resulted in the passage of the IRA. The Act has been heralded as ushering in a new way of doing climate policy, often referred to as “green industrial policy” or sometimes “Bidenomics.”

In a speech laying out the pillars of this new strategy, National Economic Council Director Brian Deese described this policy as “a strategy to strengthen our supply chains and rebuild our industrial base, across sectors, technologies, and regions.” Now, there’s nothing inherently “green” about that vision, but Deese emphasized responding to climate change as a core goal of this re-industrialization. The IRA concretizes these commitments, creating tax credits expected to spur up to $1.2 trillion in clean-energy-related spending over the next 10 years.

The IRA also contains significant commitments to environmental justice that operate alongside the Biden administration’s Justice40 initiative, which instructs the government to direct 40 percent of the benefits of certain investments to disadvantaged communities. (Note, though, that Justice40 doesn’t apply to tax credits because they aren’t government spending.) Brookings calculates that the law includes around $46 billion for environmental justice programs, including grants for state and regional green banks and for schools and communities to pursue their own climate initiatives. It also codifies environmental justice into its tax credits, providing additional benefits for developers locating their projects in so-called “energy” communities and low-income communities.

These initiatives represent a sea change in the federal government’s approach to environmental justice. The old strategy was largely one of reducing industry-related pollution burdens and ameliorating the legacy of racist siting practices. The new one might be called “industrial environmental justice.” This strategy focuses on bringing investments to historically disadvantaged communities to nurture opportunities, jobs, and resilience. Early analysis suggests the Act has already created 170,600 clean-energy jobs and spurred 210 major new clean energy projects.

In some ways, this new strategy is a welcome development that may catalyze real structural change. At its best, the IRA might promote economic and energy democracy, giving communities not just freedom from unequal pollution burdens but the capital, skills, and autonomy to produce their own visions of a resilient, sustainable future. There are also hopes that the IRA will redistribute wealth and income, thereby proving an antidote to the extreme and racialized inequality facing Americans today. And many of the investments the Act supports are unalloyed goods for communities that receive them, such as electric school buses to replace diesel ones that produce horrific air pollution consequences for the children aboard.

However, green industrial policy raises its own complex environmental justice challenges. For one, the technologies that the IRA promotes are not all as unequivocally good for communities as electric school buses. The Act provides incentives for hydrogen, carbon capture and storage, and nuclear infrastructure that communities may have reasonable reservations about hosting. (Indeed, even wind and solar technologies are unfortunately proving controversial in many affluent communities.) The process and substance of evaluating which infrastructures are beneficial creates its own demands on frequently under-resourced and overstretched community advocates and groups.

As others have observed, the IRA also relies on a strategy of change that assumes that making clean energy affordable and enticing will ultimately drive fossil fuels out of existence. But this eventuality is far from guaranteed. So far, renewable energy’s astounding global growth has proven additive, not displacing. That means that communities most impacted by fossil fuels’ pernicious consequences will continue to have to fight piecemeal battles to protect their health and the planet’s well-being, even as permitting reforms make these battles more difficult.

Many hope that the ‘place-based’ model of the IRA — focused on targeting investments to certain communities — may shift climate politics enough to allow for more robust restrictions on fossil fuels down the road. In the meantime, as IRA implementation proceeds, researchers, policymakers, and activists interested in ensuring that green industrial policy produces environmental justice benefits must dig into the bureaucratic details:

• Which communities are hosting what kinds of infrastructure? How is equity being incorporated into grantmaking?
• How are communities involved in project selection?
• What kinds of jobs and economic benefits are clean energy projects producing? What kinds of local air and water quality benefits?
• Conversely, what risks are communities taking in accepting new infrastructure projects?
• What kinds of capacity-building efforts are proving successful at giving communities the tools needed to architect their own energy future?
• Are these sufficient under conditions where communities of color are also bearing a disproportionate brunt of mounting climate disasters?

The IRA’s clean energy infrastructure investments provide momentum toward a more equitable energy future, but clean energy is not ineluctably just energy. It will be a struggle of solidarity to make it so.

Shelley Welton

Presidential Distinguished Professor

Shelley Welton is Presidential Distinguished Professor of Law and Energy Policy with the Kleinman Center and Penn Carey Law. Her research focuses on how climate change is transforming energy and environmental law and governance.