Agricultural Provisions of the Inflation Reduction Act and Beyond

The historic “Inflation Reduction Act (IRA)”, passed by the Biden Administration in August 2022, has set the stage for a nationwide shift towards cost-effective clean energy solutions across sectors. The act directs nearly $400 billion in federal funding towards incentives for renewable energy, electric vehicles, and curbing carbon emission from fossil fuel production, clean manufacturing, domestic procurement of materials, and investment into cutting edge technologies such as carbon storage and clean hydrogen. The IRA’s reconciliation package is estimated to reduce carbon emissions by 40 percent below 2005 levels by 2030, making significant progress towards the United States’ mid-century climate goals and restoring its status as leader in the fight against climate crisis.

The IRA goes beyond investments in direct renewable infrastructure. It also tackles emissions from other sectors, including agriculture. Nearly $40 billion in funding has been earmarked for agricultural provisions to support climate smart agriculture initiatives. Of this $40 billion, nearly $20 billion has been reserved for agriculture conservation programs to encourage farmers to incorporate a more sustainable form of farming by scaling carbon sequestration measures across their practices. A further $5 billion has been reserved for wildfire protection and forestry projects, to support climate smart forestry.

Agriculture is known to have a huge environmental footprint and will likely be one of the first sectors to experience the impacts of climate change. Therefore, the introduction of the IRA is a critical step by this country towards the adoption of more climate friendly and regenerative farming practices. Even though the agricultural industry is a significant contributor to the global greenhouse gas, this sector can also contribute to sequestering carbon in an effort to mitigate the climate crisis. In 2020, the U.S agricultural sector emitted an estimated 669.5 million metric tons of carbon-dioxide equivalent, accounting for nearly 11.2 percent of the country’s GHG emissions. Investments from the IRA in conservation practices and forestry are likely to increase the amount of carbon stored in soil by 278.6 million metric tons of CO2 equivalent  by 2030. Globally, it is estimated that by adopting climate smart and regenerative agricultural practices, the sector has the potential to sequester 14.5-22 gigatons of CO2 equivalent by 2050.

Understanding the climate benefits of healthier soil and terrestrial ecosystems is essential in addressing and combating the climate crisis. Regenerative agriculture is a term that is widely used to describe farming practices that aim to rebuild soil’s organic matter by restoring its degraded biodiversity, resulting in overall carbon drawdown that can help in mitigating the effects of climate change. In other words, it is a long-term holistic strategy that aims to produce food with lower or net-positive environmental impact. Embracing this philosophy, the Inflation Reduction Act includes $300 million for the United States Department of Agriculture to assess the climate benefits of healthy soil. This initiative will help build new and better markets, both for the farmers & consumers, by investing in nutrient management strategies to help address the global food security crisis. The bill’s investment in programs like Environmental Quality Incentives Program (EQIP), Regional Conservation Partnership Program (RCPP), Conservation Stewardship Program (CSP), and Agricultural Conservation Easement Program (ACEP) will encourage farmers to reduce their dependence on pesticides for crop production and undertake more organic production practices.

With the current Farm Bill set to expire on September 30, 2023, and congressional hearings underway to determine stakeholders’ priorities for re-authorization, the provisions of the IRA are set to shape the negotiations under the new draft. The Farm Bill, reauthorized by Congress every five years, covers a wide range of issues from land conservation to rural development to food and nutrition. The 2018 Farm Bill comprised of twelve focus areas, which aimed to provide support and stability to the country’s farmers by enhancing farm support programs and improving crop insurance. However, the current Farm Bill does little to support climate smart agriculture. By allocating funds towards agricultural programs that support carbon storage, the IRA could help redefine the landscape of the 2023 Farm Bill in a meaningful way. The President’s Budget released in March expressed support to invest in climate resilient practices and recommends the Farm Bill to address climate change through voluntary incentives. Further, the budget supports rural communities in their transition to clean energy by increasing investments in grants and expanding the reach of USDA Climate Hubs that provide technical assistance to producers to help tackle climate risk.

With the global food demand expected to grow 70 percent by 2050, the upcoming Farm Bill has the opportunity to increase investment in regenerative agriculture practices and ensure the country’s competitiveness in the global market by transitioning to a more resilient and sustainable food system.

Naimat Chopra

2022 Kleinman Energia Fellow

Naimat Chopra is pursuing a master’s degree in social policy and data analytics at the School of Social Policy & Practice (SP2). She is the 2022 Kleinman Energia Fellow.