The $362 billion Inflation Reduction Act (IRA), expected to be approved this week by the House of Representatives, makes major new investments in a renewable energy transition and boosts climate-focused farm conservation and rural development programs. It also includes incentives for fossil fuel development and dubious carbon capture projects. Despite these flaws, IATP supports the passage of the IRA. But how government agencies prioritize this new spending, the level of community and public involvement, and whether it is complemented by regulatory action to reduce greenhouse gas emissions will determine how successful the IRA ultimately is in responding to the climate crisis.
After several decades of inertia, Congress is finally taking action on climate change. The science summarized by the Intergovernmental Panel on Climate Change (IPCC) has been clear that countries must slash emissions by 2030 to limit the enormous damage of global warming expected if temperatures rise above by 1.5°C. The United States has fallen behind in its commitment to reduce emissions by 50% (of 2005 levels) by 2030, currently on track to reduce emissions by only 26%. Several analysists project the IRA will get the U.S. to around 40% reduction in emissions by 2030, though some have criticized these projections for overestimating the impact of unproven carbon capture and sequestration technology in reducing emissions.
The IRA serves as a form of industrial policy, providing a swath of tax incentives and credits to expand renewable energy production and use in manufacturing, buildings and transportation, including investments in rural communities. The IRA also includes significant new spending for agriculture conservation programs that are critical for farmers responding to the climate crisis by improving soil health, expanding crop diversity and utilizing sustainably grazing, including: $8.45 billion for the Environmental Quality Incentives Program (EQIP) and $3.25 billion for the Conservation Stewardship Program (CSP). The National Sustainable Agriculture Coalition provides a good breakdown of new conservation spending.
The boost in spending will have an immediate positive impact for farmers. Last year, an IATP report found that farmers are routinely closed out of EQIP and CSP due to lack of funding. However, how U.S. Department of Agriculture (USDA) targets the conservation dollars will matter, too. Another IATP analysis found that EQIP spending too often went to high-emitting factory farms to manage their waste. One positive of the IRA is that it does not include a requirement that 50% of EQIP spending go to livestock — a current requirement under the Farm Bill that often steers dollars toward factory farms. We’ll be watching closely how the USDA sets priorities for this new round of EQIP spending.
The same goes for an additional $1.965 billion to the Rural Energy for America Program (REAP). Most of REAP’s funding goes to on-farm solar and wind, but a portion of REAP supports the capture of methane from manure lagoons on large-scale hog and dairy farms (known as factory farm gas). The result is a perverse incentive for farmers to produce more manure and further consolidate production into larger farm operations. Our analysis of the Biden Methane Reduction Plan found that it hoped to use REAP to fund more factory farm gas production. To reach climate goals, it’s critical that new REAP resources go to real renewable energy — on-farm solar and wind production.
Congress and USDA should also address concerns about the IRA’s new farmer debt relief program. Last year, Congress approved a farmer debt relief program in recognition of longstanding, race-based discriminatory practices in lending programs, particularly for Black farmers. That program faced an immediate legal challenge led by former Trump administration staffer Stephen Miller, claiming it was discriminatory against white farmers. The IRA repealed last year’s farm debt relief program and replaced it with $3.1 billion for economically “distressed” farmers and $2.1 billion for farmers who have experienced discrimination (both determined by the USDA). The Federation for Southern Cooperatives criticized the IRA’s repeal of the previous program, viewing the decision as “conceding defeat” on the white farmers lawsuit and potentially causing delay in debt relief payments. The National Family Farm Coalition also criticized the IRA’s debt relief approach as including “vague language and policies developed without adequate community stakeholder input.” The Rural Coalition supported the IRA change, optimistic it would pave the way for quick debt relief. It will be critical that the USDA move quickly after the IRA’s passage to grant debt relief for farmers who have faced discrimination in agriculture lending.
To gain passage, the IRA included priorities of the fossil-fuel-backed Senator Joe Manchin. Those damaging provisions would auction off thousands of oil and gas leases on public lands and water, as well as accelerate permitting for a handful of select fossil fuel projects including the Mountain Valley natural gas pipeline, a Manchin pet project in West Virginia. It also includes major carbon capture and storage tax incentives that will go to major polluters and further support controversial carbon dioxide pipelines being proposed through Midwest states. Climate justice groups have criticized the IRA for expanding fossil fuel projects and sacrificing communities already dealing with pollution from fossil fuel infrastructure.
The IRA is a big compromise carrot that dodged the tougher stick that also must be part of the climate solution. Stronger regulations on emissions and structural policy changes, including in the next Farm Bill, will be necessary. IATP has called for new regulations of methane emissions on large dairy and hog factory farms and greater disclosure of corporate climate risk and emissions at the Securities and Exchange Commission. Stronger limits on emissions associated with nitrogen fertilizer (from its fossil-fuel powered production to its application), a major source of agriculture emissions, are needed moving forward.
The next Farm Bill will be another opportunity to expand access to conservation programs and limit the dollars going to factory farms. But for the climate, more structural changes are needed to shift from programs that currently incentivize the over-production of cheap (heavily fertilized) animal feed for large-scale animal production — a system that has pushed out small and mid-sized farmers for decades and prevents new farmers from accessing land. We need to go further to include climate risk in agriculture credit and insurance programs, as well as consider how supply management programs and deeper investments in local food systems can better support a more climate-resilient food system.
The passage of the IRA is not the endpoint but the launch of a new phase in the race to advance the right policies to reduce emissions, support a just transition and strengthen resilience in our food and farm system. There’s much more that needs to be done, from ensuring the IRA’s implementation is on the right track to tightening pollution regulations to integrating climate concerns into the Farm Bill and trade rules. Here we go.