The Racial Equity Point of View on the Inflation Reduction Act

The United States has crossed a threshold after decades of valiant attempts to build political will for climate action. In a historic compromise, the Inflation Reduction Act is moving billions of dollars into the market and sending a signal across the globe that America is committed to fighting the climate crisis as a part of a multinational duty to the generations.

By now you have likely seen various and sundry overviews of the potential impact of the Inflation Reduction Act. In our review of the legislation, we can agree that the late summer bargain offers real capital to clean energy research and development, heavy duty and car transportation, and drought mitigation in the West. Most importantly, the Inflation Reduction Act adds certainty to investment capital in the form of Investment Tax and Production Credits and provides direct payment to accelerate projects. Inclusive financing will support deployment of wind and solar energy, which can translate to accessible energy for people and planet. These kinds of federal investments are a call to action for philanthropic support, network and relational infrastructure that can realize the potential of the bargain.  

However, the context of this legislation and its principal concessions are also a call to action for philanthropy. As news of the legislation spread faster than the details, communities voiced concerns about the opaqueness of dealmaking and lodged public inquiry and demands for protection of vulnerable places and people. The release of the final text confirmed those fears and about the closed-door nature of the terms in contravention to community practice of participatory coalitions.

As a body that is committed to racial equity, we are aware that the ways are as important as the means. As the same communities of Black, Indigenous, and people of color, chronically poor, and people who live in regions where energy extraction threatens their lives and livelihood, we are called, in this moment, to heed the concerns they have raised. EGA’s focus on the connections between environmental degradation in the US South and Global South have sharpened our understanding of myriad harms to people and place. With the support of so many EGA members, long suffering communities have done their homework on planetary solutions for species survival. As the benefits of the Inflation Reduction Act are realized, it is important to understand the forewarnings of our movement partners. 

A brief overview on the highlight and lowlights of the Inflation Reduction Act’s release of $369 billion in funding include:

• $700 million to public land management
• $200 million to watershed support for threatened ecology
• $150 million in carbon offset dollars
• $100 million for wood innovation
• $500 million in the Defense Production Act resourcing for renewable manufacturing
• $9 billion in consumer energy rebate programs
• $60 billion in funding for equity items, further including:

• $27 billion in disadvantaged community clean energy acceleration
• $3 billion in environmental and climate justice Block grants
• $3 billion in neighborhood access and equity grants
• $3 billion in port air pollution equipment dollars

• $20 billion in climate smart agricultural practices
• $5 billion in resilient forest, fire and urban tree planting
• $2.6 billion for coastal habitat restoration and conservation grants

These are massive investments. However, vulnerable and racialized communities have raised the following concerns, among others, to date:

• Only 16% of total funding is earmarked for Environmental Justice priorities, which does not meet the Justice40 benchmark;
• Environmental Justice priorities are only available on an improperly accelerated timeline and will require rigorous advocacy at multiple levels to be realized. This discounts well-known disparities and present-day lack of resources and capacity, staff and psychosocial impacts;
• The Act and companion bills put Appalachia, the Gulf of Mexico, Alaska and the Gulf South on the table, furthering their status as sacrifice zones;
• Indigenous communities have not seen investments in their capacity for forest management or expertise in traditional knowledge resourced at the level of industry;
• Investment capital in wood innovation is falsely neutral about uses for biomass and other community rejected technology;
• Funding for renewable manufacture as a category does not consider equitable demands of historical examples of ecosystem harm from mining, which will be integral to the energy transition;

As the conversation about this landmark legislation shifts to a staid pace of regulatory, state, local, community and territorial forums, the impact of the legislation will be borne out. At EGA, our NorthStar for progress is the Racial Equity Point of View. We are committed to working with our members to examine the impact, partner for just economies, healthy communities, and always, for people and planet.

We are clear that not all environmentalists, networks or communities share the same perspective on this moment. And for this reason, we believe that now is the time for philanthropy to recommit investing deeply in support for the communities who are now in yet another level of harm’s way. Vulnerable and racialized communities will need direct support, and sustained capacity to fight the political, structural, and regulatory wake of the Inflation Reduction Act. We hope to be a resource as you determine the path beyond this unforgettable moment.