DIANA FURCHTGOTT-ROTH: After two years, it is clear that Biden's anti-inflation law has had exactly the opposite effect

How well is the Inflation Control Act working? The fact that Vice President Kamala Harris plans to call on the federal government to ban gouging in grocery stores on the second anniversary of the Act should give you the answer: It doesn't work.

Even though her administration still takes responsibility for the ridiculously misnamed IRA program and the large number of grocery stores ensures robust price competition, Harris' proposal shows that Americans are concerned about high prices.

Inflation has fallen from over 8% in 2022, when the IRA was signed, to 2.9% annually, but food prices are 21% higher than they were three years ago. Rather than reducing inflation, the IRA has likely increased it by giving companies tax breaks for producing more expensive energy and transportation. (RELATED: The good, the bad and the ugly: Biden's climate bill turns two years old)

As inflation has risen, so have tax credits. When the IRA law was enacted, the U.S. Treasury Department estimated that the tax credits would cost $270 billion over ten years. But now the Treasury Department reports that the cost of the IRA tax credits will be over $1 trillion over ten years, which is consistent with Goldman Sachs' estimates.

These tax credits encourage the development of wind and solar energy, which in turn drives up the cost of generating electricity and makes food more expensive. Intermittent energy is more expensive than continuous energy because the wind doesn't always blow and the sun doesn't always shine.

Wind farms need backup natural gas plants, and solar plants need backup batteries. Natural gas plants generate cheaper electricity when they run continuously than when they are only occasionally turned off when the wind dies down. But natural gas and coal plants are being crowded out by distorting subsidies for renewable energy.

California's rules promoting wind and solar power caused residential electricity prices to rise by nearly 170 percent between 2004 and 2024, from about 12 cents to 33 cents per kilowatt hour. The U.S. average is about 16 cents. (RELATED: Electricity prices rose seven times faster under Trump)

RALEIGH, NORTH CAROLINA – AUGUST 16: Democratic U.S. presidential candidate Vice President Kamala Harris speaks about her political platform, including improving the cost of living for all Americans, at the Hendrick Center For Automotive Excellence on August 16, 2024 in Raleigh, North Carolina. This is the candidate's first major political speech since accepting the Democratic Party nomination. (Photo by Grant Baldwin/Getty Images)

Bringing renewable energy to urban centers will require extensive transmission infrastructure, which will cost more than $220 billion, according to the Energy Department, and companies are passing the costs on to households in the form of higher tariffs.

Likewise, electric vehicles (EVs), which receive the $7,500 IRA tax credit, are more expensive than gasoline-powered vehicles. The Ford F150 Pickup XL costs $36,965 and the Ford Lightning pickup truck—the electric equivalent—costs $62,995.

Under the IRA, electric vehicles had to have a certain percentage of domestic production to receive the credit, but there is a huge loophole in the law for leased vehicles. The Treasury Department has ruled that commercial vehicles do not have to meet the domestic requirements to receive the credit and that leased vehicles are considered commercial. Therefore, people can lease electric vehicles and receive the credit.

The IRA tax credits were supposed to benefit Americans and build domestic industry. But Chinese companies are partnering with American companies to get tax credits. The result: the IRA is making China stronger and America weaker.

Ford and Contemporary Amperex Technology Co. Ltd. (CATL) have a joint venture in Michigan. Beijing will influence both the technology and factory operations of the $2.5 billion plant, which will receive $2.2 billion in tax breaks.

China dominates battery technology and has more than 70 percent of the world's production capacity for electric vehicle batteries. CATL is the largest producer and benefits from close ties with the Chinese Communist Party (CCP).

One rationale for the IRA was to reduce emissions, but many calculations show that tax-advantaged renewable energy increases global emissions. Solar panels, wind turbines and batteries made in China use electricity from coal-fired power plants. Emissions are generated when the components are transported to Europe and the US, and when these panels and turbines are disposed of when they are no longer usable.

As Vice President Harris' announcement makes clear, inflation is not fixed. The IRA has likely made it worse by increasing energy and transportation costs and penalizing domestic energy. This is not a happy anniversary.

Diana Furchtgott-Roth is director of the Center for Energy, Climate, and Environment and the Herbert and Joyce Morgan Fellow for Energy and Environmental Policy at the Heritage Foundation. The Heritage Foundation is listed for identification purposes only. The views expressed in this article are those of the author and do not reflect any institutional position of the Heritage Foundation, the National Review Institute, or their trustees.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

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