Inflation Control Act Exactly what critics predicted

DAILY CALLER NEWS FOUNDATION— In a recent interview, World Energy Council Secretary General Angela Wilkinson told me that one of the biggest obstacles to today’s energy transition is the lack of what she calls “systems thinking.”

“Energy transitions are a change in the way society is organized,” she stressed. “It's not just a matter of swapping one technology for another and everything else staying the same. Yet we have this very simplistic narrative that we can take the oil system, put in renewables, it will happen immediately and nothing else will change. That's like telling you we're going to pull out your femur but want you to run a marathon.”

Yet it was precisely this simplistic narrative that President Joe Biden and Democrats in Congress used throughout 2021 and the first eight months of 2022 to try to convince the public and reluctant Democratic senators – such as Senator Joe Manchin of West Virginia – of the merits of the Orwellian-named Inflation Reduction Act.

As we mark the two-year anniversary of the day Manchin gave up his political future by being the deciding vote in passing this landmark legislation, now is a good time to take a look at where the country has been since August 16, 2022.

The first thing to understand about the Inflation Control Act is that the Democrats who passed it strictly along party lines view it as merely a down payment on their ultimate Green New Deal-based goals to transform the entire U.S. economy. It's not just me saying that, but also Democratic officials like Treasury Secretary Janet Yellen, who said in a recent interview that the global energy transition to a net-zero goal by 2050 would require $3 trillion in new investment every year.

That's a conservative estimate, by the way. McKinsey & Co. published an estimate two years ago that it would take $275 trillion from 2021 to 2050 to achieve that goal. That estimate was before we even learned about the energy needs of data centers and artificial intelligence, and before we experienced all the inflation under Biden and Harris. By now, the figure would undoubtedly be $300 trillion or more, a cost so high and economically ruinous that the human mind just can't really comprehend it.

The announced $369 billion in tax breaks and direct subsidies for green energy in the Inflation Reduction Act seem paltry by comparison. Goldman Sachs estimated last year that the actual cost over time will be closer to $1.2 trillion, but that's still just a drop in the bucket.

Obviously, future presidents and Congresses would have to pass many more debt-financed spending sprees along the lines of the Inflation Reduction Act to truly realize the flowery utopia envisioned by the Green New Deal and its sponsors.

So what has that down payment really accomplished two years later?

Not much, actually, in terms of transforming the energy system. In the U.S., the share of wind and solar in electricity generation has increased only slightly. This is especially true for solar, whose installed capacity increased by over 10% in 2023 and continues its rapid increase in 2024. Growth has been particularly rapid in Texas, which has quickly become the national leader in solar capacity after focusing on expanding wind energy over the past 20 years.

The influx of subsidies and tax breaks from the Inflation Control Act also inevitably has the effect of encouraging the creation of companies that are not based on sound business models. This is particularly evident in the electric vehicle space, where almost every pure-play electric vehicle maker in the country not named Tesla is either bankrupt or teetering on the brink of bankruptcy. Legacy automakers like Ford, GM and Stellantis, so eager to fully implement the Biden-Harris agenda, have spent much of the past year scaling back or eliminating their investments in electric vehicles as the consumer market has collapsed.

The much-vaunted Biden-Harris offshore wind venture is also turning into a pointless fiasco, as companies like Orsted, BP, Equinor and others have canceled one project after another and suffered major financial losses due to high inflation, rising interest rates and broken supply chains. The recent fiasco over collapsed blades at Vineyard Wind, the only offshore project to come online so far, littering the beaches of Nantucket Island with dangerous fiberglass insulation, now threatens to force a rethink across the industry in the US.

Finally, the other aspect of the deal Manchin made with Senate Majority Leader Chuck Schumer and then-House Speaker Nancy Pelosi in exchange for his tie-breaking vote on the Inflation Reduction Act – legislation to simplify permitting processes for energy projects – was also a flop. Manchin's original bill failed in late 2022, and the bipartisan bill he is now pursuing appears to have similarly poor prospects for final passage.

As we mark the second anniversary of the Inflation Reduction Act, it is probably fair to say that the uncoordinated collection of green subsidies and tax incentives has produced precisely the negative effects that its critics warned about when Biden signed the law.

It's been a bit of a disaster so far, and whoever becomes president in 2025 should make rethinking the whole approach their top energy priority. Maybe even put Angela Wilkinson in charge of leading the effort.

Originally published by Daily Caller News Foundation.

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