[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
A BIG CLIMATE DEAL: LOWERING COSTS,
CREATING JOBS, AND REDUCING POLLUTION
WITH THE INFLATION REDUCTION ACT
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HEARING
BEFORE THE
SELECT COMMITTEE ON THE
CLIMATE CRISIS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
SEPTEMBER 29, 2022
__________
Serial No. 117-23
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
Printed for the use of the Select Committee on the Climate Crisis
__________
U.S. GOVERNMENT PUBLISHING OFFICE
49-423 WASHINGTON : 2022
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SELECT COMMITTEE ON THE CLIMATE CRISIS
One Hundred Seventeenth Congress
KATHY CASTOR, Florida, Chair
SUZANNE BONAMICI, Oregon GARRET GRAVES, Louisiana,
JULIA BROWNLEY, California Ranking Member
JARED HUFFMAN, California GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia BUDDY CARTER, Georgia
MIKE LEVIN, California CAROL MILLER, West Virginia
SEAN CASTEN, Illinois KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado DAN CRENSHAW, Texas
VERONICA ESCOBAR, Texas ANTHONY GONZALEZ, Ohio
------
Ana Unruh Cohen, Majority Staff Director
Sarah Jorgenson, Minority Staff Director
climatecrisis.house.gov
C O N T E N T S
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STATEMENTS OF MEMBERS OF CONGRESS
Page
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, and Chair, Select Committee on the Climate Crisis:
Opening Statement............................................ 1
Prepared Statement........................................... 2
Hon. Garret Graves, a Representative in Congress from the State
of Louisiana, and Ranking Member, Select Committee on the
Climate Crisis:
Opening Statement............................................ 3
WITNESSES
Dr. Quinta Warren, Associate Director, Sustainability Policy,
Consumer Reports
Oral Statement............................................... 6
Prepared Statement........................................... 8
Philip Rossetti, Senior Fellow for Energy and Environment, R
Street Institute
Oral Statement............................................... 12
Prepared Statement........................................... 14
Josh Nassar, Legislative Director, International Union, United
Automobile, Aerospace, and Agricultural Implement Workers of
America (UAW)
Oral Statement............................................... 19
Prepared Statement........................................... 21
SUBMISSION FOR THE RECORD
Prepared Statement of Samantha Sloan, Vice President, Global
Policy, Sustainability, and Marketing, First Solar, Inc.,
submitted for the record by Ms. Castor......................... 5
APPENDIX
Questions for the Record from Hon. Kathy Castor to Dr. Quinta
Warren......................................................... 43
Questions for the Record from Hon. Kathy Castor to Josh Nassar... 44
A BIG CLIMATE DEAL: LOWERING COSTS,
CREATING JOBS, AND REDUCING POLLUTION
WITH THE INFLATION REDUCTION ACT
----------
THURSDAY, SEPTEMBER 29, 2022
House of Representatives,
Select Committee on the Climate Crisis,
Washington, DC.
The committee met, pursuant to call, at 12:47 p.m., in Room
210, Cannon House Office Building, Hon. Kathy Castor
[Chairwoman of the committee] presiding.
Present: Representatives Castor, Bonamici, Casten, Escobar,
Graves, Palmer, Carter, Miller, and Crenshaw.
Ms. Castor. The committee will come to order. Without
objection, the Chair is authorized to declare a recess at any
time.
As a reminder, members participating in the hearing
remotely should be visible on camera. Throughout the hearing,
members are responsible for controlling their own microphones
and can be muted by staff only to avoid inadvertent background
noise.
As a reminder, statements, documents, and motions must be su
bmit- ted to the electronic repository, to
[email protected].
Finally, if you are experiencing any technical problems,
please inform the committee staff immediately.
Well, good afternoon, everyone. Thank you all for joining
this hybrid hearing, A Big Climate Deal: Lowering Costs,
Creating Jobs, and Reducing Pollution with the Inflation
Reduction Act.
We are going to talk today about how the Inflation
Reduction Act will help families lower electric and fuel bills,
create jobs, and expand investments in U.S. manufacturing,
clean energy, clean vehicles, and climate solutions.
I will recognize myself right now for a shorter opening
statement. I am going to submit my full statement into the
record.
Welcome again, everyone. The Inflation Reduction Act is a
``cost cutter'' that puts money back into the pockets of
Americans by making the largest investment in clean energy and
energy efficiency in the nation's history.
And it is more poignant today that action to address the
climate crisis, that we act urgently. And I want to thank
everyone who has relayed their concerns for my Florida
neighbors in the path of that monster Hurricane Ian, to the
Ranking Member, especially for his outreach.
Rep. Graves, I truly appreciate you offering your advice
and counsel, because folks in Louisiana certainly have too much
experience at that as well.
And as the devastation unfolds, we really owe it to the
hardworking people across America to reduce the risks and costs
of climate fueled disasters, whether they are these juiced-up
hurricanes or the scorching heat or drought or wildfires.
And that is why the Inflation Reduction Act is so
important. It will put the United States on a path to reduce
our heat trapping pollution by roughly 40 percent by 2030. And
it will strengthen our energy security, lower costs for
Americans, and create millions of jobs.
By reducing our reliance on expensive and volatile fossil
fuels, the Inflation Reduction Act will allow more Americans to
enjoy the cost-saving benefits of renewables, like wind and
solar, which are now the cheapest sources of power; more money
for energy efficiency, to also save them money, make it cheaper
for them to electrify their homes; make energy and their
appliances more energy efficient. And those who buy electric
vehicles will get thousands off the sticker price, and those
EVs can save you about $500 a year on fuel costs alone.
According to the BlueGreen Alliance, the new law will also
help create more than 9 million good jobs over the next decade.
That includes 150,000 jobs expanding environmental justice,
which means deploying clean buses and garbage trucks in areas
with poor air quality, and building new solar and wind projects
in working class communities and on Tribal land.
The Inflation Reduction Act is an enormous step forward,
but we know there is more yet to do. So we have some
outstanding witnesses here today to help us talk about
implementation and how we get those dollars back into the
pockets of our neighbors. So I look forward to today's
discussion.
And I will yield back my time and recognize Rep. Graves,
the Ranking Member, for 5 minutes.
[The statement of Ms. Castor follows:]
Opening Statement of Chair Kathy Castor
Hearing on ``A Big Climate Deal: Lowering Costs, Creating Jobs, and
Reducing Pollution with the Inflation Reduction Act''
September 29, 2022
As prepared for delivery
In today's hearing, we'll examine the financial benefits of the
Inflation Reduction Act to American families. The Inflation Reduction
Act is a ``cost cutter'' that puts money back into the wallets of
Americans. And it includes the largest investment in clean energy and
energy efficiency in our nation's history, answering the call to
mitigate the growing impacts and costs of the climate crisis.
Action to combat the climate crisis is urgent. And I want to thank
everyone who has relayed concern for my Florida neighbors in the path
of monster Hurricane Ian. As the scale of the devastation unfolds, we
owe it to the hard-working people of this nation to reduce the risks
and costs of climate-fueled disasters, whether they be juiced-up
hurricanes, scorching heat, droughts, or wildfires like we see out
West. In Puerto Rico, nearly 350,000 homes and businesses remain
without power long after Hurricane Fiona made landfall. And in Alaska,
a powerful storm brought floods, power outages, and new threats to food
security. These costly harms underscore the need to strengthen our
infrastructure and reduce climate pollution. That's why the Inflation
Reduction Act is so important. It will put the United States on a path
to reduce our heat-trapping pollution by roughly 40% by 2030. And as
you'll hear today, it will do so while strengthening our energy
security, lowering costs for Americans, and creating millions of jobs.
By reducing our dependence on expensive and volatile fossil fuels,
the Inflation Reduction Act will allow more Americans to enjoy the
cost-saving benefits of cleaner, cheaper energy. Renewables like wind
and solar are now the cheapest source of power. And by installing more,
we'll pass cost savings to consumers while meeting their energy needs.
Speaking of savings, the rebates and credits in the climate law will
make it cheaper for Americans to electrify their homes and make them
more energy efficient. That includes rebates to switch to cost-saving
electric appliances and vehicles; to buy clean water heaters and
cooling systems; and to install rooftop solar and battery storage.
According to Rewiring America, the average household could receive more
than $10,000 in benefits to fully electrify their lives, leading to an
additional savings of $1,800 a year on energy bills. Those who buy
electric vehicles will get thousands off the sticker price--and they
could save more than $500 a year on fuel costs alone. Imagine that: No
more pain at the gas pump!
The new law will also create millions of good-paying jobs. Under
President Biden, America reached 3.5% unemployment this summer,
matching the lowest unemployment rate we've had in half a century.
President Biden's climate law builds on that progress. According to the
BlueGreen Alliance, the Inflation Reduction Act will help create more
than 9 million good jobs over the next decade. That includes 5 million
jobs expanding renewables and bolstering our grid; 900,000 jobs
expanding clean energy across rural communities through electric
cooperatives; 900,000 jobs in clean manufacturing; and much more.
Crucially, the Inflation Reduction Act will also put 150,000
Americans to work expanding environmental justice. That's because the
climate law invests in Environmental and Climate Justice Block Grants,
which will support community-led projects to address environmental
harms and public health in vulnerable neighborhoods. Thanks to the
climate law, we're also deploying zero-emission buses and garbage
trucks in areas with poor air quality. And we're incentivizing new
solar and wind energy projects in low-income communities and Tribal
lands. Finally, the new law directs at least 60 percent of the
Greenhouse Gas Reduction Fund to EJ communities, empowering our workers
to deploy rooftop and community solar where they are most needed.
The Inflation Reduction Act is an enormous step forward. It was
recently described by the head of the International Energy Agency as
the ``single most important action'' in addressing climate change since
the Paris Agreement. But we know there is more to do. Our Select
Committee will keep pushing for further progress. Congress will keep
working with the Biden Administration to fulfill this Big Climate Deal.
And together, we'll keep forging the path to energy independence, which
will require harnessing the immense potential of American clean energy
and American ingenuity to lead the world in this transition. For now, I
look forward to today's discussion with our witnesses.
Mr. Graves. Madam Chair, thank you for holding this
hearing. I want to thank the witnesses and thank you for your
flexibility as well. I know we are shifting times a little bit.
Madam Chair, I do want to just offer our prayers and
support to your constituents and the residents of your state. I
wouldn't wish a hurricane on anyone, and watching this one
bearing down on your state in one of the worst trajectories you
could probably have, going along that West Coast with the
strong side up against the coast and the state, I am very, very
sorry for what you and your other congressional delegation
members and citizens of Florida are going through. And just
know that we are here to offer whatever support we can to you
and to fellow Floridians in the response and recovery phase.
Madam Chair, the Inflation Reduction Act--and I am going to
give a peek to Mr. Rossetti's testimony because I had a chance
to look at it a little bit. One thing that is noteworthy in the
testimony is that, according to his projections, approximately
two-thirds of the emissions reductions--I will say this slowly
and carefully--approximately two-thirds of the emissions
reductions that are, I guess, being taken credit for under the
Inflation Reduction Act would have happened had that Act not
been passed. So we are talking about hundreds of billions of
dollars--hundreds of billions of dollars being spent on
projects that were already going to happen.
Look, we have been clear in this committee, I think the
Chair and I share the objective of a trajectory that is lower
emissions, that is a more diverse, cleaner energy portfolio.
But making sure--from my perspective, making sure that we do so
in a way that is based on U.S. resources, that is efficient,
that continues the trajectory of downward emissions in a way
that looks globally.
As the United States has led the world in reducing
emissions, China has increased four tons for every one ton we
have reduced. That is not--that doesn't affect the United
States. That doesn't benefit the United States.
I quickly want to say in regard to hurricanes, because we
need to make sure that we are staying factual here. Number one,
virtually every study, including the journal Nature Climate
Change, has found that there has been a 13 percent reduction in
hurricanes--13 percent reduction in hurricanes this century.
And number two, there have been some studies that have shown
increased intensification of hurricanes, while a lower number,
increased intensification. Got it.
One study that recently came out from NOAA indicated that
part of the intensification could be tied to the fact we
actually have cleaner air today, lower particulate matter which
was reflecting the energy back up and, therefore, we now have a
warmer Gulf of Mexico and other areas that are resulting in
higher or faster intensification of hurricanes.
So I just think it is really important that any solutions
we focus on are truly based on science and data.
Madam Chair, I look forward to hearing from our witnesses
today. I apologize, as I mentioned to you earlier, I do have to
take off for a few other meetings, but I yield back and look
forward to hearing from our witnesses.
Ms. Castor. Thank you very much.
Now I want to welcome our witnesses. Thank you all for
being here. Thank you for moving up the schedule a little bit.
Dr. Quinta Warren is the Associate Director of
Sustainability Policy at Consumer Reports, where she helps
develop winning strategies to address the impacts, inequities
of the climate crisis, and local air pollution, and to build a
more sustainable future
for consumers. Previously, Dr. Warren founded Energy Research
Consulting, and also served as a Fellow at the Department of
Energy.
Philip Rossetti is the Senior Fellow for Energy and
Environment at the R Street Institute, where he conducts
research on energy, climate, and environmental policy. Mr.
Rossetti previously served as a Fellow on the minority staff of
our committee, so welcome back to him.
Josh Nassar is the Legislative Director of the
International Union of United Automobile, Aerospace, and
Agriculture Implement Workers of the UAW. He leads the team
responsible for implementing the union's policy agenda as well
as designing legislative strategy on labor, trade, environment,
and healthcare, defense, energy, tax, and other issues.
Welcome.
And finally, Samantha Sloan of First Solar was one of our
scheduled witnesses. She was not able to join us in person
today due to a family emergency. So we are sorry to miss her,
but I ask unanimous consent that Ms. Sloan's testimony be added
to the hearing record.
And hearing no objection, so ordered.
[The statement of Ms. Sloan follows:]
Testimony of Samantha Sloan
Vice President, Global Policy, Sustainability, and Marketing
First Solar, Inc.
Before the House Select Committee on the Climate Crisis
Hearing on ``A Big Climate Deal: Lowering Costs, Creating Jobs, and
Reducing Pollution with the Inflation Reduction Act''
29 September 2022
Good afternoon Chair Castor, Ranking Member Graves, and
distinguished members of the Committee. My name is Samantha Sloan, and
I am the Vice President of Global Policy at First Solar, America's
leading solar technology company. I have been at First Solar for 13
years.
Founded in Ohio in 1999, we operate the largest solar manufacturing
footprint in the Western Hemisphere, with two existing factories in
Ohio, a third factory scheduled to come online in the state next year,
and a fourth planned in the U.S. Southeast by 2025. First Solar is
proud to be America's solar company: U.S.-headquartered and making
solar panels in America, using American content.
I am honored to represent First Solar today and would like to thank
the Committee for convening this hearing on the intersection between
economic growth, industrial strategy, and fighting climate change. I
would like to begin by adding context that, in our opinion, is crucial
not just for this discussion today but also for understanding the
current state of solar manufacturing in the United States.
Today, control of the global solar supply chain is concentrated in
one country, China. By all accounts, China has bought this dominance
through unfair and illegal subsidies and anti-competitive practices
that have decimated American solar manufacturing. While solar panels
were invented here, it is an unfortunate fact that today, First Solar
is unique among the world's ten largest solar manufacturers: We are the
only company of the ten headquartered in the United States, and the
only company of those ten that does not engage in any manufacturing
activity in China.
Viewed through this lens, the Inflation Reduction Act (IRA) of 2022
delivers a powerful legislative counterpunch, creating America's first
durable solar industrial strategy and an opportunity to dismantle
China's dominance of solar manufacturing value chains. Doing so creates
a viable pathway to the secure supply of critical clean energy
technologies, enabling the fight against climate change and capturing
value for our economy.
It is difficult to overstate the economic value that the IRA will
deliver. Solar is the lowest cost form of new electricity generation
capacity, with system prices falling an average of 15% per year over
the past decade. The energy transition is well on its way here at home.
However, according to National Renewable Energy Laboratory data, less
than a third of the almost 24 gigawatts of new solar panels installed
in 2021 were produced in the United States.
Quite simply, incenting the creation of domestic solar supply
chains allows the United States to harness this opportunity. When a
greater percentage of solar panels installed in America are
competitively made in America, we ensure that the benefits of
investment, economic growth, and job creation are retained here at home
rather than exported to China.
Our own experience, which will span about $4 billion in U.S.
manufacturing investment since 1999 (excluding our overseas
manufacturing investments), has shown that:
1. American solar manufacturing is competitive. Our newest factory
in Ohio is expected to establish a highly efficient manufacturing
template for our next generation technology, delivering higher
efficiency and wattage solar panels, while lowering costs on a
delivered basis.
2. American solar manufacturing creates steady, good-paying jobs.
We expect to have more than 3,000 employees on our payroll by 2025,
making us the largest employer in the sector. Our average manufacturing
salary is $65,000, and every one of our workers has access to
comprehensive benefits, including healthcare. In addition to the direct
jobs we create, it is estimated that we will support approximately
15,000 indirect jobs by 2025.\1\
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\1\ Assuming five workers added in the overall U.S. economy for
every one manufacturing job (Source: National Association of
Manufacturers (NAM), using 2020 IMPLAN data).
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3. American solar manufacturing delivers economic benefits. Our
next generation solar panel, which will roll off our production lines
in 2023, will use an estimated 90% American content, including glass
and steel, which has already led to supply chain investments in the
state. As we grow, our supply chain must grow with us, and it is
estimated that our recently announced $1.2 billion expansion plan will
add $3.2 billion to the U.S. economy.\2\
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\2\ Assuming economic impact multiplier of $2.68 per $1.00 spent on
manufacturing (Source: NAM, using 2020 IMPLAN data).
Moreover, the IRA amplifies the benefits of solar manufacturing by
providing the scaffolding for the entire industry to grow, and we
expect to start seeing other investments in the United States across
the clean energy value chain, including critical minerals, allowing the
United States to capture further value.
I will conclude by bringing my testimony back to the primary
purpose of this House Select Committee: the climate crisis. Crystalline
silicon, the solar semiconductor primarily produced by China, is
heavily dependent on coal power, and its producers are accused of using
forced labor. The fact is that deploying PV systems using carbon-
intensive solar panels from China would result in significant carbon
dioxide-equivalent emissions.
Just because the smokestacks are not visible from here in
Washington, DC does not mean that they are not harming the planet. By
encouraging manufacturing here at home, the IRA helps ensure that our
transition to a sustainable energy future is fair to all and enhances,
not damages, the global fight against climate change while allowing the
United States to capture economic value in the process.
First Solar is pleased to be here today to participate in these
discussions. We are proud of our U.S. manufacturing capabilities and
our past, current and future contributions to the U.S. economy, and we
and believe that the IRA will significantly advance efforts to grow our
country's economy, create jobs in America and combat the climate
crisis. I would be happy to answer any questions you may have. Thank
you.
Ms. Castor. So, without objection, the witnesses' written
testimony will be made part of this record.
And, with that, Dr. Warren, you are recognized for 5
minutes to present your testimony. Welcome.
STATEMENTS OF DR. QUINTA WARREN, ASSOCIATE DIREC-
TOR OF SUSTAINABILITY POLICY, CONSUMER REPORTS;
PHILIP ROSSETTI, SENIOR FELLOW FOR ENERGY AND ENVIRONMENT, R
STREET INSTITUTE; AND JOSH NASSAR, LEGISLATIVE DIRECTOR,
INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND
AGRICULTURE IMPLEMENT WORKERS OF AMERICA (UAW)
STATEMENT OF DR. QUINTA WARREN
Dr. Warren. My name is Dr. Quinta Warren, and I am the
Associate Director of Sustainability Policy at Consumer
Reports. Thank you, Chair Castor, Ranking Member Graves, and
members of the Select Committee on the Climate Crisis, for
inviting Consumer Reports to testify today.
Consumer Reports is supportive of the Inflation Reduction
Act because it helps more consumers than any vehicle tax credit
in history, saving them fueling and energy costs, reducing
public and consumer costs tied to air pollution and greenhouse
gas emissions, and ensuring overburdened communities can have
access to clean technologies.
Consumer Reports is a nonprofit, nonpartisan organization
founded in 1936. Our mission is to help create a fair, safe,
and just marketplace for all consumers. We test and rate
thousands of products and services, and we advocate for
consumer laws and policies.
One of the things that Consumer Reports is best known for
is testing cars. Every year, our testers drive about a half a
million miles to put new cars through their paces, and we work
with policymakers like you to advance policies for safer and
cleaner cars.
Our analysis show that consumers can save a lot of money by
using cleaner technology, and our surveys and analyses also
show that the majority of consumers want them, but there are
barriers preventing them from purchasing and owning these
technologies.
Early this year, we conducted our largest ever nationally
representative consumer survey on better electric vehicles and
low carbon fuels. We found that 71 percent of Americans
expressed some level of interest in buying or leasing an
electric vehicle, or EV. Within that, 14 percent would
definitely buy or lease an EV today. That is more than triple
the number from 2020. And this strong interest crosses racial
and ethnic groups where people see EVs as saving money on fuel
and maintenance costs. And they are right.
Our own analysis shows that owning and maintaining an EV
saves $6,000 to $10,000 over the life of the vehicle, compared
to a comparable gas car. But there are still barriers standing
in their way, including costs associated with buying an EV.
The IRA helps tackle this barrier through purchase
incentives for both new and used EVs. The expanded tax credits
in the IRA directly address the upfront cost problem,
encouraging every car company to offer more EV models and
giving consumers expanded clean vehicle options for decades to
come.
Just as important is the used EV tax credit that will
directly help the overwhelming majority of consumers who buy
their cars used. This credit will be especially helpful for
low-income communities which are disproportionately impacted by
air pollution and climate change, and are often frozen out of
the new car market due in large part to redlining and other
discriminatory policies.
Having EV tax credits go directly to dealerships will
ensure greater accessibility to the tax credit for low-income
consumers who did not have the tax liability to benefit from
the entirety of the tax credit themselves.
EVs are a fantastic money-saving technology, but our
economy will also need other ways to cut greenhouse gas
emissions from vehicles. For example, two-thirds of Americans
would fill up their tanks on liquid low carbon fuels made from
sustainable biomass, for example, if they did not have to shift
the kind of vehicle they used and it did not have an additional
cost. And 62 percent would be likely to choose a flight that
ran on a similar fuel, assuming there is no cost premium.
The vehicle purchase incentives in the IRA for fuel cell
vehicles and tax credits for sustainable aviation fuel will go
a long way to ensure that consumers have options for low carbon
fuel vehicles, as will the research funds for analysis of the
impacts of fuel on the environment and public health.
Of course, the IRA also delivers more money-saving benefits
for American homes, especially for low-income households which
spend a larger share of their income on energy costs.
In summary, cleaner technologies save consumers money on
fuel and electricity and maintenance costs. However, upfront
purchase costs prevent consumers from buying and owning these
technologies. We applaud the Inflation Reduction Act as the
incentives therein will help to ensure that consumers can save
money and cut down on the many costs tied to air pollution and
greenhouse gas emissions. And this is particularly important
for low-income consumers who have too often been left out of
the transition to cleaner and more money-saving technologies.
Thank you for the opportunity to speak.
[The statement of Dr. Warren follows:]
Testimony of Quinta Warren, Ph.D.
Associate Director, Sustainability Policy
Consumer Reports
Before the United States House of Representatives
Select Committee on the Climate Crisis
Hearing on ``A Big Climate Deal: Lowering Costs, Creating Jobs, and
Reducing Pollution with the Inflation Reduction Act''
September 29, 2022
Thank you Chair Castor, Ranking Member Graves and members of the
Select Committee on the Climate Crisis for inviting Consumer Reports
(CR) to testify on the benefits that the Inflation Reduction Act (IRA)
will bring to consumers across the country.
The IRA is a landmark piece of climate legislation that will bring
cleaner, cost-saving technologies to all consumers. This legislation
has the potential to give more Americans access to clean vehicles and
more energy efficient homes.
This transition to cleaner technologies is a win-win: it will help
consumers save money on fuel and electricity costs while also reducing
consumer and public spending on healthcare tied to air pollution,
particularly in overburdened communities.
Introduction
CR is an independent, nonprofit and nonpartisan organization that
works with consumers to create a fair and just marketplace. Known for
its rigorous product testing and ratings, CR also advocates for laws
and corporate practices that are beneficial for consumers. We survey
millions of Americans every year, report extensively on the challenges
and opportunities facing today's consumers, and provide
ad-free content and tools to 6 million members across the United
States. CR is dedicated to amplifying the voices of consumers to
promote safety, digital rights, financial fairness, and sustainability.
Surveys and analyses conducted by CR show that consumers care about
the environment and want access to cleaner and less polluting
technology, but there are barriers such as cost preventing them from
purchasing and owning these technologies.
Air pollution and greenhouse gas (GHG) emissions have adverse
impacts on the health of consumers, the environment, and climate. These
impacts can show up in various ways that will increase costs for
consumers, not only for fuel and energy use, but for other consumer
costs, such as healthcare and insurance. Providing consumers with
cleaner and more energy efficient technologies can dramatically lower
these costs, and presents them with the ability to make purchasing
decisions that save them money. GHG emissions are contributing to
extreme weather events such as extreme heat, flooding, and drought.
Criteria pollutants such as ozone and particulate matter cause health
issues such as respiratory diseases, lung cancer, pre-term births, and
neurological damage.\1,2\ Introducing EVs and other low carbon fuel
vehicles into California's market has saved the state $1.84 million in
public health impacts, and helped to avoid more than 200 premature
deaths due to reduced toxic air pollution from vehicles.\3\ These
issues affect overburdened communities such as communities of color
most due to redlining and other discriminatory policies.
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\1\ Air Pollution: Everything You Need to Know, NRDC, 2021, https:/
/www.nrdc.org/stories/air-pollution-everything-you-need-know
\2\ Traffic-Related Air Pollution: A Critical Review of
the Literature on Emissions, Exposure, and Health Effects, Health
Effects Institute, 2010, https://www.healtheffects.org/publication/
traffic-related-air-pollution-critical-review-literature-emissions-
exposure-and-health
\3\ California's Low Carbon Fuel Standard, California Delivers,
2018, http://www.cadelivers.org/low-carbon-fuel-standard/
#: :text=California%27s%20Low%20Carbon%20Fuel%20Standard&text=In
%202018%2C%20the%20California%20Air,groundbreaking%20climate%20policy%2C
%20SB %2032
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In order to reduce emissions, we must bring clean technologies,
such as electric vehicles (EV) and energy efficient appliances, to
market at a scale that can help establish their widespread adoption. By
increasing the scale at which these technologies are available in the
marketplace, we will see greater options for consumers, driving
competition, reducing costs, and increasing consumer savings. By giving
consumers incentives to adopt newer, cleaner, cost-saving technologies,
we empower them to make decisions that will benefit their wallets and
support a lifestyle with fewer emissions.
1. Consumers and the Environment
Consumers are making an active shift to support and adopt clean
technologies.\4\ According to a 2022 nationally representative CR
survey on consumer attitudes regarding the transportation industry's
impact on the environment and consumers' willingness to make
environmentally-friendly decisions, over 70% of consumers in the United
States find the issue of climate change to be an ``important'' or
``very important'' issue, and 61% of Americans say impact on the
environment is important when considering buying or leasing a
vehicle.\5\
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\4\ Shifting sands: How consumer behaviour is embracing
sustainability, Deloitte
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https://www2.deloitte.com/ch/en/pages/consumer-business/articles/
shifting-sands-sustainable-consumer.html
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\5\ January/February 2022 Consumer Reports nationally
representative Battery Electric Vehicle and Low Carbon Fuels Survey of
8,027 US adults. View topline results here
---------------------------------------------------------------------------
(https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_ Breakthrough_Energy_18_February_2022) and full report
here
(https://article.images.consumerreports.org/image/upload/v1657127210/
prod/content/dam/CRO-Images-2022/Cars/07July/
2022_Consumer_Reports_BEV_and_LCF_Survey_Report.pdf).
Similarly, a 2022 nationally representative CR survey of more than
two thousand Americans shows that 55% of Americans who purchased large
appliances in the last five years say that environmental concerns were
``extremely'' or ``very'' important to them when they purchased those
appliances.\6\
---------------------------------------------------------------------------
\6\ March 2022 Consumer Reports nationally representative Home
Sustainability Survey of 2,240 US adults. View topline results here
---------------------------------------------------------------------------
(https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_Home_ Sustainability_March_2022).
The incentives in the IRA will help to ensure that all consumers
gain the cost-saving benefits of EVs and energy efficient appliances,
especially low-income and overburdened communities, which have
historically borne the brunt of air pollution and GHG emissions.
Provisions for Low and Zero-Emission Vehicles
Transportation accounts for 27% of total U.S. GHG emissions, the
largest of any sector.\7\ Transitioning to EVs and other Zero-Emission
Vehicles (ZEV) is an obvious strategy to achieve significant emissions
reductions in this high-emitting sector.
---------------------------------------------------------------------------
\7\ Sources of Greenhouse Gas Emissions, EPA https://www.epa.gov/
ghgemissions/sources-greenhouse-gas-emissions
---------------------------------------------------------------------------
1. Battery Electric Vehicles
In January and February 2022, CR conducted a nationally
representative survey on consumer perceptions and awareness of battery
electric vehicles (BEV) and low carbon fuels.\8\ The survey found that
71% of Americans express some level of interest in buying or leasing an
electric-only vehicle. Within that 71%, we found that 14% of American
drivers would ``definitely'' buy or lease an EV today. That is up from
just 4% who said the same thing in a 2020 CR nationally representative
survey of 3,392 licensed drivers.\9\ The 2022 survey also showed that
other racial and ethnic groups showed a similar level of interest in
EVs as whites.\10\
---------------------------------------------------------------------------
\8\ January/February 2022 Consumer Reports nationally
representative Battery Electric Vehicle and Low Carbon Fuels Survey of
8,027 US adults. View topline results here
---------------------------------------------------------------------------
(https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_ Breakthrough_Energy_18_February_2022) and full report
here
(https://article.images.consumerreports.org/image/upload/v1657127210/
prod/content/dam/CRO-Images-2022/Cars/07July/
2022_Consumer_Reports_BEV_and_LCF_Survey_Report.pdf).
---------------------------------------------------------------------------
\9\ July/August 2020 Consumer Reports nationally representative
Fuel Economy and Electric Vehicles Survey; Electric Vehicles section
showed to 3,392 US adults with valid driver's licenses. View topline
results here (https://article.images.consumerreports.org/prod/content/
dam/surveys/
Consumer_Reports_Electric_Vehicles_Fuel_Economy_National_August_2020)
and full report here (https://advocacy.consumerreports.org/wp-content/
uploads/2020/12/CR-National-EV-Survey-December-2020-2.pdf).
\10\ Across Racial Demographics, Interest in Purchasing Electric
Vehicles is Considerable, but Systemic Barriers Persist, Consumer
Reports, EVNoire, GreenLatinos, and the Union of Concerned Scientists,
2022, https://advocacy.consumerreports.org/press_release/across-racial-
demographics-interest-in-purchasing-electric-vehicles-is-considerable-
but-systemic-barriers-persist/
---------------------------------------------------------------------------
When we asked consumers why they would consider purchasing an EV,
the most common answers were saving money on fuel, lower lifetime
costs, and lower maintenance costs. When we asked consumers who did not
say they would ``definitely'' buy an EV what would prevent them from
getting an EV, among the top 3 barriers was the cost associated with
buying, owning and maintaining an EV.\11\ Our vehicle Total Cost of
Ownership analysis shows that owning and maintaining an EV is cheaper
than owning and maintaining a comparable gasoline-powered vehicle, as
EV owners save $6,000 to $10,000 over the life of the vehicle.\12\
---------------------------------------------------------------------------
\11\ January/February 2022 Consumer Reports nationally
representative Battery Electric Vehicle and Low Carbon Fuels Survey of
8,027 US adults. View topline results here
---------------------------------------------------------------------------
(https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_ Breakthrough_Energy_18_February_2022) and full report
here
(https://article.images.consumerreports.org/image/upload/v1657127210/
prod/content/dam/CRO-Images-2022/Cars/07July/
2022_Consumer_Reports_BEV_and_LCF_Survey_Report.pdf).
---------------------------------------------------------------------------
\12\ New analysis from CR finds that the most popular electric
vehicles cost less to own than the best-selling gas-powered vehicles in
their class, Consumer Reports, 2020, https://
---------------------------------------------------------------------------
advocacy.consumerreports.org/press_release/new-analysis-from-cr-finds-
that-the-most-popular-electric-vehicles-cost-less-to-own-than-the-best-
selling-gas-powered-vehicles-in-their-class/
The purchase incentives in the Inflation Reduction Act can help
offset the cost of purchasing EVs. The removal of the 200,000-unit
lifetime EV production cap will give more consumers the ability to
access EV incentives for the next decade, and encourages manufacturers
to offer more EV models without being locked out of the incentives. The
inclusion of income caps and MSRP caps for vehicles will ensure that
these investments are going to the hands of consumers who will benefit
from them the most.
The used EV tax credit will help to ensure a robust secondary EV
market as 70% of consumers buy their cars on the used car market. This
credit will be especially helpful for low income communities, which
traditionally rely on the secondary market for their vehicle purchases.
The tax credits and investments into commercial EVs will help improve
air quality in these communities. Provisions in the IRA which allow EV
tax credits to go directly to dealerships will ensure greater benefit
from the tax credit for low-income consumers who do not have the tax
liability to benefit from the entirety of the tax credit. Historically,
since these tax credits are non-refundable, consumers who do not have a
tax liability of $7,500 or above would only receive the tax credit to
match their liability. This shift will enable consumers to see
immediate savings from the incentive up to the maximum tax credit for
their vehicle of choice.
Low-income and disadvantaged communities bear the brunt of the
emissions associated with e-commerce. A recent CR investigation showed
the extent of that impact in underserved communities who live near
ports, last mile shipping facilities, and highly utilized
transportation corridors, highlighting the need for investments to
reduce emissions in all facets of the transportation sector. The IRA
proposes to do this, including through investments in zero-emission
heavy duty vehicles.\13\
---------------------------------------------------------------------------
\13\ When Amazon Expands, These Communities Pay the Price, Consumer
Reports, 2021,
---------------------------------------------------------------------------
https://www.consumerreports.org/corporate-accountability/when-amazon-
expands-these-communities-pay-the-price-a2554249208/
2. Low Carbon Fuels
Low carbon fuels (LCFs) are transportation fuels that produce lower
GHG emissions than traditional fossil fuels. Our BEV/LCF survey found
that 67% of American consumers would use drop-in LCFs in their vehicle
if the cost per gallon was the same as the cost for traditional fuels.
Sixty-two percent (62%) say they are ``very likely'' or ``somewhat
likely'' to choose a flight on a plane that uses Sustainable Aviation
Fuels, if the cost of the ticket was the same as flying on a plane that
uses traditional jet fuel.\14\
---------------------------------------------------------------------------
\14\ January/February 2022 Consumer Reports nationally
representative Battery Electric Vehicle and Low Carbon Fuels Survey of
8,027 US adults. View topline results here
---------------------------------------------------------------------------
(https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_ Breakthrough_Energy_18_February_2022) and full report
here
(https://article.images.consumerreports.org/image/upload/v1657127210/
prod/content/dam/CRO-Images-2022/Cars/07July/
2022_Consumer_Reports_BEV_and_LCF_Survey_Report.pdf).
The vehicle purchase incentives in the IRA for fuel cell vehicles,
the clean hydrogen credit, tax credits for SAF, and research funds for
SAF and other biofuels will help increase consumer options for low
carbon fuel vehicles beyond EVs.
3. Reducing Emissions Beyond Passenger Vehicles
The emphasis that the IRA places on adopting electric technology is
commendable and critical to decarbonizing our country's overall
footprint. We support these investments to ensure that the United
States is on a path to zero-emissions, and also acknowledge the IRA's
investments in other LCFs that will support the decarbonization of
other transportation sub-sectors that are harder to electrify. The
emissions associated with the shipment of goods from warehouses to
doorsteps, from aviation industries, and from maritime industries,
among others, can be reduced with investments in LCFs.
The IRA investments into the development of clean hydrogen are
especially important to shifting to the production of cleaner fuels,
and will support the development of a market for more fuel-cell
technology vehicle and infrastructure options. The investments made
into Sustainable Aviation Fuels (SAF) will support critical
transformation in one of the more difficult transportation sub-sectors
to decarbonize, and consumers are prepared to support this technology.
CR appreciates the IRA funding allocation that will fund research
into the impacts of biofuels on the environment and on public health.
These findings will better serve advancements in understanding the
impacts of different fuel technologies on consumers and the impacts on
overburdened communities.
Provisions for Home Energy Efficiency and Electrification Upgrades
The incentives provided by the IRA will reduce purchasing costs for
cleaner technology, making buying decisions easier for the consumer who
is looking to transition but is concerned with upfront costs. One of
our nationally representative surveys showed that cost still proved to
be the top factor that people who purchased a large appliance in the
past five years considered in their decision to purchase: when asked
what the top three most important factors were to them when they made
the purchase, 73% selected price-almost three times as many as selected
impact on the environment (24%).\15\
---------------------------------------------------------------------------
\15\ March 2022 Consumer Reports nationally representative Home
Sustainability Survey of 2,240 US adults. View topline results here
---------------------------------------------------------------------------
(https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_Home_ Sustainability_March_2022).
The IRA takes a holistic approach to providing consumers with
resources to bring cleaner, cost-saving technology throughout their
homes. From solar tax credits to incentives for the installation of
electric appliances, this legislation can transform the American
household as we know it, saving consumers money on energy costs, and
improving indoor air quality. More energy efficient appliances reduce
energy use, bringing cost benefits to consumers that can also be
helpful in easing energy burdens. This is especially critical for low-
income and other disadvantaged households which spend a
disproportionate amount of their income on energy bills.\16\
---------------------------------------------------------------------------
\16\ Low-Income Households, Communities of Color Face High ``Energy
Burden'' Entering Recession, ACEEE, 2020, https://www.aceee.org/press-
release/2020/09/report-low-income-households-communities-color-face-
high-energy-burden
---------------------------------------------------------------------------
Electric appliances such as heat pumps and electric ranges bring
considerable benefits to households in both cost savings and a
reduction in both indoor pollution and GHG emissions. For instance,
studies show that gas ranges not only release significant amounts of
unburned methane and NOx while in use, more than 75% of leakage of
unburned methane occurs when a gas-fueled stove is turned off.\17\ For
a consumer concerned with these emissions in their home and looking to
make the switch away from the gas-fueled stove, the IRA can provide
considerable incentives to reduce the upfront cost of a new electric
range.
---------------------------------------------------------------------------
\17\ Methane and NOX Emissions from Natural Gas Stoves,
Cooktops, and Ovens in Residential Homes, Lebel et al., Environ. Sci.
Technol. 2022, 56, 4, 2529-2539,
---------------------------------------------------------------------------
https://pubs.acs.org/doi/10.1021/acs.est.1c04707
As consumers consider transitions to cleaner technology in their
home to reduce their energy use, there are considerable challenges
preventing them from making the switch. For consumers living in older
homes, they may need to undergo a process of retrofitting their homes
and electrical panels to better accommodate new electric appliances,
heat pump systems, or even solar panels.\18\ For those looking to make
changes to their home to improve their energy efficiency and save on
energy costs, they will likely need to consider weatherizing upgrades
as well. For these reasons, we applaud the IRA language that will allow
for a portion of these incentives to be used to support installation
costs, weatherization upgrades, and electrical panel upgrades.
---------------------------------------------------------------------------
\18\ Hot, Cold and Clean: Policy Solutions to Promote Equitable and
Affordable Adoption of Heat Pump Retrofits in Existing Buildings,
Berkeley Law, UCLA Law, 2022
---------------------------------------------------------------------------
https://law.ucla.edu/sites/default/files/PDFs/Publications/
Emmett%20Institute/Hot-Cold-Clean-Heat-Pump-Retrofit-Report-1.pdf
These critical provisions will assist in breaking down cost
barriers for consumers looking to save money, make their homes more
energy efficient, and reduce emissions tied to home energy use.
Conclusion
Cleaner technologies save consumers money on fuel and electricity,
and maintenance costs. However, upfront purchase costs prevent many
consumers from buying and owning these technologies.
The incentives in the Inflation Reduction Act will go a long way
towards helping consumers save money on fuel and electricity costs
while also reducing consumer and public spending on healthcare tied to
air pollution, particularly in overburdened communities. In order to
support the expansion of the clean energy market in a way that reduces
costs and increases consumer savings, we must continue to support
investments like the IRA in addition to strong GHG and smog standards
that encourage manufacturers to increase the supply of cleaner
technologies. Strong standards and complementary incentives to adopt
clean technologies are particularly important for low income consumers
who would otherwise not be able to participate in the transition to
cleaner technologies.
Ms. Castor. Thank you very much.
Next, Mr. Rossetti, you are up. You are recognized for 5
minutes to present your testimony. Welcome.
STATEMENT OF PHILIP ROSSETTI
Mr. Rossetti. Thank you, Chairwoman Castor, Ranking Member
Graves, and Honorable members of the committee, for inviting me
to testify on the Inflation Reduction Act today.
I want to cover three key points about the Inflation
Reduction Act. One is the overall potential environmental
impact of the legislation; two are the barriers to actually
achieving that outcome; and three is the overall economic
impact as the incidence of subsidies are going to have to be
paid for by taxes elsewhere in the economy and what effect this
might have.
So overall on the environmental impact, at R Street, we
took a look at the total estimated costs of the IRA and just
took an honest value, the CBO's estimate, and said, okay, you
know, if this is true, how much clean energy can this buy, and
compare that to the Energy Information Administration's
projected baseline.
And looking at that, the sheer volume subsidy, which is
hundreds of billions of dollars, does result in an increase in
purchases, and we would expect about a 37 percent increase in
clean electricity production over the baseline and some modest
effects in the transportation sector, with overall a potential
about 12 percent emission reduction relative to 2005 levels,
which is very consistent with the Rhodium Group that estimate
about 8 to 12 percent in other studies.
The caveat to this, though, is the low cost of renewables
and high investment potential already means that most of this
technology would have already been deployed, irrespective of
the IRA.
So we estimate about 67 percent of the clean electricity
subsidies will go to clean energy production that would have
occurred even absent the IRA. Similarly, with the EV tax
credits, we do see a huge increase in the--or excuse me--we see
a large amount of the subsidies go to EVs that probably would
have been deployed anyways. The EIA expects that close to 6
million new EVs being deployed and the tax credits support
about 1 million new EVs.
In this environment, we expect that the additionality of
these subsidies and the potential environmental benefit is
mitigated by the fact that most of the money would go to
efforts that would already occur without the IRA.
In terms of actually getting to that potential 12 percent
emission reduction, it is largely locked behind regulatory
factors. Increasingly, we are hearing from the clean energy
space that they are facing regulatory barriers rather than cost
barriers to new deployment. So there is close to a thousand
gigawatts of low carbon electricity in the interconnection
queues in the United States right now. The interconnection
queue timelines have gone from about 2 years to close to 4
years, and we hear from some developers that can even be about
8 years in some areas.
The transmission adequacy is not really good. The
transmission congestion costs on many of the interconnections
are increasing, you know, sometimes by multiple times.
We also have increasing curtailment in the renewable space.
So a lot of areas are already saturated with new renewables,
and deploying more renewables means that there is a diminishing
return.
So without that increased transmission and availability to
actually get new clean energy to where it needs to go, you are
not going to get environmental benefit. And the REPEAT Project,
which is probably one of the most optimistic estimates of the
IRA's effects, that estimated that about 80 percent of their
emission potential is locked behind transmission growth.
So actually getting to this environmental outcome requires
structural changes in regulatory policy. Especially on the
permitting, it has been very interesting. At R Street we looked
at the DOE and BLM's permitting for clean energy, and we note
that about 42 percent of DOE's projects were related to clean
energy, conservation, transmission. Only 15 percent were fossil
fuel. Similar ratios in BLM.
And just looking at the Federal Permitting Dashboard today,
65 percent of the energy projects are renewable projects. So
addressing these issues are key to clean energy growth and are
largely absent from the IRA.
Additionally, it is important to consider the full economic
impacts of any legislation. Every dollar that is going to be
spent on subsidy by the U.S. Government is going to result in a
dollar of tax somewhere else. So who is going to pay that tax
is largely going to determine the overall economic impact of
any legislation.
So when it comes to the IRA, we already know that a huge
portion of it is going to be from corporate taxes. We also have
to ask, okay, who is going to be paying those taxes? The CBO
notes that higher corporate rates are going to overall reduce
the invest--the incentives to invest in the United States are
going to have negative economic effects.
The Tax Foundation similarly, in looking at the IRA,
estimates about a 0.2 percent lower GDP in the long run and
lower long run incomes across the board for Americans.
There are some positive effects of the IRA, namely the
deficit reduction, and these can offset, to a certain degree,
the negative impacts of the tax increases. But overall when we
look at the studies, it generally shows about a wash.
So, with that, you know, it is important to consider that--
what are we getting, how much is it going to cost, and who is
going to pay for it.
And I look forward to your questions. Thank you.
[The statement of Mr. Rossetti follows:]
Submitted Statement of Philip Rossetti
Senior Fellow, Energy and Environment
R Street Institute
Before the Select Committee on the Climate Crisis
United States House of Representatives
Hearing on ``A Big Climate Deal: Lowering Costs, Creating Jobs, and
Reducing Pollution with the Inflation Reduction Act''
September 29, 2022
Chairwoman Castor, Ranking Member Graves and honorable members of
the Committee,
Thank you for inviting me to testify on the policy effects of the
Inflation Reduction Act (IRA). My name is Philip Rossetti, and I am a
senior fellow for Energy and Environment at the R Street Institute. The
R Street Institute is a nonpartisan, nonprofit think tank that
emphasizes market-based solutions to policy challenges in the United
States. My work at R Street specifically focuses on providing policy
analysis and education around climate change, energy policy, energy
security and other environmental challenges facing the nation.
In my testimony on the IRA, I would like to make three key points:
1. While we expect the IRA could have a substantial impact on U.S.
greenhouse gas (GHG) emissions assuming minimal regulatory barriers to
new clean energy deployment, the already low costs of renewable energy
means that most of the IRA's subsidies will go to clean energy that
would have been produced anyway.
2. Our own estimates of emission impact from the IRA, as well as
others, are likely overstating the environmental benefits of additional
subsidy due to the challenges of modeling permitting and regulatory
constraints to clean energy growth. Increasingly, research is showing
these factors play a greater role in clean energy growth than cost
competitiveness with fossil fuels.
3. While government spending stimulates economic activity in
subsidized sectors, that spending is balanced by higher taxes elsewhere
in the economy. The expected overall economic effects of the IRA are
slightly negative, and the legislation is not expected to have any
improving effect on inflation. While we praise the deficit-reducing
outcome of the legislation, lawmakers should appreciate that the effect
of the legislation is to transfer wealth from taxed Americans to
subsidized energy companies or other subsidy claimants.
Effects of the Inflation Reduction Act on U.S. Greenhouse Gas Emissions
In our own analyses, we compared the estimated subsidy expenditures
from the Congressional Budget Office (CBO) with the projected clean
energy generation and alternative fuel vehicle deployments projected by
the Energy Information Administration (EIA).\1\ Essentially, we took at
face value that the CBO's estimated level of subsidy is correct and
modeled a projection of clean energy growth assuming this as
representative of the volume of clean energy and alternative fuel
vehicle deployments through 2031. We then compared this to the
projected levels in the EIA's 2022 Annual Energy Outlook (AEO) to
estimate the effect of the IRA.
---------------------------------------------------------------------------
\1\ Philip Rossetti, ``Potential Effects of the Inflation Reduction
Act on Greenhouse Gas Emissions,'' R Street Institute, Sept. 27, 2022.
https://www.rstreet.org/2022/09/27/potential-effects-of-the-inflation-
reduction-act-on-greenhouse-gas-emissions.
---------------------------------------------------------------------------
We caveat these assessments with the fact that such a methodology,
which has been similarly employed in other modeling exercises of the
IRA, assumes that there are minimal barriers to the market entry of new
resources aside from cost, and further in my testimony I will explain
the mounting evidence against such an assumption. As such, our
assessment should be considered highly optimistic as a scenario that
assumes minimal regulatory barriers to clean anergy and infrastructure
growth.
We found that the IRA, at estimated subsidy volumes, could support
a 37 percent increase in clean electricity generation by the year 2031,
and transportation-related carbon dioxide emissions could be 5 percent
lower than the reference case. Overall, energy-related carbon dioxide
emissions in the United States after the IRA could be up to 35 percent
below 2005 levels by 2030, whereas the reference case projects 23
percent below 2005 levels by 2030, for an effect of the IRA of reducing
energy-related carbon dioxide emissions by up to 12 percent relative to
2005 levels. This estimate is consistent with similar analyses, such as
that of the Rhodium Group which estimated the IRA to bring emissions
down an additional 8-12 percent below 2005 levels by 2030.\2\
---------------------------------------------------------------------------
\2\ John Larsen et al., ``A Turning Point for US Climate Progress:
Assessing the Climate and Clean Energy Provisions in the Inflation
Reduction Act,'' Rhodium Group, Aug. 12, 2022. https://rhg.com/
research/climate-clean-energy-inflation-reduction-act.
---------------------------------------------------------------------------
The seemingly large effect of the IRA is mostly attributable to the
sheer volume of subsidy that is directed at clean energy, and
especially at the electric power sector. The IRA dedicates
approximately $391 billion of subsidy toward climate and energy related
priorities.\3\ R Street's estimate of the IRA's impact on electricity
focused on $179 billion of subsidy. With such significant spending,
there is certain to be an effect. However, we feel it is important to
note that we found that 67 percent of new clean electricity generation
that would be eligible for subsidy under the IRA would have been
produced even if the IRA had never been signed into law. While the
large volume of subsidy will incentivize some new market entry, most of
it will reward clean energy investors for doing what they would have
done anyway.
---------------------------------------------------------------------------
\3\ ``CBO Scores IRA with $238 Billion of Deficit Reduction,''
Committee for a Responsible Federal Budget, Sept. 7, 2022. https://
www.crfb.org/blogs/cbo-scores-ira-238-billion-deficit-reduction.
---------------------------------------------------------------------------
In the transportation sector, we note that the additionality of the
IRA's subsidies is even more diminished. The IRA is estimated by the
CBO to expend $7.5 billion on tax credits for new alternative fuel
vehicles. At a tax credit value of $7,500 per vehicle, the IRA would
support the market entry of one million new clean vehicles through
2031. However, the EIA projects that through 2031 there will be 9
million new alternative fuel vehicle sales, including 5.8 million
electric vehicle (EV) sales.\4\ The large difference between subsidy-
supported vehicle sales and projected vehicle sales indicates that this
particular government expenditure will have minimal environmental
benefit.
---------------------------------------------------------------------------
\4\ Annual Energy Outlook 2022, U.S. Energy Information
Administration, March 3, 2022, Table 38. https://www.eia.gov/outlooks/
aeo/data/browser/#/?id=48-AEO2022®ion=1-
0&cases=ref2022&start=2020&end=2050&f=A&linechart= ref2022-
d011222a.59-48-AEO2022.1-0 ref2022-d011222a.62-48-AEO2022.1-0 ref2022-
d011222a.63-48-AEO2022.1-0 ref2022-d011222a.67-48-AEO2022.1-0 ref2022-
d011222a.80-48-AEO2022.1-0&map=ref2022-d011222a.5-48-AEO2022.1-
0&ctype=linechart&sourcekey=0.
---------------------------------------------------------------------------
The IRA does deliver some improvements to the design of clean
energy subsidies though. The IRA's eventual transition to technology-
neutral production and investment tax credits and clean fuel tax
credits that are awarded based on emission ratios will help to mitigate
the technological favoritism that has plagued clean energy subsidies
for decades. Additionally, the income thresholds for vehicle subsidies
will mitigate their regressive nature in the tax code. Overall, the
IRA's changes that enable the market entry of new clean energy
technologies on an equal footing to incumbent ones that may already be
receiving subsidy is praiseworthy.
But it is important to caveat this acknowledgment with a
reiteration that the large volume of subsidies directed toward
environmental benefits that are projected to be attained anyway (clean
electricity, EVs, etc.) yield no additional emission mitigation despite
their burden to taxpayers. Continued subsidy of technologically mature
energy sources, especially ones that are already cost-competitive with
incumbents, functions as a wealth transfer from taxpayers to energy
investors.
It should also be noted that the estimates referenced above are
based on the CBO's expected changes to revenue from the IRA. If
alternative claims that the IRA has a greater emission benefit than our
estimate are true, then one should also expect that there will be more
claimants to the IRA's subsidy and thus the overall cost of the bill
will increase and the deficit reducing effects of the legislation would
be reduced, worsening its net-economic outcomes. Similarly, if--as can
be contested--our claims are too optimistic, then there would be fewer
subsidy claimants and the costs of the legislation would be reduced,
which would improve its deficit-reducing effects and overall economic
impacts.
Regulatory Barriers to Clean Energy and Other Factors Mitigate
Potential Benefits
A large portion of the IRA's subsidies focus on clean energy
production, especially electricity. To realize these benefits,
investors must be able to readily construct new facilities, and in the
case of electricity interconnect them with the electric power grid.
However, increasingly, research is showing that regulatory barriers are
playing a larger factor in clean energy deployment than capital costs,
which are not readily addressed by subsidies.
According to Lawrence Berkely National Laboratory (LBL), by the end
of 2021 there were over 1,000 gigawatts (GW) of energy generation
capacity in interconnection queues, and 427 GW of storage capacity.\5\
Of this, 930 GW was zero-carbon with solar (676 GW) being the largest
share.\6\ LBL noted that fossil generation seeking grid interconnection
is on the decline, with 75 GW of natural gas and less than 1 GW of coal
in interconnection queues. For comparison, the entire existing U.S.
electric grid has a capacity of 1,144 GW.\7\ LBL also noted that time
spent in queues for projects has increased from an average of 2.1 years
to 3.7 years.\8\ The Department of Energy (DOE) notes that the IRA's
additional subsidy for clean energy deployment will exacerbate
delays.\9\
---------------------------------------------------------------------------
\5\ ``Queued Up: Characteristics of Power Plants Seeking
Transmission Interconnection,'' Lawrence Berkely National Laboratory,
April 2022. https://emp.lbl.gov/queues.
\6\ Ibid.
\7\ ``Electricity Explained: Electricity generation, capacity, and
sales in the United States,'' U.S. Energy Information Administration,
last updated July 15, 2022.
---------------------------------------------------------------------------
https://www.eia.gov/energyexplained/electricity/electricity-in-the-us-
generation-capacity-and-sales.php.
---------------------------------------------------------------------------
\8\ ``Queued Up.'' https://emp.lbl.gov/sites/default/files/
queued_up_2021_04-13-2022.pdf.
\9\ ``DOE Launches New Initiative to Improve Clean Energy
Interconnection,'' Department of Energy, Aug. 15, 2022. https://
www.energy.gov/eere/wind/articles/doe-launches-new-initiative-improve-
clean-energy-interconnection.
---------------------------------------------------------------------------
Prior to the IRA, the largest wholesale electricity market
operator, PJM, planned to delay interconnection reviews for
applications filed in 2021 until 2026.\10\ The other major grid
operators face huge backlogs as well, and renewables developers report
project development timelines ballooning to eight years.\11\ This casts
serious doubt on the additional deployment effects the IRA could have
under current conditions.
---------------------------------------------------------------------------
\10\ Ethan Howland, ``PJM proposes `first-ready, first-served'
interconnection review process, steps to clear backlog,'' UtilityDive,
June 15, 2022.
---------------------------------------------------------------------------
https://www.utilitydive.com/news/pjm-interconnection-request-FERC-
proposal/625544/
#: :text=Dive%20Brief%3A,the%20Federal%20Energy%20Regulatory%20Commissio
n.
---------------------------------------------------------------------------
\11\ Emma Penrod, ``Why the energy transition broke the U.S.
interconnection system,'' UtilityDive, Aug. 22, 2022.
---------------------------------------------------------------------------
https://www.utilitydive.com/news/energy-transition-interconnection-
reform-ferc-qcells/628822/.
Aside from grid interconnection, conventional permitting issues are
increasingly playing a larger role for clean energy-related projects
than they are for fossil ones. Last year, an R Street report noted that
the median timelines for environmental impact statements under the
National Environmental Policy Act (NEPA) have increased from 2.3 years
in 2010 to 3.5 years by 2019 and peaked at 4.7 years in 2016.\12\ R
Street also noted last year that for projects requiring either an
environmental assessment or an environmental impact statement under the
DOE, 42 percent were related to clean energy, conservation, or
transmission and 15 percent were related to fossil fuel.\13\ Similarly,
24 percent of the Bureau of Land Management's (BLM) active
environmental impact statements were for renewable energy and only 13
percent were for fossil fuels.\14\ Additionally, BLM data shows that
only 0.3 percent of oil and gas projects required an environmental
impact statement, but 12 percent of renewable projects did.\15\ More
recently, an R Street assessment of the projects listed in the Federal
Permitting Dashboard noted that 65 percent of the energy-related
projects were for renewable energy and 16 percent were for electricity
transmission projects which are needed for clean energy growth, while
only 19 percent of projects were fossil fuel related.\16\
---------------------------------------------------------------------------
\12\ Philip Rossetti, ``Addressing NEPA-Related Infrastructure
Delays,'' R Street Institute, July, 2021. https://www.rstreet.org/wp-
content/uploads/2021/07/FINAL_RSTREET234.pdf.
\13\ Ibid.
\14\ Philip Rossetti, ``The Environmental Case for Improving
NEPA,'' R Street Institute, July 7, 2021. https://www.rstreet.org/2021/
07/07/the-environmental-case-for-improving-nepa.
\15\ Ibid.
\16\ Philip Rossetti, ``Permitting reform is key for renewable
energy, transmission and LNG exports,'' R Street Institute, Sept. 20,
2022. https://www.rstreet.org/2022/09/20/permitting-reform-is-key-for-
renewable-energy-transmission-and-lng-exports.
---------------------------------------------------------------------------
Overall, the data increasingly shows that renewable energy projects
get caught up in red tape even more frequently than fossil fuel ones.
There is increasing recognition that interconnection and permitting
reform is needed for clean energy growth, and Sen. Brian Schatz (D-
Hawaii) noted in a tweet that, ``The environmental movement of the last
generation was partly organized around stopping things. But to save the
planet we are going to have to build things at unprecedented speed and
scale.'' \17\
---------------------------------------------------------------------------
\17\ Brian Schatz @brianschatz, ``The environmental movement of the
last generation was partly organized around stopping things. But to
save the planet we are going to have to build things at an
unprecedented speed and scale. We need to make it easier, not harder,
to build big, planet saving projects.'' April 30, 2022. 2:22 PM. Tweet.
---------------------------------------------------------------------------
https://twitter.com/brianschatz/status/1520468607293030400?lang=en.
As the IRA was passed as a budget reconciliation effort, its
provisions were constrained to budgetarily related policies. As such,
permitting reforms outside of additional funding are not present in the
IRA, and, overall, this blunts the level of impact that the IRA can
have for clean energy deployment.
As noted above, R Street's own estimate of the IRA's potential
climate impact, and others, presume environmental benefits are attained
because capital is deployed to facilities that are built and utilized.
These assumptions, though, are likely far too optimistic given current
evidence of clean energy interconnection timelines, minimizing the
likelihood that the potential climate benefits of the IRA will be fully
realized, or even mostly realized. Perhaps the most optimistic
assessment of the IRA was Princeton University's REPEAT Project, but
that study caveated that 80 percent of their emission benefits would be
unrealized without transmission growth.\18\ Given the regulatory
barriers to clean energy growth, it would have been more prudent for
Congress to pursue either a bipartisan clean energy package that
includes permitting reform or to have passed legislation on energy
permitting before allocating substantial subsidies towards clean energy
priorities.
---------------------------------------------------------------------------
\18\ Jesse Jenkins @JesseJenkins, ``2. Over 80% of the potential
emissions reductions delivered by IRA in 2030 are lost if transmission
expansion is constrained to 1%/year, and roughly 25% are lost if growth
is limited to 1.5%/year,'' Sept. 22, 2022. 1:18 PM. Tweet.
---------------------------------------------------------------------------
https://twitter.com/JesseJenkins/status/1572998749131264000.
In addition to overcoming massive regulatory barriers to new
project development, integrating higher levels of renewables face
growing economic headwinds and yields diminishing emissions
displacement. The geographic profile of renewables create congestion on
the transmission system, inhibiting the ability to transport the energy
to areas of high demand or greater emissions displacement. In other
words, the most profitable opportunities for clean energy have been
claimed first, and parts of the grid are becoming saturated with
renewables.\19\ This is inducing a sharp uptick in transmission
congestion and renewables curtailments. For example, from 2019 to 2021,
renewables curtailment in Texas tripled; wind curtailment in the Great
Plains increased fivefold; and curtailment increased in other
renewables-rich areas like California and the Midwest.\20\ From 2019 to
2021, transmission congestion costs have increased by between 8 and
1,173 percent across the seven organized wholesale electricity markets,
which incorporate most of the country.\21\
---------------------------------------------------------------------------
\19\ Devin Hartman, ``Liberty never looked so green: Policy
implications of private carbon-free energy commitments,'' UtilityDive,
Aug. 17, 2022. https://www.utilitydive.com/news/liberty-never-looked-
so-green-policy-implications-of-private-carbon-free-e/629625.
\20\ Adam Wilson, ``As IRA drives renewables investment, attention
turns to transmission upgrades,'' S&P Capital IQ, Sept. 21, 2022.
---------------------------------------------------------------------------
https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/
article?id=72172110&KeyProductLink Type=6.
---------------------------------------------------------------------------
\21\ Ibid.
---------------------------------------------------------------------------
In short, energy policy analysts are increasingly concerned that
clean energy and the transmission needed to support it cannot readily
be built, and the IRA's budget reconciliation-oriented design means
that it will exacerbate rather than mitigate these trends, independent
of other policy changes.
Economic Effects of the IRA Involve Tradeoffs
The IRA's provisions are expected to increase federal savings and
revenue by $738 billion, while at the same time expending $499 billion,
resulting in a net revenue increase of $238 billion.\22\ The revenue
raising provisions of the IRA primarily come from changes to corporate
taxes, specifically the implementation of a new corporate minimum tax.
Whenever the government spends money, the recipients of that subsidy
are beneficiaries. For this reason, it is common for industry-specific
analysis to claim substantial economic benefits from legislation.
However, equally important is the other side of the equation, which is
how the government either is raising or will raise funds to pay for
that subsidy, which in this case will partially come from corporate
taxes and other tax increases.
---------------------------------------------------------------------------
\22\ ``CBO Scores IRA with $238 Billion of Deficit Reduction,''
Committee for a Responsible Federal Budget, Sept. 7, 2022. https://
www.crfb.org/blogs/cbo-scores-ira-238-billion-deficit-reduction.
---------------------------------------------------------------------------
The clean energy industries that are on the receiving end of
hundreds of billions of dollars of subsidies, as well as workers in
those industries, will be beneficiaries of the IRA. But there is also
the question of whether there will be harm caused to Americans outside
of the subsidized industries through changes in the corporate tax
structure. Despite the name of the policy, corporations do not pay
taxes; ultimately it is people who pay taxes, and the burdens of
corporate taxes fall among corporate investors, workers and customers
to varying degrees depending on the prevailing economic conditions at
the time.\23\ Who bears corporate taxes is largely dictated by the
openness of the economy to global competition, and empirical estimates
of corporate tax incidence have found that between 50 and 100 percent
of corporate income taxes fall on corporate workers.\24\ Even corporate
taxes on ``super-normal'' returns, like the corporate minimum tax in
the IRA, are estimated to have half their costs fall on corporate
workers.\25\
---------------------------------------------------------------------------
\23\ Greg Mankiw, ``Corporate Tax Rates,'' Greg Mankiw's Blog, May
3, 2006.
---------------------------------------------------------------------------
https://gregmankiw.blogspot.com/2006/05/corporate-tax-rates.html.
---------------------------------------------------------------------------
\24\ Stephen J. Entin, ``Labor Bears Much of the Cost of the
Corporate Tax,'' Tax Foundation, Oct. 24, 2017. https://
taxfoundation.org/labor-bears-corporate-tax.
\25\ Ibid.
---------------------------------------------------------------------------
My testimony today will not cover the literature or state of debate
on corporate taxes in tax policy, but I do wish to draw attention to
several key findings from modeling exercises of the IRA. Firstly, the
CBO in its assessment of the IRA noted that the higher corporate taxes
will negatively impact the U.S. economy:
In CBO's assessment, the proposed new corporate minimum tax
would reduce the incentive for those large corporations to
invest, primarily by limiting the tax benefit of accelerated
depreciation and by decreasing the
after-tax return on their new investment . . . By setting a new
minimum tax, section 10101 would limit the tax benefit of
accelerated depreciation for affected corporations and, all
else being equal, reduce their business investment.\26\
---------------------------------------------------------------------------
\26\ Phillip L. Swagel, ``Economic Analysis of Budget
Reconciliation Legislation,'' Congressional Budget Office, Aug. 4,
2022. https://www.cbo.gov/system/files/2022-08/58357-Graham.pdf.
The CBO noted that reduced deficits could offset the negative
effect of the changes in corporate taxes but stated that achieving as
much depends on various factors. Additionally, the Joint Committee on
Taxation (JCT), in estimating who will bear the costs of the IRA's tax
increases, noted that the distributional changes are most prominent at
the top and bottom income ranges. Americans earning less than $10,000
per year are expected to have a 3.1 percent increase in federal taxes
in 2023, and a 1.8 percent increase in 2031.\27\ Americans earning more
than $1 million per year are expected to have 1.9 percent higher taxes
in 2023, and 0.1 percent higher taxes in 2031.\28\
---------------------------------------------------------------------------
\27\ ``Distributional Effects of Title I--Committee on Finance of
an Amendment in the Nature of a Substitute to H.R. 5376, The Inflation
Reduction Act of 2022,'' Joint Committee on Taxation, July 29, 2022.
---------------------------------------------------------------------------
https://www.finance.senate.gov/imo/media/doc/
jct_distributional_effects_inflation_reduction_act.pdf.
---------------------------------------------------------------------------
\28\ Ibid.
---------------------------------------------------------------------------
The governmental analyses from the CBO and the JCT are also
consistent with the estimated effects on GDP and income by the Tax
Foundation. The Tax Foundation estimates that in the long run, the IRA
will reduce GDP by 0.2 percent, reduce real wages by 0.1 percent and
reduce capital stock in the economy by 0.3 percent, resulting in a loss
of 29,000 full-time equivalent jobs overall.\29\ The Tax Foundation
also finds that although subsidies may buoy incomes in the near term,
in the long run all income groups have lower income.\30\
---------------------------------------------------------------------------
\29\ Alex Durante et al., ``Details & Analysis of the Inflation
Reduction Act Tax Provisions,'' Tax Foundation, Aug. 12, 2022. https://
taxfoundation.org/inflation-reduction-act/.
\30\ Ibid.
---------------------------------------------------------------------------
Any impact on inflation, which would potentially improve after-tax
incomes, is expected to be minimal. The CBO estimated that the IRA will
have between ^0.1 and +0.1 percent change in inflation next year, which
is consistent with the Tax Foundation's estimate that the IRA's impact
on inflation is ``likely close to zero.'' \31\
---------------------------------------------------------------------------
\31\ Phillip L. Swagel, ``Economic Analysis of Budget
Reconciliation Legislation,'' Congressional Budget Office, Aug. 4,
2022. https://www.cbo.gov/system/files/2022-08/58357-Graham.pdf;
Durante et al. https://taxfoundation.org/inflation-reduction-act.
---------------------------------------------------------------------------
In effect, the IRA has two sides to its provisions. On the one
hand, deficit reduction and subsidy yield benefits to select sectors,
but the method of paying for these creates hardship in other sectors of
the economy that counteract these benefits. R Street also noted in its
analysis of the IRA that monetized environmental benefits are unlikely
to make the IRA net-beneficial, due to its inefficient subsidy
structure. When considering opportunity costs, the IRA is more likely
to be a negative event for the U.S. economy than a positive one, but
overall, the counteracting positive and negative effects of the law
largely cancel each other out.
Conclusion
Thank you again Chairwoman Castor, Ranking Member Graves and
honorable members of the committee for holding this hearing. If I can
be of any assistance to members of the Committee, please feel free to
contact me or my colleagues at the R Street Institute.
Philip Rossetti
Senior Fellow for Energy & Environment
R Street Institute
202.525.5717
[email protected]
Ms. Castor. Thank you, Mr. Rossetti.
Next up, Mr. Nassar, you are recognized for 5 minutes.
Welcome.
STATEMENT OF JOSH NASSAR
Mr. Nassar. Thank you, Chairwoman Castor, Ranking Member
Graves, and members of the Select Committee. On behalf of the 1
million members and retirees of United Auto Workers, our
President, Ray Curry, the Executive Board, just want to thank
you for this opportunity to share our views on the Inflation
Reduction Act and, you know, express what an honor it is to
talk before this committee today. The work of this committee is
extremely important, in our view.
So the Inflation Reduction Act is an unambiguous win for
working people, in our view, and here is why. Number one, it
deals with what is actually, you know, putting a pinch on
people's wallets and pocketbooks, which is--you know. Big thing
is the high cost of prescription drugs, which in the United
States is often, you know, four times or more than other
countries. And remember, as taxpayers, we subsidize a lot of
the research for pharmaceutical drugs as well.
But not just that, the energy. By having a diversity of
sources, you know, it will lead to lower costs for people, you
know, over time.
But we--you got to--we look at Inflation Reduction Act in
tandem with the Bipartisan Infrastructure Law, CHIPS, Recovery
Act, and it is a very productive Congress. Those are four very
important laws, and they work together, and I will be happy to,
you know, get into that more.
But just a couple things that I just want to make sure to
set the record straight on. One is, you know, on the taxes. So
this bill is paid for by having, you know, enforcement on the
richest folks, IRS. And, you know, it has been estimated over,
you know, $160 billion a year from the top 1 percent are not
paid in taxes. So it is really--it is really a focus up there,
which makes a lot of sense.
And then the other thing is having this corporate minimum
tax, which, you know, right now, that will--that by not having
a minimum, we basically are, you know, creating environment
where it is--it is--there is a premium for kind of exporting
jobs, and it actually becomes some incentive. So it actually is
good for workers.
And also, just the corporate share of tax receipts has
dropped precipitously over time, so this kind of makes things a
little, you know, a little more equal, where they are paying
their fair share.
As far as inflation itself, you know, we at Auto Workers,
you know, have suffered greatly because of, for example, the
chip shortage. Well, why was there a chip shortage? Because of
the pandemic.
The pandemic is the root cause of all the chaos with the
supply chains and, you know, is really--can be traced back to
why, you know, a big reason why inflation--but the truth is
that inflation is for many, many factors. It is not just one
thing.
But we know this much. The cost of prescription drugs, the
cost of energy, are really, you know, hurting people, and this
directly addresses those major cost factors.
The other thing I want to talk about is what it does
actually for manufacturing. We have lacked manufacturing policy
for a long time in this country. And the truth is that China
and all those other countries that are deploying EVs, a lot of
them are really far advanced, and they have been supporting
those industries and those investments for a long time. So we
have been competing with one arm tied behind our back.
And now one might say, well, why should we care? Well, the
reality is that EVs are here, and they are global, and they are
going to become a larger percentage.
So people are going to be driving EVs more over time. The
question for us is, where are they going to be built? We want
them to be built in the United States, and we want them to be
supporting good union jobs. So that is our view on that.
And what it does is it--between ATVM, the various, you
know, tax programs that are here, the conversion grants, et
cetera, what it does is it will enable factories to change over
to be able to build electric vehicles. It will also allow a lot
more of the battery supply, the battery manufacturing to be
here, where we are way behind.
And we think that the entire supply chain, you know, should
be in the U.S., that we should have a--we should be able to
dominate this just like we used to dominate auto manufacturing.
Now, you know, are they going to be good jobs all created
from here? That is--that is something that is to be determined
in auto, because what we have to see is, are workers going to
have a choice to collectively bargain or not? A lot of
automakers go through great lengths to fight against workers
having that choice. So what is going to happen there?
We are also seeing a lot of companies who are automakers
teaming up with battery manufacturers and creating joint
ventures, and, you know, what kind of jobs are those going to
provide? We think they should be good union auto jobs because
they are about moving the car forward.
So, you know, this is--and the other thing I will say is
just, this will speed up the transition to EVs, and these are
investments that were badly, badly needed.
Happy to answer any questions you might have. Thank you.
[The statement of Mr. Nassar follows:]
Submitted Statement of Josh Nassar
Legislative Director, International Union
United Automobile, Aerospace, and
Agricultural Implement Workers of America (UAW)
Before the Select Committee on the Climate Crisis
United States House of Representatives
Hearing on ``A Big Climate Deal: Lowering Costs, Creating Jobs, and
Reducing Pollution with the Inflation Reduction Act''
September 29, 2022
Chairwoman Castor, Ranking Member Graves, and members of the Select
Committee, on behalf of the over one million active and retired members
of the International Union, United Automobile, Aerospace, and
Agricultural Implement Workers of America (UAW), UAW President Ray
Curry, and the UAW International Executive Board (IEB), I want to thank
you for the opportunity to share our perspective on the Inflation
Reduction Act. It is my honor to appear before you today.
The recent passage of the Inflation Reduction Act is an unambiguous
win for the American people. The law squarely takes on two of the main
drivers of inflation: energy costs and astronomical prescription drug
costs. The law addresses energy costs by investing in a wide variety of
domestic energy sources of energy production, which is projected to
reduce carbon emissions by 40 percent by 2030.\1\ It is the single
biggest investment, $369 billion, to address climate change in our
history. It will cut household energy costs by an average of $500 a
year, tackle the climate crisis by significantly reducing carbon
emissions, and create thousands of good-paying jobs.\2\ Importantly,
the new law is ``paid for'' by placing a minimum tax on corporations
and ensuring the wealthiest pay their fair share of taxes.
---------------------------------------------------------------------------
\1\ https://www.whitehouse.gov/omb/briefing-room/2022/08/23/New-
OMB-Analysis-The-Inflation-Reduction-Act-Will-Significantly-Cut-the-
Social-Costs-of-Climate-Change/
\2\ https://www.whitehouse.gov/briefing-room/statements-releases/
2022/08/15/by-the-numbers-the-inflation-reduction-act/
---------------------------------------------------------------------------
The 117th Congress and the Biden Administration have been highly
productive and have succeeded where prior Administrations and
Congresses from both parties have fallen short. The American Rescue
Plan Act (ARPA), Inflation Reduction Act, CHIPS and Science Act, and
bipartisan Infrastructure Investment and Jobs Act (IIJA) work in tandem
to strengthen our economy and national security. The laws put our
country in a position to have a brighter future by investing in our
manufacturing base that is essential to ensure industries and jobs of
the future are made in America. These four laws stand to benefit UAW
members and retirees for decades to come.
Urgency of Climate Change
A large body of scientific research predicted for decades that
climate change would increase the number and strength of extreme
weather and climate events, such as heat waves and droughts.
Unfortunately, these predictions have already been proven right by
mother nature. We are witnessing the impacts of climate change in real
time. Higher water temperatures intensify hurricanes and other extreme
weather events. Addressing climate change will become increasingly
difficult as time marches on. The realities of climate change demand
action. We have a responsibility to current and future generations. The
Inflation Reduction Act takes critical steps that will be looked kindly
upon by our children and grandchildren in the decades ahead.
Before discussing specific provisions, I must address some of the
misinformation about the Inflation Reduction Act that is being widely
disseminated by deep pocketed special interests in a clear attempt to
convince working people they will pay higher taxes because of the law.
These claims are demonstrably false. No one earning under $400,000 will
pay more in taxes due to this law.\3\ The tax provisions in this law
will ensure that some of the largest corporations in the world pay
their fair share by imposing a 15% minimum corporate tax on
corporations with profits exceeding $1 billion. The Joint Committee on
Taxation (JCT) estimates that this provision will generate $222.2
billion in revenue from FY 2022 through FY 2031.
---------------------------------------------------------------------------
\3\ https://www.whitehouse.gov/briefing-room/statements-releases/
2022/08/19/fact-sheet-the-inflation-reduction-act-supports-workers-and-
families/
---------------------------------------------------------------------------
The minimum corporate tax is long overdue. Thirty-nine profitable
corporations in the S&P 500 or Fortune 500 paid no federal income tax
from 2018 through 2020, the first three years that the Tax Cuts and
Jobs Act (TCJA) was in effect.\4\ These same corporations generated
$122 billion in profits during that period. The corporate share of
federal tax revenue has dropped by two-thirds in the last 60 years,
from 32% in 1952 to 10% in 2013.\5\
---------------------------------------------------------------------------
\4\ https://itep.org/corporate-tax-avoidance-under-the-tax-cuts-
and-jobs-act/
\5\ https://americansfortaxfairness.org/tax-fairness-briefing-
booklet/fact-sheet-corporate-tax-rates/
#: :text=Corporate%20share%20of%20federal%20tax%20revenue%20has%20droppe
d, no%20federal%20income%20taxes%20from%202008%20to%202012.
---------------------------------------------------------------------------
The Inflation Reduction Act also invests $80 billion in the
Internal Revenue Service (IRS) to modernize and strengthen enforcement
to ensure the wealthy are paying their fair share. The law
substantially increases the budget of the IRS and staffing levels to go
after ultra-wealthy tax evaders. The richest 1% evade paying $160
billion in taxes every year.\6\ The Congressional Budget Office (CBO)
estimates that the IRS will collect about $203.7 billion because of
improved tax compliance.\7\ Inflammatory rhetoric about armed IRS
agents going after ordinary Americans is misleading and dangerous.
---------------------------------------------------------------------------
\6\ https://home.treasury.gov/news/featured-stories/the-case-for-a-
robust-attack-on-the-tax-gap
\7\ https://www.cbo.gov/system/files/2022-08/hr5376_IR_Act_8-3-
22.pdf
---------------------------------------------------------------------------
Further, the new law imposes a 1% excise tax on corporate stock
buybacks to encourage investments to grow the business instead of
enriching stockholders. The UAW has long supported creating
disincentives to curb stock buy backs. Taxing stock buybacks will, in
addition to raising $74 billion over the next ten years, limit
excessive compensation of corporate insiders and promote sounder
investment decisions that are more likely to benefit workers and
communities.\8\
---------------------------------------------------------------------------
\8\ https://www.washingtonpost.com/us-policy/2022/08/12/inflation-
reduction-act-biden-buybacks/
---------------------------------------------------------------------------
Inflation
There is a great deal of confusion about the causes of inflation.
There are no simple answers and inflation is caused by multiple
factors. The COVID-19 pandemic contributed greatly to the spike in
global inflation as supply chains have been continuously interrupted
which limit production and distribution of goods. Just as the COVID-19
pandemic is a global problem so is inflation, as the Eurozone and other
countries have recorded their highest inflation rates on record
ever.\9\
---------------------------------------------------------------------------
\9\ https://www.reuters.com/world/europe/euro-zone-inflation-
confirmed-91-energy-food-prices-surge-2022-09-16/
---------------------------------------------------------------------------
Annual U.S. inflation in the first quarter of this year averaged
just below 8.0%, the 13th-highest rate among the 44 countries examined.
According to Department of Commerce data, corporate profits rose 35%
last year.\10\ Chevron's 240% profit spike in early 2022 was part of
``the best two quarters the company has ever seen.'' \11\ Shell said
adjusted earnings were $11.5 billion for the second quarter of 2022 and
topped their previous record of $9.1 billion in the first quarter.\12\
---------------------------------------------------------------------------
\10\ https://www.bloomberg.com/news/articles/2022-03-30/2021-was-
best-year-for-u-s-corporation-profits-since-1950
\11\ https://www.theguardian.com/business/2022/apr/27/inflation-
corporate-america-increased-prices-profits
\12\ https://www.reuters.com/business/energy/shell-reports-record-
profit-115-billion-2022-07-28/
---------------------------------------------------------------------------
To make matters worse, multinational corporations in many
industries have capitalized on rising costs to mark up prices to
increase profits. Over the past several decades the oil, consumer
goods, beverage industry, pharmaceutical industry, and many other
sectors have become less competitive. When there are only a few major
players in an industry, it becomes easier to price gouge consumers.
In the U.S., the motor vehicle sector has been one of the largest
contributors to inflation as many Original Equipment Manufacturers
(OEMs) cannot keep up with demand due to the shortage of auto-grade
semiconductor chips and other supply shortages. The CHIPS and Science
Act puts us in a better position to avoid future disruptions but does
not solve the current shortage as it takes years for new facilities to
be built and ramped up.
Inflation Reduction Act's Manufacturing Investments
The Inflation Reduction Act stands to help the U.S. become less
reliant on China, which dominates the electric vehicle battery market.
According to the Financial Times, Chinese firms, either owned or
supported by the Chinese government, currently produce 60% of passenger
EVs sold around the globe and produce almost 70% of battery cells as
China has invested more than $60 billion to support EV manufacturing.
China also controls approximately 80% of the supply of rare earth
minerals, which are essential for aerospace, defense, and EV
production, and may impose export controls on these vital
materials.\13\
---------------------------------------------------------------------------
\13\ https://www.ft.com/content/d3ed83f4-19bc-4d16-b510-
415749c032c1
---------------------------------------------------------------------------
The Inflation Reduction Act also includes significant investments
that stand to benefit workers, their families, and communities
including:
Fully funding the Advanced Technology Vehicle
Manufacturing (ATVM) loan program and expand to additional vehicle
sectors.
Domestic Manufacturing Conversion grants will support the
conversion and retooling of vehicle technology manufacturing
facilities, including those at risk of closure, to onshore and build
batteries and other advanced vehicle technologies. Funding, updating,
and targeting the 48C tax credit is included to support the
establishment, retooling, and expansion of clean energy and technology
manufacturing facilities.
The Investment Tax Credit (ITC) and Production Tax Credit
(PTC) are big wins for clean energy projects like wind and solar and
they include a 10% bonus credit for projects located in an energy
transition community.
Robust funding is also available for rural renewable
energy investments through the United States Department of Agriculture
(USDA) including over $1 billion for the Rural Energy for America
Program, with prioritization of ``underutilized renewable energy
technologies'' and technical assistance. Assistance will be provided
for rural electric co-ops with $9.7 billion in loans and grants for new
renewable deployment, carbon capture and storage, and fossil fuel
debts.
More than $9 billion is included for federal procurement
of American-made clean technologies to create a stable market for clean
products, including $3 billion for the U.S. Postal Service to purchase
zero-emission vehicles.
Commercial Vehicle Tax Credit and the Heavy-Duty Fleet
Conversion Grants has $1 billion available in grants to support
adoption and deployment of vehicles until 2031. $400 million is carved
out for replacement of vehicles serving one or more communities in non-
attainment areas for any air pollutant.
$4,000 tax credits for lower/middle income consumers to
help purchase used electric vehicles (EVs), and up to $7,500 for new
EVs. The $7,500 tax credit for new clean vehicles requires that final
assembly of the car be made in North America. The 200,000 cap has been
lifted beginning in 2023, but Tesla, GM, and Toyota have surpassed the
200,000-vehicle cap for 2022. Without the Inflation Reduction Act, many
established automakers would be unable to utilize the tax credit to
lower the price of the vehicle.
Electric Vehicle Manufacturing
The global auto market is moving towards even more efficient
vehicles, including hybrid and electric vehicles. Global electric car
registrations increased by 41% in 2020, despite the pandemic-related
worldwide downturn in car sales, in which global car sales dropped
6%.\14\ It has been projected that by 2040, over 50% of new car sales
globally will be electric.\15\ The industry is preparing for EVs to be
a much larger part of the market going forward, both in the U.S. and
abroad. Major automakers around the world have announced billion-dollar
EV investments and ambitious new product plans and target dates. The
Inflation Reduction Act stands to facilitate more manufacturing of
electric vehicles. Without such incentives we will fall further behind
China in the race to build the vehicles and batteries of the future.
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\14\ https://cleanenergynews.ihsmarkit.com/research-analysis/
global-electric-vehicle-sales-grew-41-in-2020-more-growth-
comi.html#: :text=Global%20electric%20vehicle%20sales%20grew%20
41%25%20in%202020%2C,...%205%20Looking%20ahead%20...%206%20Inevitability
%20
\15\ https://edition.cnn.com/2019/05/15/business/electric-car-
outlook-bloomberg/index.html
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EV sales have grown steadily over the past decade, but they still
represent a small percentage of vehicle sales. EVs and PHEVs (Plug-in
Hybrids) combined to represent 4% of U.S. auto sales in 2021 \16\ and
EVs face challenges to mass-adoption. EVs are more expensive to
produce, making them less profitable and dependent on consumer
incentives. In most parts of the country, EV charging infrastructure is
inadequate, and the electrical grid is unprepared. Consumers shopping
for an EV have been known to have concerns about battery range and
charging speed as they have a limited selection of models and segments.
Fortunately, the Inflation Reduction Act along with the previously
mentioned laws contain investments in the infrastructure needed to
support EV deployment.
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\16\ https://wardsintelligence.informa.com/WI966151/US-Light-
Vehicle-Sales-December-2021
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The greener vehicles of the future are going to be built somewhere
and other countries are preparing for these innovative technologies. We
could see the U.S. auto industry fall behind on advanced technology,
hurting the American economy and American workers. Ignoring these
realities is not an option because it concedes our future to other
nations that have a significant auto manufacturing footprint.
To lead the future, electric vehicles and other green technologies
must be harnessed to create good U.S. union jobs where workers have a
voice on the job. It is important to ensure all manufacturing workers
can join a union free from intimidation by employers seeking to
maintain the status quo. Manufacturers of EVs should be required to pay
family and community-sustaining wages and provide benefits that workers
can count on to care for themselves and their loved ones as a condition
for receiving taxpayer assistance.
The domestic vehicle assembly and parts industries are vital to our
manufacturing base, and it is imperative that we stay strong and
competitive now and into the future. Auto manufacturing is not regional
and extends well beyond the upper Midwest. For example, in the past
year, significant investments in motor vehicle and battery
manufacturing have been announced in Tennessee, Georgia, Michigan,
North Carolina, and Kentucky. The auto industry's supply chain extends
far and wide throughout the country. Fortunately, the Inflation
Reduction Act and other aforementioned laws put us on the right track,
yet more work remains.
To be clear, the transition will take time and will occur at
different rates throughout our country and world. However, there is
little doubt that the transition will happen. The Administration's goal
is to have at least 50% of new vehicles be EVs or PHEVs by 2030. They
announced nearly $5 billion will be made available to build out an
electric vehicle charging network over the next 5 years and $3 billion
to advance the domestic EV industry in communities that have
historically been part of the auto industry.
As automakers improve technology, decrease battery costs, and
produce at scale, EVs will become increasingly more competitive with
ICEs (Internal Combustion Engine). And in the coming years, automakers
plan to launch EVs in the segments that are most popular with American
consumers: CUVs, SUVs, and pickups. Electrification is not limited to
the light-duty auto industry. Companies that produce heavy-duty trucks
and off-highway vehicles are also investing in future technology for
electrification and autonomy.
The U.S. is behind other nations in public and private investments
needed to make the U.S. a competitive player in vehicle
electrification. The European Union (EU) has established the European
Battery Alliance to promote production of batteries and key components
within the EU.\17\ South Korea is home to LG Chem, the world's largest
producer of lithium-ion batteries for electric vehicles, with a 24.6%
market share. The company has plans to triple its battery
production.\18\
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\17\ www.eba250.com/about-EBA250?/cn-reloaded=1
\18\ https://www.autoblog.com/2020/10/21/lg-chem-to-triple-ev-
battery-production/
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Creating and Maintaining Good Auto Jobs
Over the past several years, U.S. automotive production workers'
wages have fallen significantly. When adjusting for inflation between
January 2006 and January 2021, average hourly earnings for production
workers in auto assembly declined by 21% while wages in the auto parts
sector have decreased by 19%.\19\
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\19\ https://www.bls.gov/cew/data.htm
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For the transition to benefit auto workers, the entire supply
chain, from the gathering of minerals needed to power batteries to the
manufacturing of the battery and other parts to final assembly, must
support the creation and preservation of good union jobs. Of course, it
is far from certain that growth in EV sales will lead to more good
union jobs. If new entrants are hostile to unions and provide subpar
wages and benefits, it will further erode job quality in the industry.
This is not a theoretical concern as foreign-based automakers typically
resist efforts to unionize in the United States. This strong opposition
exists even though every foreign-based light duty Original Equipment
Manufacturer (OEM) is unionized in its own country. A report by
Professor Gordon Lafer details the array of tactics foreign-based
automakers have utilized to prevent unionization.\20\ Professor Lafer's
research serves as a strong reminder as to why we need the PRO Act to
become of the land. Congress has not strengthened our nation's labor
laws in over 85 years.
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\20\ https://nwlaborpress.org/wp-content/uploads/2022/01/
BuildingBackReport.pdf
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In the auto industry, Toyota, Nissan, Hyundai, Mercedes-Benz, BMW,
Volkswagen, and Honda have all hired ``union avoidance'' specialists to
guide their anti-union campaigns in the United States. Nissan's anti-
union campaign led the National Labor Relations Board (NLRB) to issue a
formal complaint charging the company with twenty-four counts of
lawbreaking. The fact Nissan engaged in such tactics so soon after
having been forced to post public notices vowing to respect the law is
a testament to the near total absence of meaningful penalties under
current law. All of Nissan's plants in other countries are
unionized.\21\ Corporations like Amazon spends millions of dollars to
hire anti-union consultants to interrogate and intimidate workers when
they seek union representation.\22\ It has become all too common for
employers to threaten relocation or shutting down operations if workers
seek to form a union.
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\21\ https://nwlaborpress.org/wp-content/uploads/2022/01/
BuildingBackReport.pdf
\22\ https://www.huffpost.com/entry/amazon-anti-union-
consultants_n_62449258e4b0742dfa5a74fb
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We must also look at the impact that procurement has on job
quality. In February 2022, Oshkosh Defense was awarded a contract to
design and build the next-generation vehicles for the United States
Postal Service (USPS). Oshkosh Defense is a defense contractor that
manufactures products for the U.S. military in its unionized plants in
Oshkosh, Wisconsin. Oshkosh workers have been UAW members since 1938.
Despite these facts, Oshkosh, upon winning the contract, announced they
are planning to take the $6 billion contract to a new, non-union plant
in South Carolina instead of having UAW members in Wisconsin carry out
this lucrative contract by building the next-generation vehicles in
Wisconsin. It is far from clear that USPS gave any meaningful
consideration to the impact on workers and communities when awarding
this significant contract. We urge Oshkosh to reverse course and build
the next generation vehicles in Oshkosh with its proven workforce.
We cannot allow this to continue to happen. Our procurement
policies across the board need to hold employers accountable and
support working families. More work remains to improve labor standards
in the federal contracting process as the U.S. government spends
hundreds of billions of dollars through a wide variety of grant
programs and contracting on an annual basis.
Investing in American Autoworkers
We are at a pivotal juncture as automakers are transitioning many
of their fleets from gas and diesel-powered vehicles to electric ones.
The shift to EVs cannot come at the expense of good wages and benefits
and it is critical that we do not leave workers behind as the industry
transitions to electrification.
To meet the ambitious EV targets put forward by major automakers
and elected officials, we will need to invest in workforce
capabilities. Luckily, the U.S. economy is not starting from nothing
thanks to the large pool of American workers who not only assemble
vehicles but build a wide range of materials and components for those
vehicles. The UAW has around 200,000 members in auto-related
manufacturing throughout the country from Michigan to Texas. These
workers have a high baseline knowledge of manufacturing and a
familiarity with manufacturing training programs. As we see a growth in
battery pack, cell, and component manufacturing, material processing,
and recycling, UAW workers are well positioned to transition into these
new types of manufacturing. With investment in key EV and battery-
specific training programs for the current workforce, these workers can
hit the ground running building the vehicles of the future and require
less investment than starting with a whole new workforce.
The UAW has a long history of supporting investments to train
American manufacturing workers with labor input. For example, the UAW
has a Skilled Trades Department with a long and successful history of
building a strong pipeline of skilled workers critical for auto
companies to grow their business and compete in a global economy. And
through collective bargaining, the UAW has pushed the industry to
continually invest in skilled trades and production workers, whether
through work-based training, apprenticeships, or tuition assistance for
skill development. With new vehicle and manufacturing technologies, the
union is exploring all avenues for productive partnerships with
employers, government, and educational institutions to promote
upskilling and reskilling related to batteries, motors, material
processing, recycling, fuel cell technology, and electric vehicle
assembly.
If there is one thing that is a ``constant'' in the auto industry,
it is that it is constantly evolving and changing. Jobs that were once
done by hand are now done by robots and machines. UAW joint training
programs work hand in hand with local training coordinators to
determine what additional education and training is needed for
journeymen and apprentices when innovative technologies emerge, such as
EVs. Training programs also need to coordinate with local community
colleges to modify curriculum and classes to prepare the workforce for
such changes.
As changes occur, we also need to simultaneously provide
comprehensive re-training programs to prepare displaced workers for
this shift to new technologies. Federal and state governments must
invest in improving and expanding vocational training and
apprenticeship programs, with an active role for unions to ensure
quality training and high road working conditions. These programs must
provide workers not only with the skills to make EV vehicles and
components, but also prepare them for the changing nature of
manufacturing work as automation and other new technologies change the
production process. Congress should also incentivize the development of
joint training and apprenticeship programs between employers and unions
and push employers to commit to retraining workers displaced by new
technology.
In addition to investing in American autoworkers, we must ensure
that the investments to build vehicles and components are made in the
communities where autoworkers are currently building traditional gas-
powered vehicles and powertrains. We cannot wait for ICE jobs to be
lost as we need to target new investments for auto manufacturing
communities now. Auto manufacturing is central to the economy of many
communities, creating community-sustaining manufacturing jobs and
stimulating economic activity in other sectors. Government support for
EV investments should prioritize investments that create jobs in
communities currently producing ICE vehicles and powertrains, hire
incumbent autoworkers, and provide wages and benefits on par with
unionized auto industry standards.
Union workers must lead this transition. In fact, UAW members are
currently building the vehicles of the future. Our members currently
make advanced technology vehicles that include battery electric (Chevy
Bolt, GMC Hummer, Ford F-150 Lightning, Ford E-Transit), plug-in
hybrids (Jeep Wrangler PHEV, Jeep Grand Cherokee PHEV, Ford Escape
PHEV, Lincoln Corsair PHEV), and autonomous vehicles (GM's Cruise
Autonomous Vehicle). UAW employers have announced plans to make EVs and
PHEVs at UAW plants in a range of segments, including CUVs, SUVs,
pickups, and delivery vans.
The EV transition reinforces the continued importance of putting in
place policies that facilitate vehicle and parts production in the
United States and ease impediments to workers at non-union automakers
to organize. As the nation invests in a transition to innovative
technology, we must seize upon these opportunities to preserve and
increase quality jobs. We have an opportunity, right now, to ensure
that future EV investments incentivize production of EVs in the United
States, made by union workers. Unionized workers earn on average 10.2%
more than their non-union counterparts.\23\ Union workers are more
likely to have paid sick days and health insurance compared to non-
union workers. Ninety-four percent of union workers participate in a
retirement plan compared with 67% of non-union workers.\24\ Policies
that strengthen labor standards and support workers' right to
collectively bargain are foundational to building a strong middle
class. There is little debate about whether the auto industry is going
to change significantly because of the growth of electric vehicles
(EVs) and plug-in hybrids. While we do not know how quickly EV markets
in the U.S. will expand, we do know EVs will become a larger component
of fleets in the decades ahead. A proactive policy approach at the
federal and state level can potentially mitigate disruptions and
harness the opportunities of the EV transition.
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\24\ https://files.epi.org/uploads/226030.pdf
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The full impact of EVs on U.S. auto industry and job quality are to
be determined. There are many open questions about the future. For
instance: Will EV's support help create good new jobs over time? Will
EV battery assembly work? Where and how will the supply chain operate?
Our union is working to ensure the answers benefit workers.
Decisions by policy makers can help ensure that the advanced technology
vehicles of the future are made here in the U.S., thereby promoting
U.S. competitiveness, and creating quality manufacturing jobs. We have
an obligation to advocate for workers and ensure that our ideas are
shaping the future of the domestic auto manufacturing industry.
As we work toward the future of clean transportation, it will be
critical to ensure this transition benefits American workers in both
the short and long term and enhances U.S. competitiveness and economic
security.
Conclusion
The passage of the Inflation Reduction Act in conjunction with the
CHIPS and Science Act, ARPA, and the IIJA will take meaningful steps to
reduce costs, create jobs, bolster domestic manufacturing, and tackle
climate change. We stand ready to work with this Committee and all
other stakeholders to ensure the transition is good for working people,
the U.S. economy, and our planet. It is critical that policymakers
fully implement these laws and build upon them in coming years.
Thank you for considering the views of autoworkers. I look forward
to answering your questions.
Ms. Castor. Thank you very much.
Thanks to our witnesses for their informative testimony. I
will recognize myself for 5 minutes to start the questions.
Thank you all for weighing in on how the Inflation
Reduction Act is a win-win-win. It is a win for American
families, it is a win for workers, it is a win for businesses
across this country.
It really puts us in a--as Mr. Nassar pointed out, a great
competitive era. The global competition for who is going to
make these technologies and how we expand them across the
world, it is on. That competition is on, and it is America that
should be in the lead on all these, and it is our families and
our workers that should benefit.
But I want to take us kind of out of the Washington, D.C.
committee room and take us to kitchen tables of families across
the country that have been grappling with higher costs, and try
to make this real for them. Because they hear Inflation
Reduction Act, they may have heard, oh, okay, this has a clean
energy and climate piece, but what does this really mean for
families?
And Consumer Reports, Ms. Warren, is a trusted source for
consumers across the country. We see rebates and discounts for
all sorts of, not just electric vehicles, but appliances, air
conditioning, heat pumps, insulating your homes. How can we get
the information out, how can you help us, and how can other
organizations help us get that information into the hands of
families who really need it? They are hungry for ways to save
money right now. What is your advice?
Dr. Warren. Thank you, Chair Castor, for the question. Yes,
the IRA has a lot of good benefits for consumers. As you
mentioned, energy costs can be high, especially for low-income
consumers for whom the spend on energy is the highest.
This bill offsets the cost of more efficient appliances,
allows them to weatherize their homes, and allows them to save
costs over time on vehicles, appliances, and so on.
I think everybody would agree that switching to more
efficient appliances is a good thing, and I think consumers
already know that, and they are clamoring for these clean
technologies.
It is a matter of creating awareness, and that is part of
what we do as Consumer Reports. For example, we have
information and buying tools on our website. One of those is
directly tied to electric vehicles. We are actually--people can
go in and put in their location information, and EV incentives
will come back out specific to where they are and their income
and so on. And we plan to update that tool once the IRA is also
implemented so that people know what the new benefits are to
them.
So as Consumer Reports, we certainly can do our part in
just educating people on how they can take advantage of these
incentives once they are implemented.
Ms. Castor. I think that is going to be so important. One
good website that I have come across is RewiringAmerica.org
where, what you said, you know, some of these are location
based, you can put in your ZIP Code and the discounts and
rebates and tax credits come up.
Some of these are available now, and we are talking about
clothes dryers, if you are going to replace your air
conditioner, get a more efficient fuel pump and save money at
the same time. Just insulating your home, things like even the
electric panel in your--the electrical panel in your home.
These are going to be available to you.
And I appreciate you pointing out that the Inflation
Reduction Act is really targeted at working class, middle-class
families. If you are a millionaire or billionaire, you do not
qualify for--you cannot use this to help you save money on your
next model Tesla. These have to be--these are targeted to
working families, middle-class families. There are some income
limits, and it is going to--it has the potential to create
millions of good-paying jobs.
Mr. Nassar, it is hard to keep up now with the
announcements from car manufacturers, battery plants now, on
their new factories and plants. What are you watching right
now, and how can we keep up with the job opportunities that
will be available?
Mr. Nassar. I think it is--thank you for the question. I
think it is really going to be important to watch the decisions
very closely made by companies as far as what are they going to
do as far as their workforce. You know, are they going to make
sure that they actually have a choice whether to join a union
or not, or are they going to fight it? Are they going to, you
know, pay below manufacturing wages or not?
And I think that the Congress and the administration really
need to put a spotlight----
Ms. Castor. Well, and the incentives are tied to if there
is more money back into people's pockets when they purchase an
EV, if it is made in America, the component parts are made in
America, and we do it with the union labor. Is that right?
Mr. Nassar. The provisions were changed in the Senate. The
House version was--that was completely the House version. The
EV tax credit, what is really good about it is, right now,
there were several companies that weren't able to offer at all,
like GM, and now the cap has been lifted, so that should enable
some more union-built cars to get out.
Ms. Castor. Yeah. We will get into it a little bit more--I
am over time. We will get into that a little bit more.
But at this time, we will recognize Mrs. Miller for 5
minutes. Welcome.
Mrs. Miller. Thank you, Chair Castor. Thank you all for
joining us today.
One of the most wonderful things about America, it is made
up of many, many people, with many, many opinions. And I
appreciate the opportunity to talk about the so-called
Inflation Reduction Act.
Every economist worth their salt has concluded that this
legislation would do the exact opposite. It will make inflation
worse. It will punish working class Americans, and it will make
America less competitive by chilling innovation.
Today I get to share with my colleagues what damage this
bill will really do to our families, our communities, and our
country.
First of all, it is telling that we are speaking of this
bill in this particular committee. This bill does nothing to
reduce inflation for working class Americans, but it does force
taxpayers to pony up hundreds of billions of dollars for Green
New Deal slush funds that will ultimately do little to nothing
to lower global emissions.
It will put hardworking American energy workers out of a
job and send billions of dollars to the Chinese Communist Party
to buy supplies for their boondoggles.
The bill also includes a $250 billion slush fund at the
Department of Energy to provide taxpayer subsidies for risky
renewable technologies that no traditional bank would ever
invest in, even with their ESG-centric leadership.
The Department of Energy should be laser-focused on
lowering the price of energy for the American people and
ensuring that our electrical grid is reliable. Instead,
Americans this year have faced record-high gas prices when they
fill up their tanks, record-high heating prices for their home,
and are staring down a cold, dark winter, with rolling
blackouts and brownouts already common across the country.
I am thankful that we still have coal and natural gas to
keep our homes powered when renewables cannot possibly fill
this need at this time. If this administration had its way, our
most reliable baseload energy would be dismantled as well.
The attacks on American energy production aren't the only
disastrous provisions of this bill. It also increases taxes on
American companies who are already grappling with high
inflation, further increasing prices, creating fewer jobs, and
lowering wages across the board.
I look forward to the Republicans taking control of
Congress next year to put a stop to this madness being
perpetrated by this bill and holding the out-of-control Biden
administration accountable and to put Americans back to work.
Mr. Rossetti, in your testimony, you state that the impact
of this bill will transfer wealth from American taxpayers to
subsidize energy companies. Proponents of the bill claim that
most of the taxes raised by the legislation are paid for by
wealthy corporations.
Can you explain why that is a misleading assumption, and
who will actually bear the burden of the book minimum tax?
Mr. Rossetti. That is an excellent question. So when you
think about the effects of the corporate tax, the important
thing to keep in mind is that, at the end of the day, humans
are the ones who pay taxes, even corporate taxes.
So most people who say that we should do corporate taxes
try to say, well, you know, it is the investors of the
corporations who bear the tax, and that might have been true in
an environment where you had a more closed economy, but now we
have a globally competitive economy, and corporations have to
compete everywhere.
So under those conditions, the research increasingly shows
that workers and consumers of corporations pay a larger share
of the corporate income tax. So the IRA's tax on what they call
supernormal returns, which is kind of a more recent term, even
that is expected to have about 50 percent of its costs fall on
corporate workers.
So when we look at these taxes, we have to understand if
investors are able to shift the incidence of the tax onto other
entities, we would expect them to do so, and I don't think the
IRA is any different in that regard.
Mrs. Miller. So is the taxpayer-funded renewable subsidies
the best way to lower global emissions or would money be better
spent more effectively elsewhere?
Mr. Rossetti. I would say that is probably not the best
policy, because one of my concerns with climate change is this
is a global challenge. So when I look at this sort of policy of
continued indefinite subsidy for renewable energies and other
energy priorities, it is communicating to the rest of the
world, especially the developing world where they have far
lower incomes relative to Americans, that these technologies
are only viable with continued subsidy, and really the key is
actually having lower real costs, not lower subsidized costs.
Mrs. Miller. I yield back my time.
Ms. Castor. Next, Rep. Bonamici, you are recognized for 5
minutes.
Ms. Bonamici. Thank you, Chair Castor, and thank you to the
witnesses. And, Chair Castor, I just want to also add, my
thoughts are with your constituents in the State of Florida.
I do want to respond to Ranking Member Graves' comment,
which I found a bit surprising today, about the number of
hurricanes decreasing. From what I could tell in my brief
research, according to the Center for Climate and Energy
Solutions, the number of smaller hurricanes has decreased, but
the number of major hurricanes has increased. And, in fact,
even the sources that confirmed that the number of hurricanes
has decreased, it is true in other ocean basins but not the
North Atlantic. So I just wanted to respond to that comment.
I am tempted to respond to Representative Miller's comments
as well, but I want to cheer for the Inflation Reduction Act
because it is a significant step moving forward in meeting our
goals of a net-zero emissions future.
We know it is not the only step we need to take. It is
anticipated that the Inflation Reduction Act will create about
9 million jobs over the next decade and among other fields:
clean energy, clean transportation, and clean manufacturing. So
this means that we need to train and onboard new workers to
work for us in apprenticeship programs. I want to talk to Mr.
Nassar about that.
Mr. Nassar, you may know I grew up in the Detroit area. I
love Oregon and I have lived there a very long time, but my
childhood was spent in the Detroit area.
So I know that U.S. companies are making more electric
vehicles. So can you talk a little bit about what is involved
in converting the infrastructure for manufacturing and how the
Inflation Reduction Act will help?
But also, I wanted to talk about the workforce issues, both
in autos, and I know your union also represents aerospace
workers. How will the Inflation Reduction Act help meet these
needs? Because as I mentioned, tremendous number of jobs, and
new skills, are going to be needed, and it is exciting.
Mr. Nassar. Very exciting. Thank you for the question.
First of all, just on the workforce for a second, you know,
through collective bargaining and other unions, we have very
successful apprenticeship programs where people able to
upskill, and I think taking a look at that, having more help
for vocational education, and building up that part of the
workforce more would be helpful Federal policy, but also take a
look at what some of the companies and unions are already
doing, because we don't need to reinvent the wheel so to speak.
Ms. Bonamici. Right. We are trying to update the National
Apprenticeship Act for the first time since the 1930s. We are
working on that.
Mr. Nassar. But the other thing is, you know, talking about
the jobs, I mean, the truth is that these are very competitive
industries, the manufacturing industries. And if you are not on
the cutting-edge, if you are not making the new product, you
know, you can fall way, way behind.
So there has to be risks taken first of all. Not every idea
necessarily pans out. But what is the cost of not doing it?
Well, the cost is, we are going to continue to have--we
will have a decline in leadership, as far as creating the
industries of the future. We would fall further behind on EV
production and battery production, and that means ultimately
those jobs won't be here.
Ms. Bonamici. Right.
Mr. Nassar. So we got to anchor the jobs here. As far as
what we can do to make them better jobs, I mean, I would say,
you know, the Senate follow the House's lead and make sure that
workers have a voice on the job by passing the GROW Act would
be one thing.
Ms. Bonamici. I agree with you on that.
Mr. Nassar. And then the other thing, I think, is just to
really, you know, have tight scrutiny on the way that companies
are using those funds and making sure that it is, you know, as
intended.
Ms. Bonamici. Great. Well, and I look forward to working
with you on that. And, of course, the CHIPS and Science Act, as
a member of the Science Committee, I know that is going to
help----
Mr. Nassar. Oh, yeah.
Ms. Bonamici [continuing]. Greatly, because everything has
chips in it now.
Dr. Warren, thank you for being here. Your testimony, you
mentioned that low-income and overburdened communities have
historically borne the brunt of the climate crisis, including
experiencing more harmful effects from air pollution and
greenhouse gas emissions.
So why does reducing emissions from the transportation
sector, which the Inflation Reduction Act does through the
investment in zero emission, heavy duty vehicles, how does that
benefit low-income and disadvantaged communities?
And also, just to follow up on Chair Castor's question, how
can the Inflation Reduction Act help Americans save on energy
costs?
And I just want to mention that, in Oregon, we heard from
Sammie Lewis in a roundtable conversation, who said that
through the programs that Oregon offers through Oregon Energy
Trust, she was able to do efficiency upgrades like are
anticipated with this bill, and she has a credit on her energy
bill right now from doing that. So can you talk about that as
well?
Dr. Warren. That is excellent to hear. Thank you for the
question, Representative.
So low-income and other overburdened communities have borne
the brunt because of, you know, discriminatory policies that
place them more in proximity to high transportation corridors,
warehouses, ports, and so on. So they feel the impact of air
pollution and greenhouse gas emissions the most.
Now, electrifying heavy duty vehicles means that there will
be, you know, reduced air pollution in those neighborhoods.
And, of course, there are other parts of the IRA that are great
for them because they get to participate in buying and owning
and using clean technologies as well.
I am trying to come back to your second question, but I
forgot----
Ms. Bonamici. Oh, I was just asking about the energy
savings that people are experiencing and what a difference that
will----
Dr. Warren. Oh, yes. Yes. So more energy efficient
appliances obviously means you use less energy, which means
that you are saving money. And, frankly, again, low-income
consumers tend to have a higher energy burden. So this is great
for them because they will get to keep more money in their
wallets.
And similar with electric vehicles, which, as I have said,
save something like 60 percent on fueling costs alone, so that
over the life of the vehicle, they will save between $6,000 and
$10,000, which is fantastic.
Ms. Bonamici. Thank you. And I know I am out of time, but
as I yield back, I just want to mention in regard to
transportation, that when the Select Committee on the Climate
Crisis came to Oregon, both Chair Castor and Representative
Carter were able to see our Electric Island where they recharge
school buses made in Georgia and city buses that are electric.
I yield back.
Ms. Castor. All right. Next, I will go to Rep. Casten. You
are recognized for 5 minutes.
Mr. Casten. Thank you, Madam Chair, and thanks so much to
our witnesses.
Mr. Rossetti, I would like to focus on you, and I really
want to emphasize the areas that we have a lot that we agree
on, but I don't want to presume on what we agree. So let me
just start with things that I am thinking we are on the same
page on, but, number one, would you agree with me that
competition helps lower inflation? Competitive markets make
things cheaper.
Mr. Rossetti. Well, I say supply is probably going to be
the key to lowering inflation. Inflation is caused by too many
dollars chasing too few goods----
Mr. Casten. I am just asking a yes or no. Are you pro-
market competition as a tool to lower inflation?
Mr. Rossetti. Yeah, we are pro-competition.
Mr. Casten. Okay. Terrific. We are on the same page.
Do you agree with me that subsidies make markets
inefficient?
Mr. Rossetti. I would agree that subsidies make markets
inefficient.
Mr. Casten. Terrific. And I know you used to be a Hill
lobbyist. Is your experience similar to mine that it is vastly
more common that corporations lobby for lower taxes than it is
that they come in and lobby for higher minimum wages?
Mr. Rossetti. I have never been a lobbyist----
Mr. Casten. Would that be your experiences?
Mr. Rossetti. I can't speak to that.
Mr. Casten. But you were on the Hill for a while. Surely
you ran into some people who were coming and making asks of us?
Mr. Rossetti. Well, I know that, you know, lobbyists are
always going to pursue more tax breaks----
Mr. Casten. Do you find that Corporate America is regularly
asking for higher minimum wages or lower taxes? This is not a
trick question.
Mr. Rossetti. I would say that, you know, corporations are
always going to ask for lower taxes because----
Mr. Casten. Okay. Terrific, terrific. The reason I
established those things we agree on is because competition
lowers inflation. The IRA gives consumers choice. If you can't
afford a solar panel on your roof, you don't have a choice. We
just made that cheaper.
If you can't afford to buy an electric vehicle, we just
made those things cheaper. Those people who can't afford that,
they are buying more expensive gasoline to run their car if
they can't afford an electric vehicle.
They are buying more expensive energy from their utility.
Once they have those solar panels, they run them. Once they
have the EVs, they drive them. They are inherently cheaper.
The permitting bill that just failed yesterday, why did it
fail? Because the regulated electric utility, which does not
know what market competition looks like if it bit them in the
posterior, lobbied against it to kill it because they can't
bear the thought that we might actually get transmission that
would bring cleaner, cheaper energy to market.
We both hate subsidies. The fossil fuel sector gets $664
billion a year in subsidies, according to the International
Monetary Fund. About 10 percent of that is through direct
taxes.
I cannot get a single Republican to support the People Over
Petroleum Act; me and my colleague, Mr. McEachin, have
introduced that would cut those taxes and give $500 back to
every American. Because at the end of the day, you all are not
pro-market. You are pro-corporate welfare.
The third point is, you said in your testimony--I am
quoting your written testimony--``50 and 100 percent of
corporate income taxes fall on corporate workers.'' Are
corporations idiots or do they actually know that that is not
really true? Because if it was, they would be pushing for
higher minimum wages because they are agnostic, right, and it
is the same as taxes.
Now, the truth is the IRA is going to create jobs, it is
going to lower energy bills, create energy independence,
improve health outcomes. It is an investment in our future. It
is going to save the typical household $1,800 a year. That is
anti-inflationary, that is less money.
But we actually have a lot of stuff that we agree with. We
agree that we need transmission reform. We agree on your
analysis that there are vastly more barriers to deploying clean
energy than there are to fossil energy.
Your own analysis says that the fossil fuel projects are
basically doing fine, not surprisingly because they are so
heavily subsidized.
We agree that we should get rid of all these distorting
market subsidies, especially the biggest ones in the fossil
fuel sector. But to do that, we need policy reform, not just
spending.
And in order to make those policy reforms, we either need
to get rid of the filibuster in the Senate, because we all know
the reason why we had to do this through reconciliation was
because of Senate procedural rules, or we need a Republican
Party that is committed to competitive markets. That is
committed to the idea that if you give consumers choice to have
cheaper energy, that is the best outcome. That is committed to
the idea that science matters, not just crony capitalism.
And we are here in this moment. I sit on the Financial
Services Committee. We had a whole long conversation with the
big banks last week about woke capitalism.
Exxon is trading at a 10 times multiple on earnings. Tesla
is trading at a hundred. Capital markets are 10 times more
desirous of putting their hard-earned dollars into companies
that are providing things that people want.
Shell is trading at a seven times multiple on earnings.
First Solar is trading about 70. Again, 10 times factor.
Capital markets choosing to invest in people who are giving
things, what people want, in spite of all those subsidies is
not woke capitalism. It is capitalism.
Let's embrace it, let's move forward, let's be responsible.
Let's recognize the areas where we have an agreement and not
get into the silly polemicism, because we do not have time to
sit around here in rhetorical gymnastics that are basically
just lies.
Thank you and I yield back.
Ms. Castor. Next up, Mr. Carter, you are recognized for 5
minutes.
Mr. Carter. Thank you, Madam Chair, and thank all witnesses
for being here today.
I want to start with you, Mr. Rossetti. Appreciate you
being here, albeit virtually. Of the many things that I have
concerns about in the IRA, in the Inflation Reduction Act, the
electric vehicle subsidies are a big concern of mine and to my
district, and I will explain that, the reason for that.
Setting aside the issue of the actual emission impacts of
EVs, I am concerned about the actual policy we rushed into law.
If you will remember, the Inflation Reduction Act did not go
through regular order. It didn't go through the committee
process. It went straight to the floor. And there is a problem
with that.
Also as you are aware, the law expands EV tax credit
incentives, but it also puts in place new requirements for
manufacturing those vehicles and batteries in the United
States. The goal of this is to bring more manufacturing into
the U.S.
We all agree with that. Republicans, Democrats, we all want
more manufacturing in the U.S. We all agree with that.
Unfortunately, a major company, Hyundai, Hyundai announced,
in my district, the largest economic development project in the
history of our state. They announced that they were going to be
building an electric vehicle plant that is going to be a $5.5
billion investment in the First Congressional District of
Georgia. It is going to create 8,100 jobs. And that is not
the--that is just their plant. It is not the subsidies and the
other companies that are going to be there as well.
They expect for subsidiary companies to invest another
billion dollars, for a total of about $6.5 billion investment
right there in the First Congressional District of Georgia,
8,100 jobs, plus the other jobs that are coming about as a
result of the ancillary jobs that will be affiliated with the
other companies that come there.
But now it is all at risk. All of it is in jeopardy. The
largest investment in the history of the State of Georgia in
jeopardy because of the Inflation Reduction Act. And let me
tell you why.
It says that Hyundai will not be able to qualify for this--
for these credits because they won't have their plant built for
18 to 24 months from now. So they are not going to be able to
participate in these EV tax credits. They are considering
withdrawing that.
Now, a couple of things I want to point out. This is
egregious in the sense that we did not go through regular
order. You know, none of us is as smart as all of us. If it had
gone through regular order, perhaps we could have--we could
have realized what was going on here, we could have vetted it
and understood that this was a problem.
But more so than anything, the President of the United
States was in South Korea the week before and assured the
leaders of this company that they would be taken care of in the
Inflation Reduction Act. And then they go and announce it, and
the following week, 2 weeks from when he had been in South
Korea, this Inflation Reduction Act is introduced and passed,
rammed through without regular order. And all of a sudden, that
promise that was made to them, they find out they are not going
to be eligible for this.
Let me ask you something, Mr. Rossetti. Most electric
vehicle models on the market today won't qualify for this EV
tax credit. Is that your understanding of that?
Mr. Rossetti. That is my understanding. The narrower
constraint of the new EV tax credit is going to mitigate the
eligibility across existing EV producers.
Mr. Carter. Is that going to result in more EVs on the
road?
Mr. Rossetti. Well, according to the estimates of the new
EV tax credit, which we show would only support about a million
EVs, that is far lower than the projected uptake even without
the IRA. So I don't see that specific tax credit having a huge
benefit to the new EV market uptake.
Mr. Carter. The EV tax credits that are in the Inflation
Reduction Act, who do they--that are written into law, who
benefits from them?
Mr. Rossetti. That is a great question. So when we think
about the tax credits for new EVs, that is obviously going to
benefit people who are buying new EVs.
But I am also a bit skeptical of the used EV tax credit,
because the expectation is that people who are buying used
vehicles would benefit the most from having their purchasing
power increased. But I would also expect people who already
have EVs that are going to sell them would do so anyway. So
they might be able to charge a higher price because of the used
EV tax credit, which might actually inadvertently benefit
people who already own EVs and are generally----
Mr. Carter. Well, I am about out of time. I thank you for
your answers. But, again, I want to reiterate, the largest
investment in the history of the State of Georgia in jeopardy
because this bill was rammed through. It didn't go through
regular order. It wasn't vetted like it should have been.
Because promises were made to these people that weren't kept,
and now it is in jeopardy.
Thank God we are the number one forestry state in the
Nation, and we can afford this.
Thank you. I yield back.
Ms. Castor. Next up, Representative Escobar, you are
recognized for 5 minutes.
Ms. Escobar. Thank you so much, Madam Chair. And I think it
is really important first to recognize what is happening in
your State of Florida and to tell you just how much I, and I
know others, have been keeping Floridians in our prayers. Just
seeing the devastation that families are living through has
been so heartbreaking.
And to see really kind of--the irony of it is, here we are
talking about the Inflation Reduction Act and all of the
benefits that can and will come from this historic piece of
legislation, while at the same time, you know, on TV screens
across America, we are witnessing the devastation happening in
Florida as a result of the climate catastrophe.
And the fact of the matter is, and the tragic reality is,
we have taken far too long to act. And for decades we have
heard from people who were either climate deniers or who loved
to list all of the obstacles or, you know, any potential
downsides to investment in order to address the climate crisis,
instead of all of us being on the same page about solutions.
And I have to agree with my colleague, Mr. Casten, who said
that we--and we had to pass climate action legislation through
reconciliation without a single Republican vote because,
tragically, too many of our Republican colleagues either want
to obstruct progress on this or deny that this is a challenge
altogether.
And so, you know, while I am very excited about the
investments in the Inflation Reduction Act, I am also very
cognizant of the fact that we are acting decades too late.
I have said this before. You can't unmelt an ice cap, you
know, and so we are going to have to do the best we can, as
quickly as we can, in order to make sure that those dollars go
out the door and are as effective as they can be.
I would like to start with a question to Dr. Warren. And to
all of our panelists, thank you all for testifying today. Thank
you for taking time to have this really important conversation.
Dr. Warren, I represent the community of El Paso, Texas,
which is an economically disadvantaged, mostly Latino community
on the U.S.-Mexico border. And we have seen the impact of
severe drought in our community, followed by historic rainfall
that leads to flooding and that leads to complete topsoil
erosion, destruction of infrastructure. So we have been having
to balance both of those things.
But I will tell you, I have a community eager to lean in on
addressing the climate crisis and also taking advantage of the
Inflation Reduction Act. And our Chairwoman kind of mentioned
this in her questions and her comments as well, you know,
wanting to make sure that--that communities understand how to
access those funds. But my particular interest is underserved
communities and making sure that we get as much information and
get those dollars directly to them.
And so I would love for you to highlight for us how
underserved communities can benefit from these incentives in
the Inflation Reduction Act, please.
Dr. Warren. Thank you for the question, Representative. I
am sorry. I was going to say, I am sorry for the things that
your community is going through. That is actually where I
wanted to start.
In terms of how they can take it--or how they can benefit
from these incentives, again, these clean technologies are
actually good for consumers because they cut down on operating
costs, they cut down on energy costs, which communities exactly
like the one you are describing will benefit from. So that will
save them money that they can keep in their wallets.
The problem has been that they generally cannot afford
these technologies. So the IRA comes in and actually brings
down these purchase costs and allows them to be part of this
clean energy transition.
In terms of vehicles, the fact that we have used EV credits
is a huge thing. This is the first time that tax credits can be
used for the secondary car market, and communities like this
generally buy their vehicles on the secondary car market.
So once again, this gives them the opportunity to
participate. They can transfer those credits to dealerships,
which will allow them to actually take advantage of the full
incentive rather than just what would be limited to their tax
liability.
So even besides cars, in the homes as well, they can reduce
the cost of energy efficient appliances, and they can
weatherize their homes, all that leads to lower energy spend
and energy costs, which allows them to save money that, once
again, they can keep in their wallets.
Ms. Escobar. Dr. Warren, thank you so much for your work.
And you are right, the secondary car market is going to be
huge, and we have got to make sure that our communities,
especially communities in need like mine, stand ready to take
advantage. Thank you so much. Appreciate it.
I am out of time. I yield back, Madam Chair.
Ms. Castor. Thank you.
Next up, Mr. Palmer, you are recognized for 5 minutes.
Mr. Palmer. Find my talk button. Thanks.
And, Chair Castor, I am glad to know that your family and
community were spared, and we do continue to monitor what is
going on in Florida, and I know all of us are committed to
helping any way we can.
I do want to talk about what you call the Inflation
Reduction Act. I call it the income reduction act. We were
talking with economists, including left-of-center economists,
economists that were in the Obama administration, that believe
that this is going to make inflation worse.
And we have been following this very closely. The more
money you pour into the market, the worse it makes inflation.
But when you add to that these, I think, very devastatingly
damaging energy policies that are being implemented by the
Biden administration and supported by the Democrats in
Congress, it is going to make life even harder for American
families.
We are in a cost-of-living crisis. We are not only seeing
the price of goods and services go up, food, just basic living
items. There are 20 million Americans that are already behind
on their utility bills, and it is going to get even worse this
winter.
I am very concerned about the number of excess winter
deaths that we will see as a result of people not being able to
keep their homes adequately warmed and still be able to afford
their food and medicine.
We have seen the impact that the passage of this bill had
on the stock market. And there are millions of families all
over the country that had invested in the market with the hopes
of using the returns from those investments to pay for their
kids' college. They are not planning on getting the government
to pay for their kids' college. They were going to pay for it.
You have got families where people in their late 50s, early
60s, planned to retire, they can't do that now. You have got
retirees that are needing to find another job because their
investments are not keeping up with inflation.
And then looking at what is happening to the market--it was
actually predicted--that if we passed another stimulus bill
like the income reduction act that it would result in the Dow
going below 30,000. They actually predicted, you know, 29,500,
and almost hit it spot on.
And I know, you know, my Democrat colleagues like to claim
that we are climate deniers. That couldn't be further from the
truth. We understand climate. And having worked in engineering,
as I have said many times, I understand what it takes to build
out the infrastructure that you have to have to go to lower
carbon emissions.
This idea that you are going to go to zero carbon emissions
in the near future is a pipe dream. It is not possible, from an
engineering side, and it is only going to make things worse.
And I am very concerned about how this is impacting.
This idea that this--this is one of the lowest hurricane--
instances of hurricanes in hurricane season in a long time--we
went one 12-year period where we didn't have really any
significant hurricanes--that even the Intergovernmental Panel
on Climate Change admits that there is no consensus that man-
made activities or climate change have any impact on the
number, frequency, or intensity of hurricanes. This is what you
get when you live on the Gulf Coast. You have hurricanes. We
have had them for years.
The interesting thing is, is that since 1900, in terms of
loss of life attributed to natural catastrophes, there has been
a 98 percent reduction. A lot of that has to do with the fact
that we have learned how to prepare for these natural disasters
and mitigate against them. And that is what we ought to be
doing in preparation for the climate change that is coming that
we can't do anything about.
I hear misrepresentations about the history of drought as
though drought is a new thing in the southwestern part of the
United States. I first would remind my colleagues that that is
a desert, arid region. It is an arid region. There is enormous
numbers of people living there relative to what there have been
in the past, so it creates a tremendous demand for water. But
we have had droughts in the southwestern United States that
lasted 50 to a hundred years, a thousand years ago.
So we have got to get back, not only to the science of
climate change, but also to the history of climate change if we
want to have any impact that truly helps people. And throwing
more money at it is not the answer.
And we are going to face a time when we literally have
blackouts in the Midwest, because they have changed the energy
mix that fuels--that provides the power to our grid.
And, with that, Madam Chairman, again, I am very concerned
about what is going on in Florida for family and friends down
there. And if we can be of any help, let us know.
I yield back.
Ms. Castor. Thank you.
Next up, Ranking Member Graves, you are recognized for 5
minutes.
Mr. Graves. Thank you, Madam Chair. Madam Chair, thanks
again for the hearing. I want to thank you all for being here,
and I apologize, I had to take off.
I understand that there was maybe a little bit of an
unpleasant dialogue earlier, and I am very sorry that I missed
it, but I want to make note that that is the second time in 2
weeks that there has been a member of--in this case, this
committee, and the same member on another committee that
attacked a witness that they didn't agree with.
Last week it was Michael Shellenberger, and I think that it
was attacking the witness because they didn't agree. And
disagreeing is fine, but if we are going to truly address
climate change, we have got to stay focused on emissions. We
have got to stay focused on emissions.
I think there are three things that we have got to stay
focused on. I think it is the affordability of energy, I think
it is energy security in regard to the supply chain, and it is
the emissions.
I want to remind you all, as the United States has led the
world in reducing emissions, for every one ton of emissions we
have reduced, China has increased by four. China has increased
by four for every one ton of emissions we have reduced.
It is infuriating to sit here and watch us continue to go
on this path where right now the United States emissions are
actually increasing. You know, read it in the press, U.S.
emissions are increasing right now.
The Inflation Reduction Act, as I noted earlier in quoting
Mr. Rossetti's testimony, projected that two-thirds of the
emissions reduction under that legislation were already going
to be--were already going to happen.
Mr. Casten made note in his comments earlier about how the
economics are being distorted or volatility or whatever. Look,
if you want to talk about volatility or distorting economics,
it is by stepping in and making things economic--distorting or
making economics perverse in a way that there is not a path to
economic sustainability.
We always talk about environmental sustainability. What
happens when subsidies dry up, when they phase out? If these
projects aren't on a path to economic sustainability, that
causes volatility.
By making or distorting economics in a way that makes
people invest in projects or technologies that aren't
economically sustainable, that just doesn't make sense. We are
creating the volatility by not thinking about a sustainably--an
economically sustainable glide path for some of these
technologies.
Mr. Rossetti, I understand that you took some lumps earlier
in regard to some of your statements on the IRA. I wanted to
give you a chance to clarify some of your remarks.
Mr. Rossetti. Sure. You know, one thing that I thought was
a little interesting is that Representative Casten I think
correctly pointed out that subsidies do distort markets and
actually reduce competition and, therefore, make things more
expensive in the long run, yet then defended the extremely
large subsidies in the IRA. It seems to be contradictory.
But one thing I also think is important to note is, the IMF
is frequently cited for its estimate of fossil fuel subsidies,
but that estimate is almost entirely contingent upon estimate
that if carbon is not taxed, that therefore that equates to a
subsidy, which is kind of similar in logic to saying that you
are, you know, subsidizing your local bank by not robbing it.
If the Democrats wanted to implement a carbon tax to
address that, if they truly believe that, then they certainly
could have under budget reconciliation provisions.
Mr. Graves. Thank you, Mr. Rossetti. Mr. Rossetti, are you
a lobbyist?
Mr. Rossetti. Absolutely not.
Mr. Graves. And are you advocating for solutions that are
economically sustainable?
Mr. Rossetti. Economically sustainable climate solutions
are key to actually bring down global emissions. You look at
where emissions are growing, it is developing nations. So if
you want something that is going to help us in the long term
especially address these impacts that many are so concerned
about, you need to have technology that is low in cost,
exportable, and going to be deployable in communities that
might have a fifth or less of the income of a typical American
household.
Mr. Graves. Madam Chair, I think the point Mr. Rossetti
just made is absolutely key, that ensuring that the
technologies that the Federal Government is involved in, that
there is a path to economic sustainability because that is the
only way that you achieve a path to environmental
sustainability. And otherwise, you are creating the volatility.
And I think Mr. Rossetti just made the point that the
government's actions right now, we are seeing higher emissions.
As I noted in my opening statement, we are seeing one-quarter
of all Americans unable to afford food, medicine, or energy.
And we are seeing greater energy insecurity. Even Secretary
Blinken, just this week, went to other countries asking them
for critical mineral supplies that we have right here in the
United States.
So I think, again, we share objectives in regard to lower
emissions and a sustainable trajectory, but I think maybe a
different pathway of getting there would make a lot more sense.
I yield back.
Ms. Castor. All right. Next up, Mr. Crenshaw, you are
recognized for 5 minutes.
Mr. Crenshaw. Thank you, Madam Chair. Thank you for holding
this hearing and allowing us to disagree on whether or not this
is good for America or bad for America and certainly answer the
question about whether it is good for inflation.
Although I did notice that in the final hours of passing
this bill, everyone basically agreed that this was not about
reducing inflation, and instead it began being branded as a
climate and energy bill.
So let's take it as a climate and energy bill and ask the
question, is it even good for energy security, is it even good
for the environment?
I would argue that it is not. Fundamentally, this bill took
a bunch of taxpayer money, about $257 billion to be exact, and
it invested it in intermittent energy sources, solar and wind
to be exact. Now, these are known to increase the price of
electricity on whatever grid they are prevalent, whether that
is in California or Germany, while also causing grid
disruptions because of their intermittency.
And even if we decided that that is what we really wanted,
you probably still can't accomplish what you want to accomplish
because of the sheer physical challenges that you face.
So under the rosiest of scenarios where there is--let's
imagine this world--no bureaucratic red tape, no litigation, no
weaponizing of the court system, and a well-functioning
permitting system, we might get 155 gigawatts of new energy
capacity brought online by 2030. That is the estimates from
optimistic, left-leaning sources.
So in this best scenario, you would get an extra 25 percent
in total capacity for the United States. But you got to
remember, when you are talking solar and wind in particular,
you can't just talk capacity. You have got to talk actual
energy production, which is usually only 30 percent of
capacity. So that number gets reduced again. And eventually we
realize we are really only adding 10 percent additional
electricity production under the rosiest of scenarios and at
quite a great cost.
So what is the cost? Well, it is not just the $250 billion
plus in taxpayer money, it is not just the increases in
electricity cost to the consumer. But there is also an
environmental cost in terms of land and materials that are
required to build these new sources of energy. Because to get
to the power capacity of wind that Democrats are hoping for,
you would need wind turbines covering the entire State of
Maryland, about 12,000 square miles. I am not sure that is good
for the environment.
It is not just about space, it is that to save the
environment, you have got to hurt it first. You have got to dig
up a lot of materials. And to build 100 megawatt wind farm, you
need 30,000 tons of iron ore, 50,000 tons of concrete, 900 tons
of nonrecyclable plastics. Multiply all that by 850 to get to
the 85 gigawatts needed, and you get 25 million tons of iron
ore, which means doubling the mining at our five largest iron
ore mines in America.
It is also 52 million tons of concrete, and that is enough
concrete for 3 million new homes, or more than enough concrete
to finish the remaining hundreds of miles of the I-69 highway
that will drive economic benefit for the entire country. And,
of course, it is 765,000 tons of plastic which require a
drastic increase in oil and gas production.
Finally, it reduces property values by 7 to 12 percent. It
will kill wildlife like the golden eagle and hurt agricultural
production.
And that is not to say I am opposed to wind and solar at
all. I am not opposed to using our natural resources to give
ourselves energy, but throughout history, energy has been about
getting more energy with less resources by utilizing energy
dense materials. More energy for less costs, more energy with
fewer air pollutants.
But these tradeoffs, just to get 10 percent of our total
production, are simply not worth it. And as policymakers, we
have to be looking at the cost-benefit analysis in what we are
doing and what will actually yield us the results that we want.
And I think this bill will fail to do that.
I yield back.
Ms. Castor. Thank you very much.
I want to thank our witnesses for your testimony today,
especially how these clean, cost-saving technologies will
benefit consumers, businesses, workers.
The American people put us--give us a competitive edge
against other countries across the planet. The Inflation
Reduction Act is a tremendous step forward.
It was recently described by the head of the International
Energy Agency as the single most important action in addressing
climate change since all of the countries on the planet came
together to tackle the crisis. But we know there is more to do,
and it is on all of us now to work with the Biden
administration, work in our own hometowns to fulfill this big
climate deal.
Together we can keep forging this path towards energy
independence, harness the immense potential of American clean
energy, and I know that American ingenuity will help get us
there.
So thank you very much. We will make sure that your
testimony is included in the record.
Without objection, all members have 10 business days within
which to submit additional written questions for witnesses, and
I ask you to please respond quickly if you are able.
Thank you all very much. We are adjourned.
[Whereupon, at 2:01 p.m., the committee was adjourned.]
United States House of Representatives
Select Committee on the Climate Crisis
Hearing on September 29, 2022
``A Big Climate Deal: Lowering Costs, Creating Jobs,
and Reducing Pollution with the Inflation Reduction Act''
Questions for the Record
Dr. Quinta Warren
Associate Director of Sustainability Policy
Consumer Reports
the honorable kathy castor
1. Climate impacts are already underway in communities across the
country. Electric power infrastructure is especially vulnerable to
extreme weather, as we saw with the devastation from Hurricane Ian. Dr.
Warren, how would the consumer incentives in the Inflation Reduction
Act help families have access to rooftop solar and backup storage that
could help them keep the lights on during, and immediately after,
extreme weather events?
In light of rising electricity and home energy costs, the
incentives in the IRA make installing solar panels and storage
batteries an even more attractive investment for many homeowners than
it was just a couple years ago.\1\ By allowing consumers who install
solar the ability to subtract 30% of the costs of their system as a tax
credit, the IRA empowers consumers to make decisions that will give
them greater control over the energy resilience in their homes, which
will be critical during extreme weather events that cause blackouts.
---------------------------------------------------------------------------
\1\ U.S. Energy Information Administration, Short Term Energy
Outlook.
---------------------------------------------------------------------------
https://www.eia.gov/outlooks/steo/report/electricity.php
2. Dr. Warren, increasingly consumers want access to clean energy
and clean vehicles. How would the incentives in the Inflation Reduction
Act help increase access to these clean technologies for all Americans?
Our 2022 nationally representative surveys on electric vehicles \2\
and home sustainability \3\ show that one of the largest barriers
preventing consumers from adopting cleaner technology is purchase
costs.The IRA will alleviate that directly by providing consumers
incentives to purchase new electric appliances in addition to new and
used electric vehicles. By ensuring that the incentives go to middle-
and lower-income consumers, the IRA will help support a clean energy
transition for those who have not historically benefited from federal
incentives. Not only have we seen that these clean technologies help
consumers save money on fuel and maintenance costs, there are also cost
savings associated with the positive health benefits that come with
transitioning to cleaner technology.
---------------------------------------------------------------------------
\2\ January/February 2022 Consumer Reports nationally
representative Battery Electric Vehicle and Low Carbon Fuels Survey of
8,027 US adults.
---------------------------------------------------------------------------
https://advocacy.consumerreports.org/press_release/more-americans-
would-definitely-get-electric-vehicles/
---------------------------------------------------------------------------
\3\ March 2022 Consumer Reports nationally representative Home
Sustainability Survey of 2,240 US adults.
---------------------------------------------------------------------------
https://article.images.consumerreports.org/prod/content/dam/surveys/
Consumer_Reports_Home_ Sustainability_March_2022
Questions for the Record
Josh Nassar
Legislative Director
United Automobile, Aerospace, and Agricultural Implement Workers (UAW)
the honorable kathy castor
1. Mr. Nassar, are there vehicles that will qualify for the new
electric vehicle tax credit in the Inflation Reduction Act?
Yes, following the passage of the Inflation Reduction Act (IRA),
the Department of Energy (DOE) published a list of plug-in vehicles
with final assembly in North America, using data from National Highway
Traffic Safety Administration (NHTSA) and the Environmental Protection
Agency (EPA). Please see below for the DOE's published list of electric
vehicles (EVs) and plug-in electric vehicles (PHEVs) made in North
America, as of October 6, 2022. (``X'' symbol is used to indicate
vehicle models that were ineligible for the credit before passage of
the Inflation Reduction Act).
----------------------------------------------------------------------------------------------------------------
Model Year Vehicle Manufacturer Sales Cap to be Lifted
----------------------------------------------------------------------------------------------------------------
2022 Audi Q5
----------------------------------------------------------------------------------------------------------------
2022 BMW 330e
----------------------------------------------------------------------------------------------------------------
2022 BMW X5
----------------------------------------------------------------------------------------------------------------
2022 Chevrolet Bolt EUV X
----------------------------------------------------------------------------------------------------------------
2022 Chevrolet Bolt EV X
----------------------------------------------------------------------------------------------------------------
2022 Chrysler Pacifica PHEV
----------------------------------------------------------------------------------------------------------------
2022 Ford Escape PHEV
----------------------------------------------------------------------------------------------------------------
2022 Ford F Series
----------------------------------------------------------------------------------------------------------------
2022 Ford Mustang MACH E
----------------------------------------------------------------------------------------------------------------
2022 Ford Transit Van
----------------------------------------------------------------------------------------------------------------
2022 GMC Hummer Pickup X
----------------------------------------------------------------------------------------------------------------
2022 GMC Hummer SUV X
----------------------------------------------------------------------------------------------------------------
2022 Jeep Grand Cherokee PHEV
----------------------------------------------------------------------------------------------------------------
2022 Jeep Wrangler PHEV
----------------------------------------------------------------------------------------------------------------
2022 Lincoln Aviator PHEV
----------------------------------------------------------------------------------------------------------------
2022 Lincoln Corsair Plug-in
----------------------------------------------------------------------------------------------------------------
2022 Lucid Air
----------------------------------------------------------------------------------------------------------------
2022 Nissan Leaf
----------------------------------------------------------------------------------------------------------------
2022 Rivian EDV
----------------------------------------------------------------------------------------------------------------
2022 Rivian R1S
----------------------------------------------------------------------------------------------------------------
2022 Rivian R1T
----------------------------------------------------------------------------------------------------------------
2022 Tesla Model 3 X
----------------------------------------------------------------------------------------------------------------
2022 Tesla Model S X
----------------------------------------------------------------------------------------------------------------
2022 Tesla Model X X
----------------------------------------------------------------------------------------------------------------
2022 Tesla Model Y X
----------------------------------------------------------------------------------------------------------------
2022 Volvo S60
----------------------------------------------------------------------------------------------------------------
2023 BMW 330e
----------------------------------------------------------------------------------------------------------------
2023 Bolt EV X
----------------------------------------------------------------------------------------------------------------
2023 Cadillac Lyriq X
----------------------------------------------------------------------------------------------------------------
2023 Jeep Grand Cherokee PHEV
----------------------------------------------------------------------------------------------------------------
2023 Jeep Wrangler PHEV
----------------------------------------------------------------------------------------------------------------
2023 Lincoln Aviator PHEV
----------------------------------------------------------------------------------------------------------------
2023 Mercedes EQS SUV
----------------------------------------------------------------------------------------------------------------
2023 Nissan Leaf
----------------------------------------------------------------------------------------------------------------
Source: Department of Energy.\1\
GM and Tesla reached the 200,000 mark before the pandemic and
several other automakers were approaching or had recently crossed the
threshold. Over time, fewer and fewer models would be eligible for the
credit if Congress had not acted. IRA's elimination of the cap enabled
consumers to gain access to the EV tax credit therefore undoubtedly
helping to strengthen the EV market. Clearly, the number of models that
qualify for the credit under the North American final assembly
requirement is extensive.
---------------------------------------------------------------------------
\1\ Department of Energy. ``Electric Vehicles with Final Assembly
in North America'':
---------------------------------------------------------------------------
https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit
Bloomberg New Energy Finance estimates 76% of the EVs sold in the
U.S. in the first half of 2022 would qualify for the North American
assembly requirement.\2\ In addition to the list above, nearly all
major automakers have announced plans to produce additional electric
vehicles in North America. IHS Markit forecasts significant increases
in North American battery electric vehicle (BEV) and PHEV production
over the next decade, reaching 3.6 million vehicles in 2025 and 6.5
million vehicles by 2029.\3\
---------------------------------------------------------------------------
\2\ Bloomberg New Energy Finance. September 20, 2022. ``US Climate
Law Shifts EV Race to Warp Speed,'' p. 12.
\3\ IHS Markit. ``Light Vehicle Powertrain and Alternative
Propulsion Forecast.''
2. Mr. Nassar, will the Inflation Reduction Act incentivize
additional electric vehicle deployment beyond what would have happened
---------------------------------------------------------------------------
without the law?
Yes, the IRA has several provisions, if properly implemented and
enforced, that could help significantly boost U.S. EV and PHEV
manufacturing. In addition to the EV tax credit, there are several
other programs to note. Without this law, our domestic industry would
fall further behind in the global EV auto market. According to
Benchmark Mineral Intelligence, China continues to dominate these
supply chains, including 78% of global cathode production and 91% of
global anode production, as well as significant shares in all of the
key minerals required for lithium-ion battery production.\4\ The
European Union (EU) has established the European Battery Alliance to
promote production of batteries and key components within the EU.\5\
South Korea is home to LG Chem, the world's largest producer of
lithium-ion batteries for electric vehicles, and plans to triple its
battery production.\6\ If the U.S. does not also invest in the upstream
battery supply chain, U.S. manufacturers will continue to be dependent
on imports, even as we build up battery cell production capacity.
Without proper planning, our dependence on imports will become greater
over time as EV production increases.
---------------------------------------------------------------------------
\4\ Benchmark Mineral Intelligence. ``Infographic: China's Lithium
Ion Battery Supply Chain Dominance'':
---------------------------------------------------------------------------
https://www.benchmarkminerals.com/membership/chinas-lithium-ion-
battery-supply-chain-dominance/
---------------------------------------------------------------------------
\5\ EBA250. ``About EBA250'': www.eba250.com/about-EBA250?/cn-
reloaded=1
\6\ Autoblog. ``LG Chem to triple its EV battery production
capacity'':
---------------------------------------------------------------------------
https://www.autoblog.com/2020/10/21/lg-chem-to-triple-ev-battery-
production/
-- The Advanced Technology Vehicles Manufacturing (ATVM) loan
program broadly expands the number of vehicles and other modes of
transport eligible to receive grants and execute the full $17 billion
in remaining loan authority. Qualified sectors include ultra-efficient
vehicles, light- and medium-duty vehicles (that meet standards), heavy-
duty vehicles (that meet standards), trains and locomotives, maritime
vessels, aircrafts, and hyperloop technology. There is a priority on
projects most likely to create quality jobs (legacy facilities are
prioritized for assistance). UAW has supported the ATVM program since
its inception over a decade and a half ago. We fought several efforts
in Congress to strip all funding from the program.
-- An additional $2 billion in funds are allocated for Domestic
Manufacturing Conversion grants to support the conversion & retooling
of existing auto manufacturing facilities to manufacture clean
vehicles, including those at risk of closure, onshore and build
batteries, and other advanced vehicle technologies.
-- The Inflation Reduction Act provided $10 billion for the 48C
tax credit to support the establishment, retooling, and expansion of
clean energy and technology manufacturing facilities in communities
that have lost fossil fuel energy jobs and to partially counteract the
impacts of the carbon footprint in the area from the previous industry.
It is prioritized for communities that have not received prior funding
under 48C. It included $10B in tax credits to qualifying projects ($4B
earmarked for communities impacted by coal-related loss of work) and a
$30 billion investment in production tax credits to accelerate U.S.
manufacturing of solar panels, wind turbines, batteries, and critical
minerals processing are included. (Please see the list below of UAW-
represented facilities that could be impacted by the expansion of
electrified vehicles in the short, medium, and long term.)
----------------------------------------------------------------------------------------------------------------
Company City State Product
----------------------------------------------------------------------------------------------------------------
Allison Transmission Indianapolis IN Transmissions
----------------------------------------------------------------------------------------------------------------
American Axle Fraser MI Transmission Components
----------------------------------------------------------------------------------------------------------------
American Axle Royal Oak MI Transmission Components
----------------------------------------------------------------------------------------------------------------
American Axle Troy MI Transmission Components
----------------------------------------------------------------------------------------------------------------
Amstead Means Industries Saginaw MI Transmission Components
----------------------------------------------------------------------------------------------------------------
Anderson Cook Chesterfield MI Transmission Components
----------------------------------------------------------------------------------------------------------------
Blue Ridge Pressure Casting Leighton PA Engine & Transmission Components
----------------------------------------------------------------------------------------------------------------
Camshaft Machine Jackson MI Engine Components
----------------------------------------------------------------------------------------------------------------
Dana Lafayette IN Transmission Components
----------------------------------------------------------------------------------------------------------------
Dana St. Clair MI Transmission Components
----------------------------------------------------------------------------------------------------------------
Detroit Diesel Detroit MI Engines; Transmissions
----------------------------------------------------------------------------------------------------------------
Dura Fremont MI Transmission Components
----------------------------------------------------------------------------------------------------------------
Eaton Auburn IN Transmission Components
----------------------------------------------------------------------------------------------------------------
Ford Livonia MI Transmissions
----------------------------------------------------------------------------------------------------------------
Ford Woodhaven MI Engine Components
----------------------------------------------------------------------------------------------------------------
Ford Romeo MI Engines
----------------------------------------------------------------------------------------------------------------
Ford Dearborn MI Engines
----------------------------------------------------------------------------------------------------------------
Ford Rawsonville MI Transmission Components
----------------------------------------------------------------------------------------------------------------
Ford Sterling Heights MI Transmissions
----------------------------------------------------------------------------------------------------------------
Ford Sharonville OH Transmissions
----------------------------------------------------------------------------------------------------------------
Ford Lima OH Engines
----------------------------------------------------------------------------------------------------------------
Ford Brook Park OH Engines
----------------------------------------------------------------------------------------------------------------
GKN Gallipolis OH Transmission Components
----------------------------------------------------------------------------------------------------------------
GM Bedford IN Engine Components
----------------------------------------------------------------------------------------------------------------
GM Romulus MI Engines; Transmissions
----------------------------------------------------------------------------------------------------------------
GM Saginaw MI Engine Components
----------------------------------------------------------------------------------------------------------------
GM Grand Rapids MI Engine Components
----------------------------------------------------------------------------------------------------------------
GM Bay City MI Engine & Transmission Components
----------------------------------------------------------------------------------------------------------------
GM Flint MI Engines
----------------------------------------------------------------------------------------------------------------
GM Buffalo NY Engines
----------------------------------------------------------------------------------------------------------------
GM Rochester NY Engine Components
----------------------------------------------------------------------------------------------------------------
GM Toledo OH Transmissions
----------------------------------------------------------------------------------------------------------------
GM Defiance OH Engine Components
----------------------------------------------------------------------------------------------------------------
GM Spring Hill TN Engines
----------------------------------------------------------------------------------------------------------------
GT Technologies Toledo OH Engine Components
----------------------------------------------------------------------------------------------------------------
GT Technologies Defiance OH Engine Components
----------------------------------------------------------------------------------------------------------------
Hastings Manufacturing Hastings MI Engine Components
----------------------------------------------------------------------------------------------------------------
Huron Manufacturing Lexington MI Engine & Transmission Components
----------------------------------------------------------------------------------------------------------------
Jones L. E. Company Menominee MI Engine Components
----------------------------------------------------------------------------------------------------------------
Kellogg Crankshaft Jackson MI Engine Components
----------------------------------------------------------------------------------------------------------------
Kelvion Inc Burkesville KY Transmission Components
----------------------------------------------------------------------------------------------------------------
Maclean Curtis Buffalo NY Transmission Components
----------------------------------------------------------------------------------------------------------------
Ohio Crankshaft Cleveland OH Engine Components
----------------------------------------------------------------------------------------------------------------
Stellantis Kokomo IN Engines & Transmissions
----------------------------------------------------------------------------------------------------------------
Stellantis Tipton IN Transmissions
----------------------------------------------------------------------------------------------------------------
Stellantis Trenton MI Engines
----------------------------------------------------------------------------------------------------------------
Stellantis Dundee MI Engines
----------------------------------------------------------------------------------------------------------------
Tenneco Burlington IA Engine Components
----------------------------------------------------------------------------------------------------------------
Tenneco Sparta MI Engine Components
----------------------------------------------------------------------------------------------------------------
Tenneco Greenville MI Engine Components
----------------------------------------------------------------------------------------------------------------
Tenneco Cambridge OH Engine Components
----------------------------------------------------------------------------------------------------------------
Textron Muskegon MI Engine Components
----------------------------------------------------------------------------------------------------------------
ThyssenKrupp AG Danville IL Engine Components
----------------------------------------------------------------------------------------------------------------
Transtar--Dacco Browser Cookeville TN Transmission Components
----------------------------------------------------------------------------------------------------------------
Volvo-Mack Hagerstown MD Engines; Transmissions
----------------------------------------------------------------------------------------------------------------
The IRA's significant investments sends a clear signal to the
industry and investors of our national commitment to expand our EV and
PHEV manufacturing footprint in the U.S.
3. Mr. Nassar, how will the Inflation Reduction Act help encourage
automakers to invest in manufacturing vehicles that will meet the new
standards in the Inflation Reduction Act?
Thank you for the question. There are numerous ways that the
Inflation Reduction Act will encourage automakers to invest in
manufacturing electric vehicles.
Thanks to the passage of the IRA, Chips and Science Act, and the
Infrastructure Investment and Jobs Act (IIJA) the Biden Administration
is now able to make a once-in-a-generation investment in domestic
manufacturing. As the industry gradually transitions to electrified
vehicles, automakers and battery manufacturers can take advantage of a
wide range of subsidies, including:
The IRA's 30D Clean Vehicles Consumer Tax Credit
extension (Sec. 13401), which provides up to $7,500 per vehicle in
savings on EVs and PHEVs with the new North America final assembly
requirement.
The BIL's Battery Material Processing Grants (Sec.
40207(b)) and Battery Manufacturing and Recycling Grants (Sec.
40207(c)) provide $6 billion in grants to invest in domestic battery
production.
The IRA expands the Department of Energy's Advanced
Technology Vehicle Manufacturing (ATVM) by lifting the loan program cap
and appropriating $3 billion fund direct loans (Sec. 50142). With these
changes, the ATVM program now has $55 billion in loan authority for
low-interest loans for clean vehicle manufacturing investments.\7\
---------------------------------------------------------------------------
\7\ Department of Energy, Loan Program Office. ``Inflation
Reduction Act of 2022'':
---------------------------------------------------------------------------
https://www.energy.gov/lpo/inflation-reduction-act-2022
The IRA appropriates $2 billion for Domestic
Manufacturing Conversion Grants (Sec. 50143) to support domestic
production of EVs, PHEVs, and fuel cell vehicles.
The IRA's 45X Advanced Manufacturing Production Credit
(Sec. 13502) provides battery manufacturers with tax credits of $35 per
kilowatt-hour for domestically produced battery cells and $10 per
kilowatt-hour for battery modules. These battery production tax credits
are worth thousands of dollars per electric vehicle and covers
approximately one-third the cost of producing an EV battery today. The
program further reduces the cost of battery inputs through a 10%
production tax credit on critical battery minerals and electrode active
materials.
The IRA's Extension of the Advanced Energy Project Credit
(Sec. 13501) allocates $10 billion for the 48C investment tax credit
for advanced energy projects, including electric vehicles, components,
and materials.
4. On Sep. 27, 2022, the Biden-Harris Administration announced it
approved Electric Vehicle Infrastructure Deployment Plans for all 50
States, the District of Columbia and Puerto Rico ahead of schedule
under the National Electric Vehicle Infrastructure Formula Program,
established and funded by the Bipartisan Infrastructure Law. This is a
good example of how the Inflation Reduction Act incentives will build
on the climate investments Congress recently passed. Mr. Nassar, could
you please elaborate on how the Bipartisan Infrastructure Law electric
vehicle charging investments and the electric vehicle incentives in the
Inflation Reduction Act will work together to accelerate electric
vehicle deployment?
The success of the electric vehicle transition in the U.S. will
depend largely on three factors: strong consumer demand, robust
infrastructure investments, and significant EV supply-side investments.
The IIJA's infrastructure investments will be crucial to ensure that
advanced vehicle technologies are built in the U.S. and create quality
jobs for American autoworkers.
The IIJA makes significant investments in the nation's electric
vehicle infrastructure. IIJA contains $7.5 billion to build out a
national network of EV chargers in the United States. A historic $5
billion investment was included for the replacement of existing school
buses with zero emission and clean school buses from 2022-2026.
It is essential to have the infrastructure in place to support the
increasing numbers of EVs on the road. EV sales have grown steadily
over the past decade, but they still represent a small percentage of
all vehicle sales. EVs and PHEVs combined to represent 4% of U.S. auto
sales in 2021. In most parts of the country, EV charging infrastructure
is inadequate, and the electrical grid might have difficulty handling
extreme temperatures and more electricity consumption. It has been
noted that consumers shopping for an EV have often express concerns
about battery range and charging speed as they have a limited selection
of models and segments. Fortunately, the Inflation Reduction Act along
with the IIJA contain investments in the infrastructure that are needed
to support greater EV deployment.
Under IIJA, the $5 billion investment in electric school buses
through the clean school bus program will allow school districts around
the country to upgrade school's aging public-school infrastructure and
reduce emissions from older buses. These provisions work in tandem with
the IRA, which incentivizes companies to invest in new technologies
including electric school buses. UAW members proudly build electric
school buses throughout the country. To give an example, Maryland
Montgomery County school system signed a $169 million deal in 2021 to
lease 326 buses that are proudly built by UAW members.\8\
---------------------------------------------------------------------------
\8\ Bloomberg, ``Biggest Electric Bus Deal in U.S. Approved in
Maryland'':
---------------------------------------------------------------------------
https://www.bloomberg.com/news/articles/2021-02-24/biggest-electric-
school-bus-deal-in-u-s-approved-in-maryland?leadSource=uverify%20wall
5. Climate impacts are already underway in communities across the
country. Electric power infrastructure is especially vulnerable to
extreme weather, as we saw with the devastation from Hurricane Ian. Mr.
Nassar, how would the electric vehicle incentives help families
increase their resilience to climate impacts? Could some electric
vehicles provide backup residential energy storage?
We are witnessing the expanding impacts of climate change in real
time. We cannot ignore this reality and must act to better prepare
communities for extreme weather events. Sadly, addressing climate
change will likely become increasingly difficult as time goes on and
air and water temperatures continue to rise.
To be clear, I am not suggesting that recent hurricanes were
``caused'' by climate change. At the same time, there is no denying
that the number and strength of extreme weather and climate events,
such as heat waves and droughts, have been on the rise and record
temperatures continue to be shattered across the world. Higher water
temperatures intensify hurricanes and other extreme weather events,
such as the case with Hurricane Fiona. It hit Puerto Rico on September
18th, causing catastrophic damage and flooding across Puerto Rico, and
leaving more than 1.4 million people without power in the immediate
aftermath. Again, the effects of climate change did not cause Hurricane
Fiona to occur, but it did increase its intensity. The realities of
climate change demand action, such as reducing emissions, and preparing
ourselves to address the consequences of climate change by increasing
mitigation efforts. We have a responsibility to current and future
generations to tackle obstacles and protect ourselves and the world
around us from the harmful and dangerous impacts of climate change.
In terms of EVs providing back up residential energy storage, there
is significant potential for EVs to provide back-up energy or
contribute to grid resilience, but that technology is not yet widely
deployed. EVs are essentially batteries on wheels. You can store energy
in those batteries, and if EVs are equipped with something called
vehicle-to-grid or vehicle-to-home technology, they can also be used to
keep the lights on in emergencies.
By using efficient electric motors and plugging into a grid using
more renewables, plug-in electric vehicles, including PHEVs and BEVs,
can significantly reduce greenhouse gas emissions.
Additionally, the UAW is working with new companies to create union
jobs, such as reaching a neutrality agreement with Forever Energy at
its planned vanadium flow battery facility in Shreveport, LA.
6. According to a study conducted by the BlueGreen Alliance and the
University of Massachusetts Amherst Political Economy Research
Institute, the Inflation Reduction Act would create more than 9 million
good jobs during the next decade. Mr. Nassar, could you please
elaborate on why is it important for the Federal government to invest
to create jobs in clean energy and clean vehicle manufacturing in the
United States where we have high road labor standards?
The IRA is a great law for working families and retirees. In
addition to lowering the skyrocketing costs of prescription drugs,
investing in the U.S. manufacturing base, and addressing climate change
by investing in low-CO2 energy sources and mitigation
strategies, the IRA puts our country on a strong footing by creating 9
million jobs over the next decade. The PERI study notes that of the 9
million jobs being created by the IRA during the next decade, more than
900,000 jobs will be part of building clean manufacturing supply chains
and more than 400,000 jobs will be created in the electric vehicles and
clean transportation sectors. Working families need them to be good
union jobs.
As more funding and tax incentives become available to companies,
high road labor standards must be built into the process. Key
conditions or considerations should be met. Does the company support
workers' right to collectively bargain? Are the full-time and part-time
workers provided family-sustaining benefits that promote economic
security and mobility? Do the workers have a safe, healthy, and
accessible workplace built with input from workers and their
representatives?
In addition, we must ensure that the investments to build vehicles
and components are made in the communities where autoworkers are
currently building traditional gas-powered vehicles and powertrains. We
cannot wait for ICE jobs to be lost as we need to target new
investments for auto manufacturing communities now. Auto manufacturing
is central to the economy of many communities, creating community-
sustaining manufacturing jobs and stimulating economic activity in
other sectors. Government support for EV investments should prioritize
investments that create jobs in communities currently producing ICE
vehicles and powertrains, hire incumbent autoworkers, and provide wages
and benefits on par with unionized auto industry standards.
The EV transition reinforces the continued importance of putting in
place policies that facilitate vehicle and parts production in the
United States and ease impediments to workers at non-union automakers
to organize. As the nation invests in a transition to innovative
technology, we must seize upon these opportunities to preserve and
increase quality jobs.
The union advantage is noteworthy. Unionized workers are more
likely to earn more, have paid sick days and health insurance, and
participate in a retirement plan. \9\ Policies that strengthen labor
standards and support workers' right to collectively bargain are the
building blocks for creating a stronger middle class. The shift to
electric vehicles cannot come at the expense of good wages and benefits
and it is critical that we do not leave workers behind as the industry
transitions.
---------------------------------------------------------------------------
\9\ Economic Policy Institute. Unions Help Reduce Disparities and
Strengthen Our Democracy, April 2021.
7. Mr. Nassar, you mentioned in your testimony that significant
investments in motor vehicle and battery manufacturing have been
announced in Tennessee, Georgia, Michigan, North Carolina, and
Kentucky. Mr. Nas- sar, how can we ensure that many of these new jobs
will be available in environmental justice and energy justice
---------------------------------------------------------------------------
communities?
Implementation, strong oversight, and vigorous enforcement will
largely determine the success of the Inflation Reduction Act. The law
includes support for communities' long-standing fight for clean air,
climate resilience, and environmental justice. These investments will
create about 150,000 jobs over the next decade. That includes
environmental justice grants focused on creating 30,000 jobs for
community-led projects that address the disproportionate health and
environmental impacts from pollution; and creating 5,000 jobs from
investments to reduce air pollution in schools, particularly in
environmental justice communities.
As battery and clean vehicle production ramp up in the U.S,
workers' must have an ability to have a voice in the workplace and
family-sustaining wages. There are deeply troubling signs for workers
in the developing battery supply chain. Auto companies, including union
automakers, are often creating joint ventures or strategic partnerships
with foreign-based battery companies. This trend can be seen in battery
cell production, material processing, and battery recycling. The White
House report on critical supply chains found that the quality of new
battery industry jobs is far below the automotive powertrain jobs they
are replacing.\10\ We have significant concerns about whether companies
in the battery supply chain will respect workers' rights to a free and
fair choice to join a union. The EV transition must not result in
increased outsourcing or an erosion of job quality in the auto
industry.
---------------------------------------------------------------------------
\10\ The White House. June 2021. ``Building Resilient Supply
Chains, Revitalizing American Manufacturing, and Fostering Broad-Based
Growth'':
---------------------------------------------------------------------------
https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-
chain-review-report.pdf, p. 120.
[all]