After decades of failed attempts by members of both parties in the U.S. to enact meaningful energy and climate-change policy, Democrats in Congress in August sent a $737 billion package to President Biden, unthinkable just weeks ago.
The new law raises $222 billion through a 15% corporate minimum tax on profits by roughly 200 corporations reporting more than $1 billion over the previous three tax years (companies can still use depreciation and R&D tax credits to further lower their rates). But it is the climate and energy provisions attracting the most attention as lawmakers largely changed their failed strategy from a stick-only approach to a combination of incentives and fees to push industry toward adopting new technologies to reduce emissions and increase the use of renewable energies.
The law provides $20 billion for construction of new clean-vehicle manufacturing sites, with another $2 billion to retool auto facilities, $6 billion for advanced industrial facilities and $2 billion for energy research at national laboratories. This is a markedly different approach after years of trying to force change on industry. Democratic lawmakers succeeded this time around not only by allowing more inland oil-and-gas leases but by recognizing that the carrot is often more effective than the stick.