The Inflation Reduction Act could be undone by the many social goals attached.

Numerous climate change activists have argued that climate change is an imminent existential threat and that drastic change is urgently required. A sample of quotes (links at end of story):

· “’It is overflowing with too much carbon. The world can’t absorb any more,’ said Tom Goldtooth, an activist and the executive director of the North American Indigenous Environmental Network…”

· “’We have to do enough in 2020 to 2030 to be able to achieve net-zero by 2050,’ [John] Kerry said….”

· National plans to reduce carbon emissions were “simply not good enough,” [U.N. Secretary General] Mr Guterres said, pointing to a disconnect between the views of scientists and citizens demanding action and governments that are “dragging their feet.”

There are two problems with this, one human and one physical. The physical problem involves the difficulty of accelerating investment in renewables, electric vehicles and/or nuclear. Given that much of this is done by top-down planning, rather than market forces, constraints only become obvious as we hit them and then must be resolved by even more top-down planning, creating delays and raising costs.

Lack of electrical engineers to install EV charging stations, for example, or insufficient mining equipment to accelerate mineral production as needed means that doubling renewable investment in the next seven years will be extremely difficult. In all likelihood, the cyclical pattern of mineral prices will turn into a longer-term upward trend and the often-promised reduction in renewable power costs will at best end and at worst be reversed. Bottlenecks in skilled labor and infrastructure will not only delay investments but raise costs as well and projected declines in renewable costs will likely prove unrealistic.

The human problem centers the tendency of interest groups to ‘pile on,’ that is, to take advantage of a perceived crisis to achieve often-unrelated goals. Twenty years ago legislation to address an energy crisis in California stalled in Congress when, recognizing its importance, numerous groups sought to add on their own special projects, most famously money for a plant to turn turkey parts into liquid fuels. The bill proved too egregious even for the famously pork-loving Congress.

More seriously, past medical emergencies have seen governments sacrifice lives to nationalistic/industrial policies, including resistance to foreign blood tests for HIV by some countries early in that crisis which left their blood supplies contaminated for months longer than necessary. During the Covid19 pandemic, several nations also forewent early, effective vaccines developed in other countries in order to promote their own. Thousands of lives were sacrificed on the altar of industrial policy for which few, if any, officials paid a price.

Now, it seems as if history is being repeated, as efforts to promote investment in renewable energy are burdened with a variety of (sometimes) well-intentioned other goals, such as maximizing employment of union workers or avoiding materials from unethical producers (nations, companies or even ‘artisanal’ operators like child miners in the Congo).

Personally, I would much rather see some well-paying union miners produce minerals in the U.S. than coerced labor anywhere in the world, and at the moment the Administration appears to agree. But if U.S. production costs are 25-50% higher than those for a less-regulated overseas producer, is there any guarantee that a future administration won’t decide that climate change really is an existential threat that justifies using ‘dirty’ minerals, battery cells, turbine blades or solar panels? Will domestic mines then lose out to cheaper foreign competition, not just because a future conservative administration reverses the existing policy but if a liberal administration decides that saving the planet means sacrificing union jobs?

The downside of this ‘everyone-pile-on’ approach has been seen recently in the Sustainable Development Goals adopted by the U.N. As Bjorn Lomborg notes in his excellent new book, Best Things First, The Millennium Development Goals had eight goals and eighteen targets, which were quantifiable and objective, like reduce child mortality. Money was allocated and substantial progress was made.

But as so often in Hollywood, the sequel proved a great disappointment. The Sustainable Development Goals (SDGs) had seventeen goals and one hundred sixty nine targets, many subjective and wildly unrealistic like “full and productive employment and decent work for every single man and woman, including for young people and persons with disabilities.” (Lomborg p. 14). Why? Because those writing the goals came to “highlight their governments’ particular policy focus, which was often ideas that played well at home, regardless of how efficient (or not) they were at solving global problems.” (Lomborg p. 26)

Sounds familiar, no? And as Lomborg notes, none of the goals saw any significant progress, and some trends actually worsened after the SDGs were adopted. The Inflation Reduction Act will probably be somewhat successful in promoting renewables, but the difficulty investors will have in meeting the diverse and sometimes subjective goals should mean not just confusion and law suits, but delays and increased costs. Battles over what constitutes a low-income community or a brownfield site will probably enrich lawyers more than promoting social justice.

All of which threatens to undermine public support for even the simplest of targets and could create enough blowback to see the Act scaled back significantly. After all, President Nixon’s Project Independence report was abandoned less because of the Watergate scandal than the fact that the goal seemed unnecessary and phenomenally expensive. While I doubt the Inflation Reduction Act will be similarly ineffective, the odds are that the country will not come anywhere close to achieving its goals.

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