Treasury Secretary Janet Yellen lauded the Inflation Reduction Act on Tuesday for producing $430 billion in spending to modernize the American energy system.
The legislation, signed by President Joe Biden last month, bankrolled various renewable power subsidies and tax credits. During a speech delivered at Cypress Creek Renewables, a solar power producer in North Carolina, Yellen said that the law will “accelerate the transition to our green energy future and lower energy costs for American households and businesses.”
“For decades, the world has been too slow to act. But strong action by the federal government is finally here,” she remarked. “While there is much more to do, I believe we now have a clear and robust plan forward. I am confident about the direction of the sustainable future that we are building together.”
Among other measures, the Inflation Reduction Act greenlit electric vehicle tax credits of $7,500 for new cars and $4,000 for used cars, as well as 30% tax credits for home solar energy systems, according to a fact sheet from the White House. Meanwhile, Yellen said that business tax credits will further “push down the costs of clean energy production.”
“Government must provide the basic foundations and long-term certainty that businesses need to invest at scale and drive the transition toward a clean energy future,” she contended. “In large part due to concerted government investment, costs for key renewable energy technologies have already seen declines upwards of 75% over the past decade.”
Although the costs of renewable energy have been decreasing, nonrenewable fuels are often the most inexpensive source of electricity, according to an analysis from the International Energy Agency. While coal and natural gas have median costs of $88 per megawatt-hour and $71 per megawatt-hour, respectively, commercial solar power and geothermal energy cost $94 per megawatt-hour and $99 per megawatt-hour, respectively.
“Over the past two years in particular, we’ve seen the direct consequences of our continued dependence on fossil fuels. Not only do we continue to contribute and subject ourselves to a rapidly warming climate,” Yellen continued, “but we expose ourselves to the type of energy market volatility we’ve experienced in the wake of Russia’s brutal war on Ukraine. No country controls the wind and the sun. And countries that can harness those sources of energy will make their economies more resilient and secure.”
Rapid increases in energy prices have caused much of the inflation observed over the past two years. However, Biden has advanced renewable energy policies while leasing the lowest amount of federal land for oil drilling since the conclusion of World War II and nixing expansions to the Keystone XL pipeline project. Energy prices increased nearly 24% between August 2021 and August 2022, according to data from the Bureau of Labor Statistics.
Ahead of upcoming nationwide midterm elections, the economy and inflation are key issues among voters, with 84% considering the former to be a top factor influencing their ballot. The Republican Party leads the Democratic Party by a 16% margin and a 19% margin with respect to trust on handling the economy and inflation, respectively, according to a poll from ABC News and The Washington Post.
The national average price of gasoline was $2.38 per gallon when Biden assumed office and increased to $3.53 per gallon by the start of the Russian invasion of Ukraine. After surpassing $5.00 per gallon in early June, prices have subsided to $3.75 per gallon as of Tuesday, according to data from AAA.