New Climate Law Will Boost Clean Energy Job Quality
This bill is not just the largest investment in fighting the climate crisis in U.S. history, it’s also a major investment in job creation, job quality, and community reinvestment.
The clean energy economy must be better for workers than our current economy. It’s a simple premise to state, but in the face of complex labor market forces it has proven very difficult to make reality. But now the historic climate and energy provisions of the recently passed Inflation Reduction Act appear ready to finally deliver a real boost to clean energy job quality.
The clean economy is already a major jobs producer with the latest Clean Jobs America report finding there are more than 3.2 million jobs in in the clean economy, a number that has been growing for the last decade or so. While those jobs provide comparable or better wages than the national average, they still fall behind in wages found in many traditional energy sectors. Additionally, their rate of collective bargaining and unionization, a measure of how much power and rights workers have on the job, also lags behind traditional energy. Just like the broader U.S. job market there are many success stories – like the clean energy projects providing union jobs and community benefits cataloged here - but also many warning signs of downward trends.
A Turning Point
The Inflation Reduction Act will help tackle that challenge head on. Six years ago, members of the BlueGreen Alliance, including NRDC, sat down to try and draft a joint platform on how to address the climate crisis and economic inequality crisis in a concerted way. The final platform, called Solidarity for Climate Action, focused on outlining core principles, such as climate stability, high-quality jobs, rebuilding manufacturing, and equity for marginalized communities. Today, these very principles and the policies to enable them are reflected throughout the climate and clean energy provisions of the Inflation Reduction Act.
To get from principles on a page to provisions in a bill NRDC joined with other BGA partners to build support for this new approach to clean energy investment. For example, the NRDC Action Fund ran two key television ads, one with SEIU, and another with the Painters, Bricklayers, BGA, and AFT that told of the importance of designing climate solutions that work for everyone in the economy. Additionally, NRDC and the Steelworkers touted the emissions savings from cleaner steel manufacturing in Michigan.
Building on those public efforts, NRDC sent a series of letters to Congress with union partners. We sent a letter with the International Brotherhood of Electrical Workers (IBEW) urging Congress to push further on both climate investments and labor standards. NRDC sent a similar letter with the American Federation of Teachers (AFT) demonstrating the importance of cleaning up schools both in job creation and improving community health. And we sent a letter with the Plumbers and Pipefitters Union (UA) on the importance of investing in water infrastructure.
If Solidarity for Climate Action was a defining moment in the fight against climate change, then the Inflation Reduction Act will likely prove to be a turning point in that same fight by not only making robust long-term climate and clean energy investments but doing so in a way that for the first time will also improve job quality and access.
Already, early analysis of the bill promises to create millions of new jobs. The Political Economy Research Institute at the University of Massachusetts Amherst found that the bill would create more than 9 million additional good jobs over the next decade - averaging nearly 1 million jobs each year.
Linkages to Labor Standards and Domestic Content
Because of this bill, for the first time ever companies who want to access the full clean energy tax credits for construction of projects like wind, solar and other renewables, will need to prove they are following labor standards that are proven to increase job quality. Specifically, there are new prevailing wage and apprenticeship requirements which ensure jobs are paying equal to the local wages and that a certain level of jobs go to apprentices who will use the hours to build the basis of a long career. These requirements help unions better compete for these jobs, by preventing contractors from underbidding with workers, often from out-of-state, who are willing to work for lower wages.
Additionally, the bill contains a 10% bonus credit available to any clean energy project that uses 100 percent US produced steel and iron and a rising percentage of domestically manufactured components starting at 40% and rising to 55% after 2026. For electric vehicles the standards go even farther requiring vehicles to be assembled in North America, and setting increasing requirements for North American and/or US free trade partner sourced critical minerals and battery manufacturing for vehicles to be eligible for the revised 30D clean vehicle credit.
Linking these credits to domestic content and assembly will both increase renewables and efficiency deployment, and also drive increased investment in the domestic manufacturing of clean energy components. Construction and manufacturing are highly unionized sectors and therefore workers in or out of the union will benefit from the higher standards the unions win through collective bargaining.
Transforming Manufacturing and Industry
The Inflation Reduction Act is likely one of the largest investments in U.S. industrial and manufacturing with massive investments in clean energy and clean vehicle manufacturing, and new programs designed to cut emissions from the industrial sector. The bill will make $30 billion available for a new Advanced Manufacturing Production Credit, $10 billion available through a revamped Sec. 48C Advanced Energy Tax Credit, $3 billion for an updated Advanced Vehicle Technology Manufacturing grant program, $2 billion for Domestic Vehicle Manufacturing Conversion Grants, $5.8 billion for an Advanced Industrial Facilities Deployment Loan Program and $500 million for Defense Production Act heat pump manufacturing and critical minerals processing.
Additionally, the bill helps create larger markets for cleaner products through a myriad of consumer facing incentives and federal procurement. The bill supports the Buy Clean program’s carbon labeling system for materials and includes more than $9 billion in federal procurement funds to purchase materials which have lower carbon emissions scores and cleaner vehicles for federal fleets.
Reinvestment in Communities That Need It Most
America has too many communities that have borne the brunt of pollution because of being politically marginalized and economically disadvantaged. Rural communities have witnessed disinvestment as people have left for cities and communities that are dependent on manufacturing or fossil energy have seen those industries pull out without leaving a lifeline for those who remain. The Inflation Reduction Act builds on the reinvestment into these communities that began in the Infrastructure Investment and Jobs Act last year.
For example, the bill contains a bonus investment credit of up to 10% for any clean energy project that in an energy community (that is a brownfield site, area with significant fossil fuel employment, or census tracts where coal mines or power plants have closed). Additionally, $4 billion of the revamped Sec. 48C Advanced Energy Project Credit is reserved for energy communities.
The bill also includes $7 billion of the $27 billion for the Greenhouse Gas Reduction Fund to be reserved for installing zero-emission projects in low-income communities, $3 billion for Environmental and Climate Justice Block Grants to address the disproportionate environmental harms disadvantaged communities face, $3 billion for Neighborhood Access and Equity Grants that improve transit and transportation in disadvantage communities, and $3 billion in grants to reduction pollution at ports and $1 billion to help deploy clean heavy-duty trucks in communities.
No Jobs on a Dead Planet
All the provisions above will increase jobs and job quality but that would only go so far to help workers if we don’t take action to ensure those workers have a livable planet. Thankfully, the bill is predicted to help cut U.S. climate change emissions by up to 40% compared to 2005 levels by 2030, which is a big step in getting us to meet the Paris Climate Accord aligned target of net-zero emissions by 2050.
Workers are already on the front lines of climate change and are paying for it with their health and livelihoods. Climate change is already exacerbating health conditions through extreme heat, increased allergen loads, and more air quality alert days. These cause workers to develop health conditions that make them lose pay and possibly their jobs or lives. Beyond health, workers also must face increasing levels of property damage to their homes from extreme weather like floods, wildfires, drought, and hurricanes. To have good jobs, we need a planet where the climate is more stable.
This bill is not just the largest investment in fighting the climate crisis in U.S. history, it’s also a major investment in job creation, job quality, and community reinvestment. The investment in the programs listed above total at least $80 billion over the next ten years.
By adding key labor standards that give better access to clean energy jobs to union members, job quality is set to increase and thanks to bonus credits and grant programs those jobs will be more likely to appear in disadvantaged communities offering a path to the middle class for many Americans who have been left behind.
Six years ago, NRDC helped create vision of a clean economy built around a strong core of union jobs where workers all over will be able to thrive, not just survive. The path has been long and rough, and we didn’t get everything we wanted or needed, but this bill appears poised to finally deliver on that vision.