The Inflation Reduction Act: A boon for Big Oil and a blow to climate Action

This revelation raises crucial concerns about the effectiveness of the IRA in combating the escalating climate crisis.


The 2022 Inflation Reduction Act (IRA), President Biden’s flagship climate legislation, could ironically fuel a surge in fossil fuel extraction, elevating the profits of the oil and gas industry at the cost of the environment and vulnerable communities. This revelation, presented in a new analysis by Oil Change International (OCI), raises crucial concerns about the effectiveness of the IRA in combating the escalating climate crisis.

The IRA’s paradoxical impact on fossil fuels

While the IRA has been lauded for its substantial investment in renewable energy and clean technology, it inadvertently leaves a backdoor open for the fossil fuel sector. According to the analysis, which includes unpublished data from the Rhodium Group, the IRA’s push for renewable energy might be overshadowed by its leniency towards oil and gas production. The data projects a worrying trend: while domestic demand for fossil gas in the U.S. is set to decline by 16% by 2035, production is expected to rise by 7%. The same disparity exists in the petroleum sector, with demand projected to fall by 20%, but production anticipated to increase by 13%. This disconnect between production and demand is largely filled by a significant boost in exports. Gas exports could potentially double by 2035, with oil and petroleum product exports rising by 23%.

The analysis further reveals a concerning aspect of the gas export industry. The growing LNG (liquefied natural gas) export sector, which is extremely energy-intensive, could negate the environmental gains from the rise in domestic wind and solar power. OCI warns that the increased consumption of gas by LNG export plants, expected to grow by 140% by 2035, could undermine the progress made in the renewable energy sector.

Political responses and implications

Collin Rees, U.S. campaign manager for OCI, criticizes the Biden administration for touting the IRA as a significant climate achievement, despite its loopholes. Rhodium’s modeling suggests that relying solely on the IRA could lead the U.S. to fall short of its Paris Agreement goals by a significant margin. This shortfall challenges Biden’s position as a climate leader and puts the efficacy of the IRA into question.

The continuation and expansion of fossil fuel production and exports have dire implications for frontline communities. These areas, predominantly inhabited by marginalized groups, are likely to bear the brunt of the environmental and health consequences. Roishetta Sibley Ozane, founder of the Vessel Project of Louisiana, voices her disappointment, feeling that Biden’s campaign promises regarding environmental justice were merely hollow words.

The United States, as one of the largest historical emitters of greenhouse gases, bears a significant responsibility in leading global efforts to mitigate climate change. The IRA, despite its potential benefits, could undermine these efforts by allowing an increase in fossil fuel production, which would have far-reaching impacts on the global fight against climate change.

Biden’s climate legacy at stake

As the world gears up for COP28, the spotlight is on global actions to end the era of fossil fuels. The United States’ approach, particularly its reliance on the IRA, will be scrutinized for its alignment with global climate goals. Biden’s climate legacy hinges on his administration’s ability to go beyond the IRA and implement comprehensive measures to phase out fossil fuels. This includes halting new fossil fuel infrastructure and ending fossil fuel leasing on federal lands.

The way forward: A call for comprehensive climate action

The OCI analysis serves as a wake-up call for the Biden administration to reassess its climate policies and commitments. It highlights the need for a holistic approach to climate action that addresses both the expansion of clean energy and the reduction of fossil fuel dependence. As the world confronts the realities of climate change, the United States must play a pivotal role in shaping a sustainable and equitable future, free from the shackles of fossil fuel dependency.


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