Legal director Sandeep Vaheesan published an article on how the political economic significance of the Inflation Reduction Act is still being vigorously debated—is it more neoliberalism or something different and better? Vaheesan draws on the history of the Hoover Dam to offer a progressive scenario: The IRA as a major boost to cooperative and publicly owned electric utilities.

The Inflation Reduction Act, popularly called the IRA, turned one on August 16. As a result of the law, the federal government may spend, over the next decade, nearly $1 trillion to support zero-carbon energy projects and efficiency and conservation investments. It will accelerate the pace of decarbonization in the United States, reducing domestic greenhouse gas emissions by up to 40 percent below 2005 levels by 2030.

Among progressives, the IRA’s political economic significance is being vigorously debated. Some commentators argue that the Biden Administration’s approach in the IRA and other signature programs represents a break with more than 40 years of neoliberal policy and politics, in which Wall Street and shareholder-run corporations made key economic decisions. Instead of instituting a cap-and-trade system or enacting carbon taxes and simply “getting the prices right,” as neoclassical economists prescribed, the federal government committed to using its spending power to spur the transition away from fossil fuels. Critically, the IRA extended investment and production tax credits, which were previously available only to for-profit entities, to community-controlled public and cooperative electric utilities. These utilities are governed by the customers they serve and their elected representatives and can develop zero-carbon energy projects in accordance with local needs and preferences, as opposed to the wants of absentee shareholders and other financial interests.

More skeptical voices, however, contend that the law represents more of the same: money for private corporations channeled through the tax code. While the law in principle opens the federal money spigot for publicly owned and cooperative utilities, critics argue that they are not well positioned to take advantage of these supports, whereas financial entities are accustomed to obtaining monetary benefits through the tax system. Consequently, they predict most of the money will flow to investor-owned utilities and corporate energy developers. In their view, the law is not a reassertion of public authority over the American energy system, but instead merely a wider opening of the public treasury to private corporations that principally answer to their shareholders and creditors.

So, what is the IRA? Is it a continuation of the neoliberal approach to decarbonization, or a progressive outline for the clean energy transition? The unsatisfactory yet hopeful answer is that it is too soon to say. Given that the law offers incentives instead of mandates, the people of the United States will decide in the coming years what the IRA will mean in practice. Will its incentives just be sweets for corporations aiming to reduce their carbon footprint, or will they also be a nutritious stimulus for building a green and democratic economy?

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