The Inflation Reduction Act Invests Big in Climate Action: Will Ohio Take Advantage?

Chris Tavenor, General Counsel, April 21, 2023

This story was originally published by the Columbus Bar Association. You can find the original article here!

The Inflation Reduction Act (IRA) has been called by the White House “the most significant action Congress has taken on clean energy and climate change in the nation’s history.” And by most accounts, it’s an accurate claim. The Act allocated over $370 billion for clean energy and climate investments, all designed to kickstart the economy in myriad ways.

For individual Ohioans, the IRA makes it more affordable to purchase energy efficient appliances, including stoves, dryers, and water heaters. It created new tax credits for rooftop solar panels, potentially allowing an additional 90,000 homes to adopt solar. Between now and 2030, the IRA is expected to invest $12.8 billion in Ohio’s clean energy economy, bringing good paying jobs with it.

From small businesses to electric vehicles, from manufacturing to community solar, the IRA provides the dollars needed to transition our economy away from fossil fuels and on toward a carbon-free world. However, two key questions linger behind the dollars.

Will Ohio’s government take advantage of the federal dollars?

And will it use those dollars appropriately?

Ohio’s state government historically has not reacted kindly to climate policy, whether at the Ohio Statehouse or in the Governor’s Office. The one significant piece of climate legislation to come out of the General Assembly created state renewable portfolio standards and energy efficiency standards for public utilities. Passed back under the Strickland Administration a decade and a half ago, the law came under attack almost immediately.

House Bill 6, now known as the “worst energy policy of the 21st century,” eviscerated those standards and bailed out nuclear and coal plants. Ultimately implicated in a bribery scandal, the law’s biggest proponent, former Ohio House Speaker Larry Householder, was convicted in federal district court earlier this year.

Ohio’s Executive Branch has also largely ignored climate change. The Ohio EPA does not have any information regarding climate change on its website. The Governor never mentions climate change or greenhouse gas emissions in his environmental work, largely centering on water through his H2Ohio program. The Public Utilities Commission and Ohio Power Siting Board focus primarily on the economic impacts of energy diversity, rather than the long-term realities of fossil fuels.

Yet the Inflation Reduction Act makes very clear, throughout its funding mechanisms, that states must pursue funding with the goal of decreasing carbon emissions in order to combat climate change. At the bare minimum, many of the funding mechanisms bring dollars to support renewable projects Ohio’s laws currently discourage or outright ban.

If Ohio wants to bring these federal dollars in to support its businesses and disadvantaged communities, it must change its tune on the climate crisis.

The 134th General Assembly passed Senate Bill 52, a law allowing county governments to exclude the construction of utility scale solar and wind in all or part of the county. However, the Inflation Reduction Act provides dollars explicitly for the expansion of solar and wind, especially in rural areas or in disadvantaged communities. If Ohio wants to remain competitive to bring dollars into the state to support these projects, it must rethink legislation like Senate Bill 52.

In December, during the lame duck session of the 134th, the state legislature also passed House Bill 507, which opens Ohio’s public lands for natural gas exploitation while also labeling natural gas as “green energy.” As a fossil fuel, natural gas is certainly not “green” energy nor “renewable,” as some Ohio politicians and businesses claim. And this distinction is important when it comes to pursuing IRA funding. Many of the programs designed to fund “Zero Emissions” technologies in the IRA make clear that projects cannot include “false” solutions, which includes those that still burn fossil fuels.

Perhaps most significantly, however, is the combined $32 billion made available to the U.S. EPA through the Climate Pollution Reduction Grants ($5 billion) and the Greenhouse Gas Reduction Fund ($27 billion). The Climate Pollution Reduction Grants is explicitly designed to provide state governments (and other non-federal governments) with funds “to develop and implement plans for reducing greenhouse gas emissions and other harmful air pollution.”

In other words, the Inflation Reduction Act provides funds for states to create Climate Action Plans.

Many municipalities across Ohio have already developed such plans, outlining the steps their cities will take to combat the climate crisis, including Columbus, Cleveland, and Cincinnati. At the state level, Ohio has no such plan.

Recently, Ohio EPA’s new director, Anne Vogel, said she wants to make sure “Ohio is going after every bit of money” made available from laws like the Inflation Reduction Act. And at the end of March, during a presentation at the Ohio State Bar Association’s Environmental Law Seminar, Director Vogel indicated that the Ohio EPA submitted a Notice of Intent for an initial planning grant. Presumably, this goal includes developing a Climate Pollution Reduction Plan for Ohio. Such a plan would allow for intra- and inter-state coordination on climate reduction strategies, and more particularly, create cross-agency goals for greenhouse gas reductions. State agencies like the Ohio EPA, Ohio Department of Natural Resources, Ohio Department of Agriculture, Ohio Department of Transportation, and the Public Utilities Commission all have parts to play in reducing climate pollution.

Pursuing a U.S. EPA Climate Pollution Reduction Grant is a huge opportunity for Ohio to establish its pathway toward combating the climate crisis. It is absolutely essential for the state to take leadership in this fight, coordinating efforts and distributing dollars to the communities that need them most. The Ohio EPA, or another similar state agency, could chart a new path forward for the state, developing a first-of-its-kind climate action plan for Ohio.

Using that plan, Ohio’s Executive Branch could then help advise businesses, state agencies, and local governments as they consider applications for other Inflation Reduction Act dollars. Whether a business pursues dollars through the U.S. EPA’s Greenhouse Gas Reduction Fund, or a state agency like the Public Utilities Commission of Ohio sets up a competitive grant process for utilities to pursue IRA funding, state coordination is essential to make the most impact, dollar for dollar.

Ultimately, the Inflation Reduction Act and its underpinning climate goals will only see success if states and businesses take its purpose seriously. The climate crisis is here, and it’s impacting Ohioans all across the state. We need all hands on deck to face the problem, at all levels of government.

The Inflation Reduction Act is not without its flaws—it includes provisions that allow for further fossil fuel development and continue to fund private vehicle ownership rather than public transportation. It also missed key opportunities, like providing funding for more community-owned renewable projects or the creation of a Civilian Climate Corps. All things considered, however, the bill does present a once-in-a-lifetime opportunity for our country to revolutionize its energy economy.

At the Ohio Environmental Council, we’re hopeful that Ohio’s state government will step up to the challenge, joining the fight against the climate crisis.