The Inflation Reduction Act, the Democrats’ landmark tax, health and climate bill, is on its way to the White House for President Joe Biden’s signature. Now the hard work begins, says Hawaii’s senior senator.

Sen. Brian Schatz wept on the Senate floor as he and his colleagues hugged and cheered last week after the legislation made it past its first hurdle. The House then passed it on Friday, giving Biden and the Democratic Party a victory after months of negotiations.

Hawaii’s other federal legislators, Sen. Mazie Hirono and Reps. Ed Case and Kai Kahele, also voted for the measure, which passed along party lines.

The bill seeks to reduce drug prices and force certain corporations to pay more taxes. It also injects a record $369 billion into the fight against climate change, Schatz’s top policy priority.

Senator Brian Schatz gestures during a field hearing held at the East West Center Auditorium.
U.S. Sen. Brian Schatz is elated that Democrats were able to pass marquee climate legislation, which he says has the opportunity to save people in Hawaii lots of money while also protecting the planet. Cory Lum/Civil Beat/2022

Schatz’s office provided several specific examples.

For instance, if someone wanted to install a solar system on their house next year they would only be eligible for a 22% tax credit before the Inflation Reduction Act. If they wanted to install that same system in 2024 there would be no credit at all.

Once signed into law, however, the new bill will increase the tax credit to 30%, which would reduce the cost of a $16,000 home array down to $11,200. Storage batteries will also be eligible for the 30% credit.

Certain households will also be eligible for $9 billion in rebates for home electrification projects, such as installing an electric stove, adding insulation or installing a heat pump.

The rebate depends on the project and could range from a few hundred dollars up to $8,000.

“There’s nothing as consequential as what’s happening to our planet.” — U.S. Sen. Brian Schatz

The new legislation also includes $60 billion for environmental projects focused on low-income and disadvantaged communities and another $25 million for Native Hawaiians to adapt to climate change and become more resilient to increasing temperatures and rising sea levels.

The environmental justice grants, Schatz said, were key to getting progressive buy-in on the bill, which was pared down through negotiations with West Virginia Sen. Joe Manchin, the swing-vote Democrat with strong ties to the fossil fuel industry who all but held the legislation hostage for months.

Civil Beat caught up with the senator last week to discuss the legislation and what it means for Hawaii. The interview has been edited for length and clarity.

Q: You’re known as the “climate guy” in the Senate and a member of Democratic leadership, yet you seemed somewhat surprised that this deal came together at all. Why is that?

This bill died and then was resuscitated a half a dozen times. I’ve never experienced anything quite like it. Usually, when a bill dies, it may be revisited at some point, but it’s customary to give up after a couple of failed attempts.

But because the planet was at stake we just refused to give up. By ‘we,’ I mean, certainly Senate Democrats, but really, I mean, the whole climate movement led by young people demanding that we do something about the planetary crisis.

This was a long, long, difficult journey. Whenever the bill was dead, I never allowed myself to believe it and whenever the bill looked like it was going to pass I never found myself believing that either. I had to keep the mindset that nothing was real until it actually materialized as a Senate-passed bill.

Q: Is that why you became as emotional as you did when the bill actually did pass?

This is the reason I came to the Senate. There’s nothing as consequential as what’s happening to our planet. Lots of other issues matter very much, but I do believe that this political generation will be defined in the history books on the basis of whether or not we dealt with this because this is the one thing that can’t wait any further.

Q: This has been described as “historic” climate legislation. What do you see as the biggest game-changer in this bill?

First, it’s just the magnitude of it. It’s at least 10 times as big as anything we’ve ever done before and scale matters when you’re talking about deploying green energy.

A little pilot project is not going to tame the climate. A countrywide sector-by-sector strategy to decarbonize is what we needed, and this was equal to the moment in terms of scale.

The other thing that I’m particularly proud of is that we didn’t allow ourselves to get distracted by individual legislative proposals, which might have had their own virtue but didn’t really drive carbon emissions down.

One thing I told leader (Sen. Chuck) Schumer at the beginning was that just like any other bill that seemed like it was going to pass he was going to experience the phenomenon of lots of other members coming to him and saying, “Could you please put my individual legislative hobby horse in this bill?”

I said to him that we couldn’t do it that way because this was not about the laws of politics, this was about the laws of physics.

That sounds like a big policy innovation, but it really was a breakthrough to say that the way we defined success was not whether individual organizations were happy with the bill but whether the independent analysis showed that it drove emissions down.

Q: Can you pinpoint something specific?

The two pieces that do the heaviest lifting as it relates to carbon emissions are the investment tax credit and production tax credit for solar and wind.

There are two aspects of this that are super important. One is, again, the scale. It’s just more money and it’s more certainty and it’s way more generous than ever before so that’s the foundation of it.

The second piece is that it’s actually broken into two five-year periods. The first five-year period is a normal investment and production tax credit. The second five-year period is a pay-per-carbon reduction model that’s agnostic about the particular mode of carbon reduction. It just says if you’re doing geothermal energy, if you’re doing wind energy, if you’re doing solar energy, or if you’re doing something new you’re eligible to get subsidized by the federal government.

Rooftop solar panels / photovoltaic system installed on adjacent building near Ala Moana Center. 10 june 2015. photograph Cory Lum/CIvil Beat
Tax credits for clean energy projects like rooftop solar are central to the Inflation Reduction Act. Cory Lum/Civil Beat/2015

Again, this is less interest-group driven, even when the interest groups are virtuous. It’s less driven by trade associations and individual business enterprises. This is driven more by the needs of the planet.

Q: What’s something that’s in this bill that’s not getting the attention you think it warrants?

The $60 billion in environmental justice block grants was a key to unlocking the progressive coalition.

I think there were a lot of people coming into this conversation who care very much about environmental justice and who felt that they have been left out of these kinds of conversations. This is the first major investment in environmental justice at the federal level in history.

That’s a huge policy innovation and sort of sea change in terms of the way we do our environmental policy.

As I’ve always said in politics, “Nothing about me without me.”

The communities that have been adjacent to pig farms, power generation facilities, monocrop agriculture or hardrock mines needed to be restored and acknowledged. And $60 billion is not just lip service. It’s a massive investment in these communities.

Q: Obviously, this is not an example of the federal government cutting stimulus checks to every American. So how will this legislation directly affect people in Hawaii?

This is a planetary emergency, but it also presents an incredible economic opportunity.

We want to make sure that those opportunities are shared with individual consumers, not just big wind developers and solar developers.

We focused a fair amount on rooftop solar and energy conservation in the household to make sure that working class people and people at the lower income end of the spectrum have the opportunity to afford to buy solar panels and to afford to buy more efficient heating and cooling systems. This bill wasn’t just either for the industrial scale or for wealthy people.

Q: What can you do to make sure that people in Hawaii, whether citizens or government officials, take advantage of the tax credits and other provisions included in this bill?

Most of it’s tax credits, but we are planning on working with Hawaii Energy Office, to get the word out about the opportunities here because they’re pretty extraordinary for individual consumers.

Again, it’s nice for a person who can afford it to have a house off the grid. But if you’re going to get to the kind of energy transformation that’s being contemplated here, it can’t just be wealthy hobbyists who have the latest in energy conservation technology. It has to be all of us.

Q: This bill obviously is not a cure all. So what comes next?

We have to focus on implementation. We’ve learned in Hawaii that goal-setting is an essential aspect of clean energy policy, but we have to execute. We’ve got to get permits. We’ve got to get power purchase agreements. Someone has to get financing. You have to get the materials and the labor.

So if we’re talking about the transformation of our energy generation and our manufacturing and transportation systems, it’s not just a matter of declaring the policy or subsidizing the policy. Someone has to execute.

Secondly, I’m particularly interested in the international space, and this is partially why I got on the Foreign Relations Committee. We were a leader on climate and then (former President Donald) Trump was elected. Now I think we can reenter the world stage at the next U.N. climate summit in Egypt in November with our heads high, holding the high ground and hopefully leading other countries to redouble their efforts.

Q: Do you think this bill will help Democrats win in November?

I have no idea how this plays in the states that we need to win. Most of these are places that I visited a few times, but I’m not intimately familiar with their politics so I hesitate to project. I will say that there are a lot of young voters who are pretty bummed out and there are now a lot of young voters who are increasingly enthusiastic.

I also think that people who only pay passing attention to politics may not know all the particulars, but they see that we were not passing any bills and now they’re seeing that we’re passing a bunch of bills, and passing a bunch of bills that are about climate action, reducing the cost of prescriptions, chip manufacturing and taking care of our veterans.

We now have a body of work that rivals any other Congress that I’ve ever been involved in. Whether that saves us from a midterm wave, I think it’s too early to tell. And I almost always predict national politics wrong.

Civil Beat’s coverage of climate change is supported by the Environmental Funders Group of the Hawaii Community Foundation, Marisla Fund of the Hawaii Community Foundation and the Frost Family Foundation.

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