Inflation Reduction Act money might not get to those in most need, study finds

In the two years since Congress approved the Inflation Reduction Act (IRA), billions of dollars have been made available to help states fight climate change, promote clean energy and address economic inequities. 

But new reports give credibility to the fears that positive impacts aren’t being felt by the people who need it most.

The Union of Concerned Scientists, a nonprofit science advocacy group, analyzed Bipartisan Infrastructure Law (BIL) investments in California to see how much of the money has gone to historically underserved areas. The benefits, so far, are falling short of initial goals, its research found. 

Scientists used two different environmental justice screening tools, one crafted by the federal government and another designed by the state of California, to determine which communities were in most need of BIL money. Their study found that “only 9.4 percent or 18.2 percent of the $779.29 million analyzed is flowing to communities designated and prioritized as ‘Disadvantaged.’”

Communities that disproportionately face the effects of climate change and economic turmoil — such as low-income, Tribal, rural and Black communities, and places with environmental justice concerns — are specific targets for infrastructure funding. President Biden’s “Justice40” initiative is aimed at delivering “40 percent of the overall benefits of climate, clean energy, infrastructure, and other investments” to these communities. 

The Inflation Reduction Act, signed into law by President Biden in 2022, is an economic plan composed of grants, rebates, loans and other spending targeted at economic growth alongside clean energy and climate change resiliency investment. The Bipartisan Infrastructure Law works alongside the Inflation Reduction Act to construct the physical infrastructure needed to accomplish goals of the IRA funding. 

With three more years of funding left for the Bipartisan Infrastructure Law, the report calls for a “unified Justice40 tracking system,” which would include records of states’ decisions on where IRA funding goes to “ensure equitable federal spending.” 

The report also calls for a clearer definition of what “benefits” are. True metrics of success may actually be higher than the report found, said the Union of Concerned Scientists, but without better tracking metrics for spending data, understanding the true impact of the money on disadvantaged communities isn’t realistic.

The Center for Budget and Policy Priorities also emphasizes the role of states in getting the funding to target communities, calling for state governments to “avoid leaving money on the table” and take stronger administrative action to “get money where it’s needed most.” 

There is still time for two federal funding laws to find success. With an improved national database on where the money goes, a more unified understanding of what defines a community in need and more accountability from state and federal agencies reporting their data, the UCS report says that “BIL infrastructure investments can realize the transformative potential of Justice40.” 

Support for disadvantaged communities is central to effective climate change investment, according to  the UCS report, which reiterates how a focus on the goals of the Justice40 Initiative is central to the success of the project as a whole. 

“History shows that government investments are at high risk of being maladaptive to climate change when they fail to center equity and justice,” the report stated.

“Achieving Justice40 goals for BIL spending are critical to our collective ability to adapt to climate change.”