By Ben Beachy, Vice President of Manufacturing and Industrial Policy

Within six months of President Biden’s signature on the Inflation Reduction Act, companies announced a wave of solar, battery, and other clean tech manufacturing investments that will create more than 100,000 jobs across 31 states to make the nuts and bolts of clean energy. Many of the job openings will be in communities that have endured decades of divestment, deindustrialization, and economic insecurity.

That response to the Inflation Reduction Act’s unprecedented federal funding is faster than anyone predicted. It offers an early validation of the strategy behind the law: to wield public investments to support climate action, good jobs, and greater equity at the same time.

But some prominent commentators argue this is trying to do too much. Ezra Klein, for example, writes that such multi-pronged goals suffer from “everything bagel liberalism” that threatens the success of these landmark investments.

But here’s the thing about an everything bagel: it tastes good because it doesn’t truly have “everything.”

Do you eat bagels that mix blueberry, garlic, pumpernickel, and cinnamon raisin? No, you’re not a monster. An everything bagel gets it right—it combines ingredients that taste good together.

It’s the same with policymaking. Using public investments to achieve various goals is a sound strategy, so long as those goals are aligned.

Take the Inflation Reduction Act, which Klein accuses of trying to combine too much. In truth, the law correctly assumes that with well-targeted public investments, we can advance climate, jobs, and justice goals at the same time. For example, the Inflation Reduction Act created a $6 billion program to reduce emissions at facilities that manufacture steel, aluminum, cement, and other materials forming the backbone of our economy. The program’s guidance indicates that projects will be prioritized for funding to the extent that they:

• Cut greenhouse gas emissions;
• Reduce local pollution;
• Offer high-paying union jobs;
• Engage meaningfully with community groups; and
• Deliver economic and environmental benefits to disadvantaged communities.

That might sound like an unrealistic checklist—or an “everything bagel,” in Klein’s view. But these criteria are overlapping, spelling strong potential for extensive wins. For example, about 60% of unionized steel and aluminum facilities—all of which are high emitters—are also in disadvantaged communities. Investments in these facilities to cut emissions and boost competitiveness offer a potential win-win of supporting good union jobs, clean air, climate progress, and greater racial and economic equity.

To be clear, Inflation Reduction Act programs are not trying to solve every social ill. Klein is right that some policy goals are contradictory. To cite examples, Klein turns to the use of public funding to build affordable housing in San Francisco, which includes a requirement that an Arts Commission review buildings’ architectural design. This is not a suitable basis for evaluating the Inflation Reduction Act. No federal agency is requiring manufacturers, as a condition of funding, to meet requirements for aesthetically pleasing factory design. There will be no raisins in this everything bagel.

If we set aside the false binary of singular goals versus trying to do truly “everything,” we see a spectrum of win-win opportunities. Policymakers are smart to seize them.

And yet, Klein still worries that Inflation Reduction Act funding is trying to do too much by combining contrary ingredients. He notes that the legislation “pairs investments in decarbonization with buy-American rules and labor standards and much else.” He then suggests that these two criteria will undercut the goal of decarbonization by causing significant costs or delays in clean energy deployment.

The concern is understandable. But the data simply doesn’t back it up. Scholars from Princeton University find that a 10% increase in domestic sourcing means only a 1% increase in costs for solar projects. The analysis similarly finds that increasing wages for clean energy workers by 20% would only increase the costs of solar and wind projects by 2-6%. The researchers conclude that these costs would have no recognizable impact on the deployment of clean energy. They would, however, offer increased economic security for tens of thousands of workers and a stronger link between good jobs and climate action, as Klein correctly notes.

Why, then, does Klein suggest good jobs policies and clean energy deployment are incompatible? He cites an article from Peterson Institute authors, who argue that domestic content rules cause delays “by denying U.S. contractors from acquiring scarce components from foreign sources.” Here, Klein mixes apples and oranges by critiquing a separate domestic content policy that is not actually in the Inflation Reduction Act. The Peterson Institute quote that Klein uses is taking aim at funding for infrastructure—not clean energy—under the Build America Buy America (BABA) Act—not the Inflation Reduction Act.

While the argument isn’t relevant, the Peterson Institute authors are also wrong about domestic content requirements in BABA. The policy does not necessitate delays due to the unavailability of “scarce components.” Instead, BABA includes explicit waivers if domestic components are unavailable or would increase costs by 25%. But even if this position were accurate, it would not apply to the Inflation Reduction Act—the object of Klein’s critique.

That’s because the Inflation Reduction Act offers a generous tax credit to clean energy developers even if they do not uphold domestic content standards. The legislation includes a domestic content bonus—developers can boost their tax credit up to 10 percentage points by meeting certain domestic content standards. However, if developers choose not to meet these standards, they can still get an investment tax credit of up to 50-60% by meeting labor standards and building in communities that are low-income and impacted by energy transition. That healthy credit is plenty to make a project profitable, offering a green light for clean energy deployment.

The real tension with our climate goals is not the Inflation Reduction Act’s incentives for clean tech manufacturing, but the unacceptable status quo that the law is trying to fix.

Klein overlooks the fragility of the alternative to onshoring—continuing to hitch our climate goals to vulnerable overseas supply chains.

Here are three ways that clean tech onshoring is a better recipe for climate progress than continued dependency on imports: 

• Long-term Price Stability: Right now, 97% of the world’s wafers for solar panels are made in China. China also makes about three out of every four of the world’s electric vehicle batteries. The list goes on. Just like a corporate monopoly, when one country controls most of the supply of a critical clean energy good, they gain the power to increase the price of that good. We should not pin our climate goals on trust that the world’s monopoly producers will maintain low prices. Instead, growth of clean energy manufacturing in multiple countries, including the United States, helps to promote global competition and innovation, which are needed to continue driving down clean energy costs. The Inflation Reduction Act’s domestic manufacturing incentives are an important step towards that goal.

• Reliable Supply Chains: The status quo of extreme supply chain concentration also exposes our climate goals to shipping bottlenecks and geopolitical spats. The pandemic has taught us much about the dangers of heavy dependency on imports for essential goods. That’s as true for clean energy as it was for N95 masks. Far from jeopardizing our climate goals, onshoring incentives rightly recognize that ensuring access to clean energy means making more of the nuts and bolts here at home.
• Clean Manufacturing: Making clean energy components at home also helps to reduce industrial emissions, the world’s largest source of climate pollution when accounting for electricity use. Overseas corporations tend to be more emissions-intensive than U.S. factories in producing the aluminum, steel, and cement that goes into solar panels, wind turbines, and other clean energy goods. Solar panels, for example, are at least 85% aluminum. Producing the average ton of aluminum in China causes about 65% more climate pollution than in the U.S. Onshoring the solar supply chain, with help from Inflation Reduction Act incentives, will help to reduce these emissions. Meanwhile, the law’s investments will also directly support further emissions reductions in U.S. factories.

And that’s just how clean tech onshoring can support our climate goals. It also would help us build our clean energy future on a foundation of good jobs rather than the forced labor and human rights violations that plague overseas supply chains. It would help us to create higher-paying manufacturing jobs in communities that have been hollowed out by deindustrialization, countering the racial and economic inequality fed by manufacturing job losses. Better jobs in these communities, in turn, would help expand public support for climate policies by linking climate action with economic security. (For more details, see this factsheet.)

In short, the Inflation Reduction Act’s incentives for clean energy onshoring and deployment rightly embrace an “everything bagel” strategy of seizing win-win opportunities for climate, jobs, and justice goals alike. And those wins matter—for the workers now taking good manufacturing jobs, the hard-hit communities seeing investments for the first time in decades, and all of us who seek a livable climate.