Inflation Reduction Act Incentivizes an Increase in Harmful Mining Activities

Hardrock mining and mineral processing fuels the climate crisis, is the country’s most toxic polluter, and is linked to violence in Indigenous communities.

This week, the US Senate may vote on the Inflation Reduction Act (IRA) of 2022. Plain and simple: The world is on fire and this is Congress putting it out with a squirt gun.

The bill does make historic investments in renewable energy, helps under-resourced agencies perform better environmental reviews, and provides funding to underserved communities. But even as the US faces unprecedented heat waves, wildfires, and floods, other provisions entirely ignore the world’s best climate science, and perpetuate the fossil fuel era rather than hasten its demise. Where the IRA does actually seek to encourage a transition toward clean energy technologies, it does so with an increase in mining activities that fuel the climate crisis and disproportionately impact many communities, especially Indigenous communities and their resources.

Hardrock mining and mineral processing is responsible for an estimated 10 percent of energy-related greenhouse gas emissions in the US. ​Instead of incentivizing new mining, the Biden administration should immediately declare a climate emergency. Photo of copper mine by R. Miller.

Hardrock mining and mineral processing is responsible for 10 percent of energy-related greenhouse gas emissions globally, is the most toxic polluter in the US, and is linked to violence in Indigenous communities. Instead of incentivizing new mining, the Biden administration should immediately declare a climate emergency and reform the rules governing hardrock mining on federal lands. Here is a brief explainer of the IRA’s mining subsidies.

Clean Vehicles (30D): The IRA proposes to allow taxpayers who buy an eligible clean vehicle to receive a credit of up to $7,500. This tax credit should spur more metals recycling infrastructure to help responsibly source materials for these cars’ batteries. However, the current provision will not allow taxpayers to claim the credit if the supply chain for the battery partly passes through a non-free trade agreement country.

Today, it is possible to make some clean vehicles with the IRA’s proposed sourcing requirements. But to truly benefit from this credit, the United States and our allies need more mineral recycling and other circular economy infrastructure. Unfortunately, the IRA’s 30D sourcing requirements may instead (or maybe by design) spur more mining and mineral processing, both within the United States and in free trade agreement countries. We cannot replace dirty fossil fuels with more dirty mining, so Congress should structure the 30D credit to help build a more circular minerals economy.

Last year’s Infrastructure Investment and Jobs Act provided grant funds to study and implement battery labeling practices. Another potential solution may be found within the due diligence and recycling standards recently enacted overseas. The European Union’s Battery Directive already contains recycled content requirements similar to the IRA’s optional recycling provision. If Congress passes the IRA, the Treasury Secretary could consider 30D rules or guidance adopting standards from the EU Battery Directive, as appropriate.

Advanced Manufacturing Production Tax Credits (45X): The IRA also creates an advanced manufacturing production tax credit (45X). Most of the taxpayers claiming this credit will manufacture pieces of solar panels and wind turbines. Yet, mining companies too will get a handout equal to 10 percent of their production costs for the 50 metals named in the IRA. The mining industry does not need this subsidy. The United States is the only nation in the world that charges no federal royalty for hardrock minerals, an archaic policy that has cost taxpayers $300 billion over the last 150 years in lost revenue.

The General Mining Law of 1872 was written to incentivize settlement and colonization of what’s now called the American west when miners swung pickaxes. Today, industrial mining disturbs hundreds of millions of pounds of dirt, perpetually pollutes water and soil, and produces hundreds of millions of pounds of toxic waste. Mining, as with all extractive industries, has strong correlations with increased rates of gender-based violence, substance abuse, human trafficking, and intimate partner violence in Indigenous communities, usually perpetrated by non-Indigenous men. As written, the IRA’s mining incentives will cause unfathomable amounts of harm to mining-affected communities, often home to Indigenous, rural, poor, or otherwise marginalized people.

Make Clean Energy Clean

Mining is neither renewable nor should it get tax credits. Congress should formulate 30D and 45X provisions to stimulate more recycling rather than new mining. The EU’s Battery Directive already prioritizes recycling, reuse, and substitution policies that will greatly help source materials more responsibly and transition away from car dependency. And without Congress, President Biden must also declare a climate emergency and reform the rules governing hardrock mining on federal lands.

These decisions will help the just transition to a renewable energy economy without drastically increasing demand for new mining. We can achieve a world where mining-affected communities are no longer accepted sacrifices in the name of a green economy.

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