The Inflation Reduction Act (IRA) of 2022 is routinely celebrated as the most significant climate legislation in United States history. Nearly US$369 billion in energy and climate spending, tax credits for renewables, electric vehicles, domestic manufacturing, and a stated goal of reducing emissions 40% below 2005 levels by 2030. The liberal centre hails it as proof that the market can be steered toward decarbonisation within the existing order. The left applauds the scale while noting the compromises. But neither frame goes far enough.
The IRA is not a break with fossil capital. It is not even a compromise between climate necessity and accumulation. It is a specific form of what can only be called climate Keynesianism: massive state subsidies directed at capital to manage the green transition on terms that preserve — indeed deepen — the circuits of accumulation. The state does not discipline fossil capital; it underwrites its metamorphosis. Coal becomes “transition” gas. Gas becomes “bridge fuel” for hydrogen. Oil majors become “energy companies.” Accumulation continues. Decarbonisation is deferred to a horizon that recedes as fast as the subsidies arrive.
This article develops the thesis that the IRA is a vehicle for capital’s self-transformation, not a challenge to it. Section 1 examines the IRA as a capital subsidy. Section 2 traces who captures the green jobs. Section 3 exposes the fossil fuel provisions embedded in the climate law. Section 4 considers the structural limits of green industrial policy under capitalism.
1. The IRA as Capital Subsidy
Keynesianism, in its classical form, involved state spending to manage aggregate demand and smooth the business cycle. Climate Keynesianism retains the form — massive state outlay — but shifts the content: the spending is not primarily to boost demand but to reconfigure the productive base in a direction that allows accumulation to continue under new ecological constraints. The IRA’s tax credits, grants, and loan guarantees are not welfare for the poor or even for the working class. They are transfers to capital, specifically to those fractions of capital positioned to capture the green transition: renewable energy developers, battery manufacturers, electric vehicle assemblers, and the financial institutions that intermediate the flows.
The clean energy tax credits under the IRA are uncapped and extend for a decade. They are, in effect, a guaranteed rate of return for private investment in wind, solar, storage, and green hydrogen. For wind and solar, the production tax credit (PTC) and investment tax credit (ITC) are restored and expanded. For hydrogen, a tiered credit structure rewards “clean” production based on lifecycle emissions, with the most generous subsidies going to green hydrogen produced from renewables. The architecture mirrors the subsidy regime that built the fossil fuel industry: the state socialises the risk, capital pockets the profit.
This is not a criticism of the policy’s intent. It is a description of its class character. The IRA does not socialise the means of energy production. It does not challenge the property relation. It does not even impose a carbon price that would make fossil fuels pay their ecological debt. Instead, it deploys public money to induce private capital to shift from one accumulation strategy (fossil extraction) to another (renewable deployment). The shift is real. It will reduce emissions. But it leaves the fundamental logic — production for profit, not for need — untouched. And because it leaves untouched the logic, it leaves untouched the power of capital to determine the pace, geography, and benefits of the transition.
2. Who Captures the Green Jobs
The promise of “green jobs” is central to the IRA’s political legitimacy. The Biden administration claims the law will create hundreds of thousands of jobs in manufacturing, construction, and clean energy production. The promise is not false; it is partial. The question — who captures those jobs, under what conditions, and with what distribution of power — reveals the class dynamics beneath the green veneer.
The IRA includes prevailing wage and apprenticeship requirements for many of its tax credits, a significant concession won by organised labour. But these provisions apply only to the largest projects, and enforcement mechanisms are weak. The dominant pattern in US renewable energy construction is non-union, low-wage, precarious employment. Solar installation has become a racialised, low-wage sector dominated by subcontractors who evade labour protections. The battery and EV assembly plants sprouting across the South are overwhelmingly non-union, with wages well below legacy auto, and frequently located in right-to-work states where organising is met with hostility.
The geographical distribution of green jobs also follows capital’s logic, not social need. The IRA’s “bonus” credits for projects located in “energy communities” — coal country, brownfields — are real but insufficient. Communities that powered the old energy system are promised the new one, but the promise is contingent on capital’s calculus. When a wind farm can earn higher returns on a Texas ranch than on a West Virginia mountaintop, the mountaintop waits. The green jobs go where capital goes, not where need is greatest.
A genuine green transition would require not just jobs but control over the means of producing energy. It would require public ownership, democratic planning, and a guarantee that the transition does not reproduce the hierarchies of race, gender, and region that characterise the fossil economy. The IRA offers none of this. It offers employment within the wage relation, undercapital’s direction, at capital’s pace. That is an improvement on unemployment. But it is not liberation.
3. Fossil Fuel Provisions Embedded in Climate Law
The most damning indictment of the IRA is what it includes for fossil capital. Even as it pours billions into clean energy, the law mandates new oil and gas lease sales in the Gulf of Mexico and Alaska. It ties the expansion of renewable energy on federal lands to the simultaneous expansion of fossil fuel leasing — a quid pro quo that ensures the extraction machine keeps running. The law also provides billions in subsidies for carbon capture and sequestration (CCS), hydrogen produced from natural gas with CCS (“blue hydrogen”), and direct air capture. These technologies are not neutral. They are lifelines for the fossil fuel industry, allowing it to claim a role in the “net-zero” future without abandoning its core business.
Blue hydrogen is particularly revealing. The IRA’s 45V hydrogen tax credit (section 45V, Internal Revenue Code) provides up to $3.00 per kilogram for hydrogen produced with lifecycle emissions below 0.45 kg CO2e/kg H2. But the credit is fuel-neutral: blue hydrogen from methane with CCS qualifies, as long as the methane supply chain emissions are accounted for and the carbon is sequestered. The problem is that methane leakage — from wells, pipelines, and storage — is systematically undercounted. When full lifecycle accounting is applied, blue hydrogen often has a larger carbon footprint than burning natural gas. But the subsidy flows anyway. Capital captures the credit; the atmosphere absorbs the leakage.
This is not an oversight. It is a feature. The IRA was drafted in the shadow of Senator Joe Manchin, the West Virginia Democrat whose personal fortune is tied to the coal industry. Manchin’s demands were the price of passage: new fossil leases, faster permitting for fossil infrastructure, and subsidies for technologies that keep fossil capital in the game. The law could not pass without these provisions. That is what climate legislation looks like under capitalism — it is shaped by the power of fossil capital to demand concessions even as it is supposedly being regulated out of existence.
The lesson is unambiguous: climate Keynesianism does not pick winners between capital fractions. It subsidises both sides of the transition, precisely because both sides are capital. The state does not have an independent capacity to discipline fossil capital; it can only induce it to change direction through payments that compensate for lost accumulation opportunities. The IRA is a bribe to fossil capital to accept its own transformation — and the bribe is paid by the working class, through taxation, inflation, and the deferred costs of continued emissions.
4. The Limits of Green Industrial Policy
Green industrial policy, of which the IRA is the most ambitious example, rests on a wager: that the state can tip the scales sufficiently to make renewable energy profitable enough to outcompete fossil fuels on market terms; that the resulting transition will happen fast enough to avert catastrophic warming; and that the social costs can be managed through the existing welfare state. The wager may succeed in narrow terms — renewable capacity will grow, emissions will fall somewhat — but it will fail on the two metrics that matter most: speed and equity.
The speed problem: even with the IRA, the United States is not on track to meet its 2030 target. The Rhodium Group estimates the IRA could reduce emissions 32-42% below 2005 levels by 2030, short of the 50% target. Every year of delay locks in more warming. But under capitalism, speed is subordinate to profit. State subsidies can accelerate deployment only up to the point where they reduce the rate of profit for the renewable fraction of capital. Beyond that point, capital resists. The state can push, but it cannot break the barrier of profitability without breaking capitalism itself.
The equity problem: the benefits of the green transition under the IRA are captured by capital and by high-income consumers who can afford electric vehicles, rooftop solar, and heat pumps. The costs — higher electricity prices, continued fossil fuel pollution in low-income and minority communities, displacement of workers in carbon-intensive sectors — are borne by the working class. The IRA includes some justice provisions, like the Environmental Justice Thriving Communities Program and the Greenhouse Gas Reduction Fund. But these are small pools of money relative to the scale of inequality. They do not shift the balance of class power.
The structural limit of green industrial policy under capitalism is not technical or financial. It is political. The state cannot simultaneously subsidise capital’s green metamorphosis and discipline capital’s ongoing extraction. It cannot plan a transition democratically when the investment decisions remain in private hands. It cannot guarantee that the transition is just when the class relation that produces injustice remains intact. The IRA is a reform. It is a significant reform. But it is a reform within capitalism, not a reform of capitalism. As such, it is structurally incapable of delivering the decarbonisation that the planet requires.
What would a non-Keynesian climate strategy look like? It would begin with the recognition that the green transition must be a class project, not a capital project. It would demand the socialisation of the energy sector: public ownership of renewable generation, storage, and grid infrastructure; democratic planning of the energy transition at the community and regional level; a just transition based on full employment, wage guarantees, and worker control; and an end to the fossil fuel lease sales, pipeline permits, and export licenses that the IRA leaves untouched. It would break with the logic of accumulation entirely, recognising that the planet cannot sustain infinite growth and that the only equitable path is one that reduces the throughput of energy and materials while meeting human need.
Related: The administrative state is being purged to make way for this form of capital accumulation. See Schedule F and the Civil Service Purge and the broader logic of reaction explored here.
The IRA is not the solution. It is a particular configuration of the class struggle over the environment. It represents a defeat for the working class and for the planet in the sense that it leaves capital’s power intact. But it also opens contradictions: the growth of renewable capacity creates new material conditions for a transition that capital cannot control; the green jobs movement, weak as it is, points toward demands for control; the exposure of fossil fuel provisions reveals the true character of the state. A dialectical reading of the IRA does not celebrate it nor dismiss it. It locates it within the class struggle and asks: who is positioned to push beyond it?
The answer, as always, is the class that has no interest in preserving the existing order.