President Joe Biden’s administration made history last August by signing the Inflation Reduction Act into law. It makes record U.S. investments in climate change mitigation and adaptation strategies, projected to make a huge dent in the nation’s emissions reduction goals. To ensure New Jersey reaps the full benefits of this historic investment opportunity, business communities must advocate for state leaders and policymakers to maximize this federal funding.
Business leaders need to energetically engage in the push to hold New Jersey government accountable to its stated clean energy and sustainability agenda. For more than a decade, a global community of health professionals has been working to change the narrative on climate change. Its message: Climate change is the dominant public health challenge of our time, with the World Health Organization declaring in 2021 that climate change had become the leading threat to human health in the 21st century.
The health and well-being of New Jerseyans is inextricably linked to a stable and thriving business community. This was exemplified this summer, as wildfire smoke darkened our skies and forced us all inside, followed by historic New England flooding. These events vividly demonstrated that Northeastern states are highly vulnerable to the impacts of climate change. The knock-on economic effects of this are staggering. Beyond the sharp increases in public health costs that will result from climate change, two other major business impacts are poised to slam New Jersey’s economy if we do not begin to turn this story around soon.
Business leaders across the country are witnessing the economic havoc that climate change poses to the insurance and financial sectors. In May, State Farm announced it would no longer offer insurance coverage to California businesses and homeowners. Similar stories are emerging in Florida and Louisiana. In the long run, if people can no longer insure their homes and businesses, the financial ramifications will be extremely detrimental to New Jersey residents and businesses, starting with our shore communities.
There is a second and equally unsettling aspect to the real estate story. What are the costs associated with protecting real estate investments from climate change impacts? The Army Corps of Engineers is studying the potential of constructing retractable seawalls that will protect New York City from storm flooding. The initial cost estimate is $119 billion, though some opponents believe the true costs could be much higher. That is just the figure to protect New York City. What about the Jersey Shore coastline? Underwater, literally and financially. And that says nothing about the infrastructure costs we will incur to protect inland towns and cities from heavy rain events, extreme heat, high winds, and other more frequent extreme weather.
From risk to opportunity
The IRA is designed to mitigate climate-related risks by spurring private investment and innovation at a scale that will speed a just transition to a clean energy economy. Initial IRA investments are already demonstrating financial benefits for the business sector, including lowering energy costs though renewable energy installations, bringing manufacturing back to the U.S. and redesigning more resilient and secure supply chains.
The IRA is projected to be a huge boon to businesses in New Jersey, directly stimulating growth and employment opportunities in a range of green manufacturing and clean energy supply chain-related industries with an injection of federal investments and expanded tax credit programs. According to a 2021 report by the New Jersey Economic Development Authority, the clean energy industry is projected to create 27,000 new jobs and add $4.8 billion to the state’s economy by 2030.
Small businesses specifically stand to gain from tax credits for energy efficiency upgrades, solar installation and converting fleets to clean trucks and vans. From supplying components for wind turbines to developing community solar projects with a local workforce, New Jersey-based companies are well-positioned to grow their businesses by participating in the burgeoning clean energy sector.
Capitalizing on the IRA’s potential upside is critical to effective climate action, and, consequently, a healthy and livable New Jersey well into the future. We encourage all New Jersey businesses and organizations to get involved and advocate for investing dollars where they will have the greatest impact. We need many more leaders from the business community to stand up and help ensure New Jersey maximizes the massive economic and environmental benefits of the game-changing IRA legislation.
Dan Quinlan is co-leader of Clinicians for Climate Action New Jersey, comprised of New Jersey health care professionals advocating for climate change solutions to support the transition to a healthy, equitable and sustainable future. Richard Lawton is executive director of the New Jersey Sustainable Business Council, a growing network of companies and business organizations working to advance market innovation and policy change for a more just and sustainable economy.