‘Fossil-flation’ fuels the climate crisis and costs Americans money: Electrification is the answer

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When Sen. Joe Manchin (D-W.Va.) axed the climate provisions of a federal spending package, the move was gutting not just for the needless harm and loss for our country that it will beget, but also for its perpetuation of the craven and misinformed idea that climate spending causes inflation. Manchin amazingly suggested that we must “avoid taking steps that add fuel to the inflation fire.” But of course, it is “fossil-flation” that is feeding the fire. 

The inflation crisis battering American households is a perfect storm: a runaway climate crisis exacerbated by the conflict in Ukraine. Fossil fuels are a macro driver of inflation, which means that beyond direct energy and gas price increases, they drive up the price of everything around us. What has been exposed by the war is the fragility of our fossil fuel supply chain, and the volatility we live with by powering our lives with these planet-warming fuels. Since Russian President Vladimir Putin’s illegal invasion began, over 40 percent of overall inflation is directly attributable to skyrocketing fossil fuel prices. Although Manchin has dealt our efforts to zero out fossil fuels a serious blow, he does not get to write the ending to the story — we do. 

Fossil fuels are marked by volatility, which begets insecurity and drives down consumer confidence. Crude oil spikes have historically triggered recessions. Over the last 20 years, an American family could expect to pay $230 per month at the pump. Today, it is up 75 percent to $400 a month. Home heating fuel prices have fluctuated by 50 percent over the last two decades. And the price has increased by a staggering 99 percent. 

These fluctuations can be devastating to families, as a vast number of Americans live on the economic margins. In fact, 49 percent of Americans could not cover a $400 emergency expense today. When low-income families can no longer bear the burdens of fossil-flation, economic relief comes at the cost of physical safety. Families are exposed to unsafe cold or forced to choose between dangerous secondary heating sources: space heaters that cause fires or ovens and stoves that poison the air with carbon monoxide

The idea that domestic drilling or releasing supply from our reserves will bring prices down in any meaningful way or guarantee energy security for these households is foolishly short-sighted. There will continue to be political events across the globe that trigger price shocks that destroy lives. The simple truth is that fossil fuels contribute to climate instability and threaten our national security, which creates a vicious cycle of risk, stoking inflation and speculation. We know that climate change will cause inflation, as corroding supply chains and scarcity raise prices and we know that fossil fuels cause climate change.

This negative feedback loop will continue to make life harder for American families until we halt it. The heat waves washing over the country are becoming more frequent and more intense. They, too, are a product of fossil-flation, as they force households to spend more money to stay cool and safe. 

The solution is clear: Let’s get off fossil fuels and power our lives with plugs, not pipes.

Electrification both mitigates climate effects and creates stability. While gasoline hit a record $5 per gallon in June, driving an electric car costs the equivalent of just $1.06 per gallon today. Electric heat pump technology is so efficient that — when paired with congressional investments — the average American household would have saved $970 in energy bills if they electrified last year, and $1,350 if they had also installed solar panels. If current prices hold over the next year, these savings will grow to $1,420 and $1,840, respectively. 

This money would help American households trying to make ends meet right now. But the savings from electrification are not one-off: Every year that we use these efficient, electric machines, we save money. And renewable energy generation, whether from the panels on our roofs or the grid, locks in low energy prices for decades and stimulates local economies. It also localizes supply, insulating communities and families from the political and profiteering whims of tyrants and global oil and gas corporations. 

So, it turns out that the answer to the climate crisis and fossil-flation runs through us: our homes and our communities. Policy and private action need to come together now. 

President Biden invoked the Defense Production Act to spur domestic manufacturing of solar panels, heat pumps and insulation. The administration should use, and Congress should fund, the advanced market commitment powers contained within the order to get the 10 million American households on delivered fuel and those who are most exposed to fossil-flation, off of it. This will save these households thousands of dollars this winter alone.

Second, we should work relentlessly at the state and local level to drive down the prices of these machines by eliminating unnecessary regulation and market friction. Solar should cost less than the $1 per watt like it does in Australia, not the $3.50 per watt it does here due to local permitting costs. And we should pilot community programs to upgrade breaker boxes and install 240-volt outlets where the furnace, water heater and cooktop will need to go electric, removing a barrier when the time comes to replace these machines.

Third, we should get the private sector in the game, channeling their climate commitments in ways that help families and maximize the emissions benefits of their investments. Mortgage rates should be lower for buyers who electrify because the green assets they are creating are more valuable on Wall Street. In addition to funding far-out technologies like carbon removal or tree planting, corporations could and should be spending their carbon offset dollars on helping families in the communities they are part of purchase heat pumps and solar, providing almost instant relief at the kitchen table, with more immediate and tangible climate benefit. Electrification can bend the curve now when it matters most, meanwhile, the private sector can help and feel good doing it.

Yes, Congress should still pass those climate provisions as the central part of an anti-inflationary package designed to help America’s struggling families and communities.

We deserve a politics of abundance and shared benefit — of optimism and hope. Americans deserve policymakers who are committed to getting things done and making life better. The failure to pass the climate provisions is the opposite of that. However, one man and one moment do not define the arc of our possibility. When the answer is so clear, the outcome cannot be withheld, we will make sure of that. 

Ari Matusiak is the co-founder and CEO of Rewiring America, co-founder of Purpose Venture Group and a former special assistant to President Obama and the administration’s director of private sector engagement.

Tags Biden Climate change economy Electric vehicles Energy Energy transition gas prices Global warming Joe Manchin Russia solar panels Solar power Ukraine Vladimir Putin

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