Inflation Reduction Act

Here are five takeaways on the bill’s potential impacts:

1. The new bill brings the US much closer to meeting its climate goals.
According to an analysis released Thursday by the REPEAT Project at Princeton University, the $370 billion of climate spending in the new bill would cut US emissions roughly 42% below 2005 levels by 2030, or by 3.8 billion metric tons of carbon dioxide equivalent.

A few months into President Joe Biden’s administration, he set a bold US climate goal pledging to cut the country’s economy-wide emissions by 50 to 52% by 2030. Under current policies, the US is on track to cut its emissions between 24% and 35%, depending on the analysis. The new Inflation Reduction Act gets the country much closer to where it needs to be. 

2. Most of the emissions reductions will come from the power and transportation sectors.
In the IRA, 24% of emissions reductions come from the power sector, 19% from transportation and 9% from other industries, with smaller shares attributable to other areas. “The Inflation Reduction Act cuts US emissions primarily by accelerating deployment of clean electricity and vehicles,” REPEAT researchers wrote in a presentation summarizing their findings. 

A big way this will happen is through a lot more wind and solar power. REPEAT predicts an average of 39 gigawatts of new wind and 49 gigawatts of new solar a year, starting in 2024 and ramping up toward the end of the decade. For comparison, in 2020, the US added 15 gigawatts of wind and 10 gigawatts of utility-scale solar photovoltaic. 

“The biggest single area of emissions reductions [in the IRA] is the electric power sector,” in large part due to the tax credits for wind, solar and battery technologies, said John Larsen, a partner at the research firm Rhodium Group. “This is the area where you’ve got 10 years of full-value renewable energy tax credits.”

  1. Use of carbon capture would go up 13-fold.
    The new bill is projected to increase the use of carbon capture and storage technologies by a multiplier of 13 by 2030, according to the Princeton researchers. The incentives included in the bill would “make carbon capture a viable economic option for the most heavily emitting technologies,” including steel, cement, coal and natural gas plants, they found.
  2. The bill would lead to more emissions reductions than added emissions.
    The three models all agree this bill would do more to tackle the climate crisis than add to the problem, even though it would greenlight new oil and gas drilling, a provision criticized by some environmental advocates and by Vermont Senator Bernie Sanders.

Think tank Energy Innovation estimates the climate portions of the bill, such as the investments in wind and solar and the electric vehicle tax credits, would cut emissions between 870 to 1,150 million metric tons of carbon dioxide equivalent in 2030. Meanwhile, the provisions to expand oil and gas production could increase emissions up to 50 million metric tons.

In other words, for every ton of emissions added, 24 tons of emissions would be avoided.

  1. The bill would bring health benefits.
    By using EPA’s benefit-per-ton estimates, Energy Innovation’s modelers translated the drop in carbon and other air pollution emissions to impacts on human health. They found the bill, if implemented, could avoid up to 3,900 deaths, up to 100,000 asthma attacks, and up to 417,000 lost work days by 2030.

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