The Inflation Reduction Act Would Unlock Significant Emissions Reductions and Open Doors for Future Climate Action | Article

Soon after Senate Majority Leader Chuck Schumer (D-N.Y.) and Senator Joe Manchin (D-W.Va.) announced their agreement to move ahead with a reconciliation package containing about $369 billion to address climate change, teams of independent energy analysts and researchers began digging into the specifics to determine by how much the deal would reduce greenhouse gas emissions. According to the joint Schumer-Manchin statement from July 27, the Inflation Reduction Act (IRA) would reduce carbon emissions by roughly 40 percent by 2030. That would fall short of the Biden-Harris Administration’s pledge to lower emissions by more than 50 percent by 2030, but it would be a big improvement compared to the status quo and put that goal within reach.

The first independent analysis of the IRA climate provisions I read was published on July 28 by the Rhodium Group (and recently updated with additional findings, including an estimate of household energy cost savings of up to $1,135 per year by 2030). According to the Rhodium experts, “the IRA can cut U.S. net greenhouse gas emissions down to 31 to 44 percent below 2005 levels in 2030—with a central estimate of 40 percent below 2005 levels—compared to 24 to 35 percent under current policy.” Leading researchers at Energy Innovation and the Princeton University REPEAT Project reached similar conclusions.

The emissions reductions made possible by enactment of the IRA are critical if we want to preserve any feasible pathway to limit global warming to 1.5°C by 2100. The effects of cuts in greenhouse gases from investments made today would be realized decades into the future because the atmosphere is already overloaded with carbon dioxide and other climate-warming pollutants. So it matters a lot, for practical and political reasons, what happens between now and 2030, let alone 2100. How the emissions reductions made possible by the IRA, in conjunction with the Infrastructure Investment and Jobs Act (IIJA) (P.L.117-58), would be achieved is very important.

If enacted, the IRA would lower household energy bills with energy efficiency and electrification, reduce our dependence on foreign oil, decarbonize the electric grid and our buildings, clean the air, and help get direct air capture, green hydrogen, and other emerging clean technologies to scale. It would take steps to ensure that these benefits are distributed evenly and equitably, including the provision of $60 billion for investments to advance environmental justice priorities in disadvantaged communities. And it would put a lot of people—about nine million, according to the BlueGreen Alliance—to work in quality jobs across the clean energy sector.

These are all transformational things that will not go unnoticed in our daily lives. And they all represent improvements over business-as-usual, which will be important to help justify the next set of policies and investments needed to reduce greenhouse gas emissions by at least 50 percent by 2030. For all the IRA and IIJA will do to help, we will still be playing catch up. A few items from our post-IRA (no jinx) to-do list include additional investments in climate adaptation and community resilience, changes in how we insure our property against flood risk and sea level rise, protections for threatened and endangered species, a phase-out of wasteful fossil fuel subsidies, and equitable financial support for developing countries trying to meet their own Paris Agreement goals.

The IRA, the bipartisan effort to pass the IIJA in late 2021, and the Energy Act of 2020 should give us some optimism about our ability to handle the undeniable emergency of climate change. Our pathway to limit global warming to 1.5°C by 2100 remains narrow, and we have a lot more to do. But progress is progress, especially when it begets more progress.

Author: Daniel Bresette